The purpose of this series of articles is to describe briefly how the Loss Prevention System (LPS), can lower workers' compensation costs. The cost reduction methods described in these articles are tried and proven steps taken by industrial companies over the past 28 years. This first article provides a general overview of LPS and explains the fundamental principles on which this system is based. Future articles will describe more specifically how to develop and use six LPS tools: safe performance self-assessments, job safety analyses, loss prevention observations, near-loss and loss investigations, and stewardship. Collectively, these tools can lower workers' compensation costs, regardless of the industry or size of the company.
Currently, there are 60,000 employees and contractors in 65 countries using the Loss Prevention System. LPS has saved companies millions of dollars in workers' compensation costs, equipment and property damage, product quality incidents, regulatory assessments, and operational inefficiencies -- large companies, as well as small companies, and in such diverse industries as manufacturing, construction, mining, petroleum, chemicals, etc.
So how can you lower the cost of your workers' compensation? -- Through the daily use of your own, custom-made LPS.
What is LPS?
LPS is a business philosophy of how to run a profitable business, as well as a management system designed to reduce losses, or unplanned costs, associated with personal injuries, equipment and property damage, product quality incidents, regulatory assessments, and operational inefficiencies. Each of these events has an adverse cost associated with it. LPS can systematically reduce or eliminate the dollars expended for each of these incidents. This series of articles focuses on the workers' compensation costs that are associated with personal injuries.
Business Philosophy/Management System
It sounds like a fancy phrase but this business philosophy has four principles that are essential to the success of LPS. Adherence to these principles is an absolute prerequisite for lowering workers' compensation costs.
Principle 1 - Develop and communicate the LPS plan. The plan must describe where the company is headed in its overall business scheme, explain how LPS fits into the business plan, and specifically outline what the company intends to do to improve safety and loss prevention performance. Also included in the plan are expectations of loss prevention performance with goals and objectives established down through the lowest levels of the organization.
Principle 2 - Establish ownership and participation at all levels of the company. The company's approach to LPS implementation should be that the overall direction will be provided from the top down while determination of such specifics as how to best use the LPS tools will be from the bottom up. All levels of the company must be actively involved, with each person having the opportunity to develop ownership and an identity with the daily LPS tools and activities.
Principle 3 - Emphasize proactive not reactive efforts. Although LPS includes investigations of losses that have already occurred, the majority of time spent on LPS activities is proactive. In other words, most of the LPS activities focus on identification and elimination of hazards and risks before an injury takes place, not after the fact.
Principle 4 - Integrate loss prevention activities with daily business. All LPS activities should be designed and developed so that they are integrated into the normal, recurring business activities of the company. Some of the LPS activities occur daily, while others take place weekly or monthly. Nonetheless, performing safe performance self-assessments, conducting loss prevention observations, and investigating incident circumstances must be done as part of the job, just like fabricating steel and assembling components are part of a manufacturing process.
LPS follows a standard set of operating guidelines day in and out. Here are just a few of these guidelines as they apply to the previously-mentioned LPS tools or activities.
LPS requires use of two risk assessment and management tools -- safe performance self-assessment (SPSA) and job safety analysis (JSA). Employees perform SPSAs at the beginning of the shift, before changing tasks during the shift, and immediately following a near-loss or incident. The SPSA involves no paperwork and only takes a minute to perform.
A job safety analysis is both a technique and a tool. As a technique, a JSA reviews a work process, identifies potential hazards, and recommends procedures to perform the job safely. This technique produces a JSA tool that briefly outlines the proper way to perform a job. JSAs are used as a proactive hazard identification and risk assessment tool, in preparation and reference for loss prevention observations, in task and refresher training, and as a monitoring and control tool for construction and maintenance activities.
LPS requires the conduct of loss prevention observations (LPOs) on a planned and regular basis. An LPO is a systematic, standardized tool for observing a work process and determining if the job is being done according to specified standards. The immediate objective of LPOs is to identify and eliminate undesirable behaviors and conditions. The longer range objective is to help maximize the effectiveness of each work process by preventing losses and the respective costs associated with injuries, equipment and property damage, product quality incidents, regulatory assessments, and operational inefficiencies. Loss prevention observations are conducted routinely as a normal part of the job. It is important to conduct LPOs randomly throughout the shift, across all shifts, and in all operational areas.
For an organization to eliminate undesirable work practices and workplace hazards leading to losses, there are two fundamental principles that must be followed. First, provide positive reinforcement for correct work behaviors and practices consistent with the organization's work standards. Second, identify and eliminate deviations from these work standards. Industrial research has shown that these principles applied together are far more effective than either one alone.
LPS requires investigations of all personal injuries, regardless of the level of severity. The purpose of investigations is to examine information from each injury as it occurs and then implement solutions that should eliminate or reduce the likelihood that the injury will recur. All degrees of injury severity are examined because research has proven that the causes of minor injuries are nearly identical to those causes of more serious injuries. Therefore, if we can determine the cause of a medical-treatment case, we'll probably eliminate a more serious injury that eventually would have occurred.
LPS requires full communication of severe and potentially severe injury cases as well as results in the use and quality of LPS tools. These communications, called LPS Alerts and Bulletins, include dissemination and discussion of (1) the root causes of recent injuries, (2) solutions to prevent recurrence, and (3) results of previously implemented investigation solutions. These communications occur in several different formats, including safety discussions at the beginning of each shift following a loss and written materials in company newsletters, bulletin board notices, etc.
LPS requires that Field Assessments be conducted periodically. The purpose of the assessments is to determine how effectively LPS tools are being used by supervisors and employees. This determination can only be made by spending time in the workplace, asking questions and observing personnel in the performance of their work. These Field Assessments are also necessary to ensure that the LPS plan is being followed and that quality standards are being maintained. With regularly planned assessments, deviations from the LPS or other problems can be resolved rather quickly. Graphic results of these audits represent one type of feedback that is provided to all employees on a regular basis.
LPS requires that persons at all levels of the organization be accountable for loss prevention performance, based on incident experience, as well as work quality measures. Accountability should not be interpreted as a negative event. Under LPS, accountability refers to recognition for excellent loss prevention performance, in addition to coaching and counseling for unsatisfactory performance. The intent is to change behavior in a positive fashion, not punish people.
Although every LPS operates under the same fundamental principles and within a general framework, each LPS is custom made to match the unique needs of that organization. This tailoring to an operation must be done to ensure that LPS reflects the specific circumstances, characteristics, resources, and potential hazards of a particular workplace.
Future articles will describe how to develop and use six key LPS tools to reduce workers' compensation costs: safe performance self-assessments, job safety analyses, loss prevention observations, near-loss and loss investigations, and stewardship.
Copyright © 2001 Dr. James D. Bennett, Loss Prevention Systems
About KARE | Agent Locator | Regulatory News | Newsletter Archive
Policyholders | Agents | Why Choose KARE? | Contact Us | Home
Copyright © 2001-2002 Kentucky Association of Responsible Employers. All rights reserved.
Questions or comments about this site? We welcome your feedback.
Experiencing technical difficulties? Contact our webmaster.
Site created & maintained by McBride Design