by David Schek | Aug 7, 2013 | Consulting Services, Professional Employer Organization (PEO), Staffing Company, Workers Comp, Workers' Compensation Insurance
I receive many comments from staffing owners asking how to maintain their businesses gross profit when they receive significant workers compensation rate increases. Of course they can shop for a new policy with a Professional Employer Organization (PEO,) but for some, getting lower rates through a new policy just is not possible; especially if their experience mods are too high.
Here are my suggestions for maintaining your gross profit that worked well with my national staffing company, as well as with my current staffing consulting clients.
1. Explain and provide back up support to your clients about the hardened workers compensation market using some of the articles from Work Comp Staffing Solutionss previous blogs. https://StaffingCompSolutions.com/blog/
2. Negotiate increases with clients so they go into affect over a few months. For example on a code 9410, where your comp rate was 5 %, and is now 8 %, ask the client to accept a 3 point increase over 3-4 months instead of at one time.
3. Try not to make sudden rate increases with a client. Study which codes are most affecting your Gross Profit and negotiate with your client for those rates only. They will appreciate that you are willing not to raise rates across the board.
4. Communicate rate increases in person to your larger clients (or all your clients.) Buy your client lunch or coffee when chatting about this sensitive issue. Sending out template notices of rate increases can seem cold and usually alienates the client. Poor for relationship building!
5. As a last resort, be more creative with your temporaries pay in order to maintain margins, yet still get the same productivity. For example have a “starter” rate for new temporaries that may be .50 less than the “experience ” rate. This may help soften the impact to your total Gross Profit– depending on your turnover.
Remember to always be prospecting for new clients who may be more open to your new higher rates- especially if you can deliver superior service and value. Many of my staffing consulting clients use social media tools for this.
As we all know, the staffing industry is just getting its sea legs back after the rough economic storm called the Great Recession.
I have many more suggestions that I regularly share with my consulting clients to help their gross profits.
Please feel free to contact me at davidstaffing@gmail.com or visit our web site consulting page at https://StaffingCompSolutions.com/Work Comp Staffing Solutions-staffing-consulting-services/
All the best
David Schek
President
StaffingCompSolutions.com
American Staffing Association Member
California Staffing Association Member
Exclusive PEO Broker for the United States Staffing Association
Visit Work Comp Staffing Solutions at Booth 104 at the A. S. A. Orlando Conference
StaffingCompSolutions.com—- Workers Compensation Specialists and Staffing Business Consultants For Over 20 Years.
by David Schek | Aug 6, 2013 | News, Professional Employer Organization (PEO), Staffing Company, Workers Comp, Workers' Compensation Insurance
Well it was only a matter of time before the two met. And the results are not great for staffing companies. Insurance companies are using complex analytics (aka Big Data) as a substitute for human judgement in the underwriting process. The insurance carriers believe big data will better screen for risky clients and improve their overall profitability.
Underwriters have for decades consulted detailed actuarial tables that have helped them serve as gate keepers for insurance companies. Specifically, there was to some degree an element of human involvement in this process — that could work in a staffing client’s favor.
The combination of the emergence of big data over the last few years, and the insurance industry experiencing under preforming investment portfolios, has resulted in insurance carriers changing their traditional underwriting methods. Now, they believe by removing the human element in the underwriting process, they will experience greater returns in their workers compensation portfolios.. Here is an article that explains this change.
http://www.businessinsurance.com/article/20130113/NEWS04/301139979
This may be one reason why staffing companies are turning more and more to Professional Employer Organizations ( or PEO’s ) to meet their workers compensation and back office needs. To be sure, PEO’s use insurance carriers like everyone else, but they usually are allowed to take on more risk because of their significant financial relationship with the carrier. In fact most PEO’s have millions of dollars in deposits with their carriers. Most staffing companies of course can not afford these types of deposits.
Let’s talk about how a PEO can help solve your workers compensation challenges. Contact me at davidstaffing@gmail.com and visit us at www.StaffingCompSolutions.com
All the best
David Schek
President
StaffingCompSolutions.com
American Staffing Association Member
California Staffing Association Member
Exclusive PEO Broker for the United States Staffing Association
Visit Work Comp Staffing Solutions at Booth 104 at the A. S. A. Orlando Conference
by David Schek | Jul 30, 2013 | Professional Employer Organization (PEO), Staffing Company, Workers Comp, Workers' Compensation Insurance
A few weeks ago one of my client’s employees was driving a fork lift and had an accident resulting in a potentially catastrophic injury and workers compensation claim. As my client began to research the claim, it appeared that the fork lift may have been improperly maintained and was in very poor working order. All of which was their clients responsibility. This situation may mean that the liability for the workers compensation accident, may be shared between the staffing company’s client and the insurer/ PEO for the staffing company.
This is a good example of Subrogation. The liability (and expense) associated with a workers compensation claim can be legally shared with another party– specifically the staffing company’s client.
Here is a link to an article that further explains how subrogation works, and why every staffing company should be aware of this when they speak to their insurance carriers and PEO’s about large work comp accidents.
http://www.athensadmin.com/athens-news/workers-compensation-subrogation/
Finally, please let me know if you need a FREE Workers Compensation quote. Contact us at www.StaffingCompSolutions.com
The workers compensation market is only getting worse for staffing companies with less than 150K in premium, and it is taking more time to find to an appropriate solution.
All the best
David Schek
President
Leaststaff.com
American Staffing Association Member
California Staffing Association Member
Exclusive PEO Broker for the United States Staffing Association
Visit Work Comp Staffing Solutions at Booth 104 at the A. S. A. Orlando Conference
by David Schek | Jul 23, 2013 | News, Professional Employer Organization (PEO), Staffing Company, Workers Comp, Workers' Compensation Insurance
In study after study, employees with obesity issues are devouring their employers profits by being involved in more workers compensation claims. In fact they have higher workers compensation claim rates, spend more time getting back to work after an accident, and tend to be more affected by co-morbidity health issues. These facts are documented in multiple workers compensation studies from the NCCI as well as academic institutions and large workers compensation health agencies.
For example, in the article below, the author cites one example “where a worker weighing more than 300 pounds sprained an ankle. Even though he was in his mid-20s, the worker’s treatment dragged on for seven months without reaching maximum medical improvement, despite physical therapy and light-duty job.”
http://www.businessinsurance.com/article/99999999/NEWS080104/399999789?tags=|331|329|304|92
In addition the author follows up with an insightful observation that cases like this one involving an obese person “presents an additional challenge for workers comp managers because the longer an injured worker is away from the job, the greater risk they will “decondition” and gain additional weight, making it even harder to help them return to work, several sources said.”
Clearly this is a complicated health issue with wide scale implications for workers compensation costs– especially for light industrial staffing companies. Americans are becoming more obese with each passing year and light duty is often hard to cost effectively coordinate.
A more positive trend among light industrial staffing companies this year is the use of Professional Employer Organization (PEO’s) to help them decrease their use of expensive State Funds and eliminate the need to pay for internal administrative staff. This increased efficiency helps staffing companies focus more on the sales and servicing of their clients.
For a FREE PEO quote from a PEO broker with 25 years of staffing industry experience, and who has seasoned relationships with PEO’s that specialize in partnering with light industrial staffing companies, contact me at davidstaffing@gmail.com or visit us at www.StaffingCompSolutions.com
All the best
David Schek
President
StaffingCompSolutions.com
American Staffing Association Member
California Staffing Association Member
Exclusive PEO Broker for the United States Staffing Association
by David Schek | Jul 1, 2013 | Consulting Services, Professional Employer Organization (PEO), Staffing Company, Workers Comp, Workers' Compensation Insurance
There are basically 2 schools of thought on this issue. The first school of experts suggest that some workers compensation costs will decrease over time since comp costs will be shifted to ACA plans for the millions of workers who are covered under these new health programs. Which would be great for most staffing companies. Conversely, another school of experts say that the ACA will swamp the existing medical facilities and resources from day 1, forcing workers compensation claimants to wait longer for their treatments (at hospitals and clinics) , resulting in increased workers compensation costs and higher indemnity claims.
This article below discusses these issues in more detail. It also looks at Massachusetts’s experience since 2006 where they have had a similar plan as the ACA, and now have some history as to how it has impacted workers compensating costs.
— http://www.aaos.org/news/aaosnow/nov12/advocacy2.asp
Work Comp Staffing Solutions speaks to many staffing company owners each week. This topic comes up in most of our conversations as more staffing companies sign up to partner with Professional Employer Organizations to help them manage these ever increasing payroll responsibilities and liabilities.
To find out what more staffing companies are doing to manage their new ACA responsibilities while trying to decrease their payroll burden costs, please contact me at davidstaffing@gmail.com or visit us at www.StaffingCompSolutions.com
Finally, be sure to ask us about how we can make your staffing company much more efficient and help grow your sales using Work Comp Staffing Solutions’s “hands on” Consulting Services. https://StaffingCompSolutions.com/Work Comp Staffing Solutions-staffing-consulting-services/
All the best
David Schek
President
StaffingCompSolutions.com
American Staffing Association Member
California Staffing Association Member
Exclusive PEO Broker for the United States Staffing Association
by David Schek | Jun 24, 2013 | Healthcare Insurance, Professional Employer Organization (PEO), Staffing Company, Workers Comp, Workers' Compensation Insurance
Most staffing companies learned long ago that sending a workers compensation accident victim to the emergency room is probably the most expensive way to deal with the accident. The expenses generated from having an emergency room treat the employee, are bound to be very expensive– even for minor injuries. As a result, over the last 10-15 years, many staffing companies have wisely developed relationships with managed care providers that are located near their offices– believing that this was the best way to control their workers compensation costs.
Like with so many things in business (especially health care related), these relationships need to be managed carefully. This article explains how managed care companies are often over charging for many of their services, and that Third Party Administrators (TPA) that are supposed to be managing the managed care providers for the staffing companies, are not always doing their job properly.
http://www.businessinsurance.com/article/99999999/NEWS080110/399999535?tags=|331|92
This is another reason why working with a Professional Employer Organization (PEO) can help keep your workers compensation costs as low as possible. The PEO has specially trained staff to manage each accident situation, and make sure that the costs for treatment are reasonable- since the PEO is on the hook for these expenses too.
Please feel free to contact me at davidstaffing@gmail.com to discuss how you can start utilizing a PEO partner to better manage your workers compensation costs. Also visit us at www.StaffingCompSolutions.com to find out about our other staffing support services
All the best
David Schek
President
StaffingCompSolutions.com
American Staffing Association Member
California Staffing Association Member
Exclusive PEO Broker for the United States Staffing Association
