When Isaac Newton proclaimed in the 18th century that “What goes up, must come down,” he obviously wasn’t referring to the experience mod. If anything, the experience mod defies the laws of gravity. It has the capability to keep going up and up, the score increasing every time a worker is injured on the job, an open claim is never closed or an employee is misclassified on payroll. And the pain inflicted by a high experience mod can hurt a lot worse than having an apple fall on one’s head.

Even though job safety is paramount when it comes to controlling the experience mod score, the experience mod was never intended to be used as a safety rating tool. The experience mod was created strictly for underwriting, premium calculations and other insurance purposes. In fact, at the bottom of every NCCI modification sheet is a disclaimer: “May not be used for any other purposes including but not limited to safety scoring for project bidding purposes.” But that doesn’t stop companies from using it as a requirement for securing bids.

In truth, the practice of using the experience mod when it comes to the job bidding process should be irrelevant as a company’s injury scorecard from the previous three years, should not determine a company’s current safety standards, it still happens. Still, it is not uncommon to see employers with experience mods over 1.00 finding it harder and harder to win bids, or simply unable to bid on them at all. Some RFPs will stipulate that if a contractor’s experience mod is higher than a specified number, the should not even bother putting in a bid.

For example, a construction company with a 1.5 experience mod is bidding a project against a competitor roughly the same size, but with a much more attractive 0.9 mod. The 1.5 contractor has a premium of $400,000 and the 0.9 contractor has a premium of $260,000. The 1.5 contractor has to make the money for that extra premium somewhere, so he’s either going to have to bid higher than his competitor (with a greater chance of losing), or he can bid around the same, but by doing so has to reduce his profit margin to 8% on the bid, while his competitor can have a 15% profit margin while giving the same bid cost.

But even companies with a 1.0 experience mod should not be complacent. A 1.0 is considered “average,” so unless the company is a “C” grade business, it should strive to do better. This will not only make the company more attractive in the bidding arena, but can also reduce costs. A company that had a very attractive .98 experience mod put programs in place to reduce it to .83, which reduced insurance premiums by $15,000.

Many things go into calculating the experience mod, but at the end of the day it all comes down to the workers’ compensation triumvirate:

• job safety;
• recovery-at-work programs; and
• injury management.

Closing unresolved injuries takes due diligence, putting an effective recovery-at-work program in place takes initiative (and maybe a little imagination), but job safety is that straw that stirs the workers’ compensation drink, and that straw has a lot of moving parts.

Job safety is not only key; it is a culture that must be instilled from the top of the corporate food chain right down to the jobsite. If employees feel everyone is on board and their well-being is paramount, even above the bottom line, they will be more conscious and alert next time they engage in a workplace procedure that could be potentially dangerous. And should they get injured, they know they will receive reassurance that they are a valuable asset to the company and are needed back on the job, even in a limited capacity, as soon as they are physically able.

Having a strong recovery-at-work program is also a way to combat the struggle to hire new employees and keep current ones on the job. The retiring baby boomer workforce affects every industry as a wave of industry knowledge and expertise exits the jobsite. This departure of knowledgeable and skilled mentors should not be taken lightly.

Keeping workers safe and protecting them against accidents and injuries should be a top priority. The median time away from work after suffering an on-the-job injury is 10 days, and nearly a third of all injuries can result in 31 days or more away from work. This amount of lost activity not only hinders a contractor’s productivity, but can also put more pressure on other workers to pick up the extra work from the missing employee, which could lead to more unsafe conditions and other possible injured workers, and in turn, the need to hire more workers.

Along with the proper use of personal protection equipment and better job training, technology is now playing a role in job safety with the use of drones and virtual reality to keep employees safe. Why risk the safety of a worker to check out a jobsite by driving over rough and often hazardous terrain when a low-flying drone can do the same job? Other technologies on the horizon include software-based safety management systems and hardware-based systems that incorporate the use of sensors and wireless devices to connect both machines and personnel into a common system.

Competition is always trying to gain an edge. By investing time and money in these aspects—managing the experience mod, job safety, workplace injuries and making sure injured workers recover at work—companies can stay ahead of the competition. Staying on the cutting edge of the tools needed to control the experience mod will keep a company on top when the next big bid comes along.