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Risk Manager
Foster Farms
Livingston, Calif.

Solving a decades-old problem in the poultry industry that often disabled workers with a unique testing program.

Ernie Machado, risk manager at Livingston, Calif.-based Foster Farms, is revolutionizing safety standards and practices in the high-risk poultry-processing business.

"I really believe that if Foster is successful in sustaining its post offer of employment testing (POET) program, it will change the poultry industry," said Gary Pohlmann, senior vice president, director of risk consulting in Marsh's Atlanta office.

Foster Farms, Machado's employer for the last 29 years, processes about 1.2 million chickens and turkeys daily. The seemingly unattainable Holy Grail for Machado and others in the poultry industry is how to reduce upper extremity accidents, which Marsh's Pohlmann said had long been considered "almost a cost of doing business." It's very tough work, Pohlmann added.

Machado's search for a solution gained traction when Marsh introduced him to Denver-based BTE Technologies Inc., which custom builds equipment and software that tests protocols and sets up clinics where applicants can be tested. Machado hired BTE and the POET program was kicked off in June of 2008 at the company's Livingston plant and it is now in place at all of the Foster Farm plants.

Like other major poultry processors, Foster Farms had worked hard to install the best possible ergonomics-friendly machines and workplaces.

But upper extremities repetitive motion injuries were highest on the injury chart.

Machado knew that if Foster Farms could better understand the physical requirements of a job and then hire job applicants who demonstrate the physical capacity of the job, the frequency of injuries--particularly in the first year of employment--would decrease.

What attracted Machado to BTE was that it had helped "dozens" of companies build protocol-testing equipment. BTE is a leader in functional evaluation technology and rehabilitation technology. If Machado could pull off a POET program at Foster Farms it would be a first in the poultry industry.

Machado underscored that the POET testing is open to all employees--incoming and those who have worked for more than a few years and aspire to a better position. With POET they now have a chance to scientifically demonstrate their ability to handle a different job.

"Prior to this, much of the job hiring and job advancement work, as well as expediting back-to-work cases, was done very subjectively," said Machado.

To launch the POET program, a six-month-long job-site analysis was completed, test protocols were developed and validated and testing was implemented. One of the early challenges was a conundrum--how can you afford to screen out potential new hires when it is already difficult to recruit qualified candidates?

The solution was to classify all jobs in three tiers of physical demand requirements, thereby facilitating selective placement. This procedure also reduced the potential risk of reverse-impact for females and older workers who can't handle the most physically demanding jobs.

In addition, an important benefit of the analysis identified a number of ergonomic risks. Machado worked with plant supervisors and BTE's clinical team to implement equipment and process changes to mitigate the risk issues.

Although both Foster's human resources department and organized labor leaders were skeptical of POET, they now are fully supportive of the program, said Machado.

Results at the one-year mark last June?

--87 percent of applicants tested were placed in jobs that matched their physical capability to safely perform the job.

--57 percent of incumbent employees tested were able to progress to more physically demanding jobs.

--47 percent of incumbent employees were not transferred to jobs that would have placed them at a high risk of injury.

--In the year since POET was initiated, 100 percent of new claims have been closed.

--A 300 percent reduction in cost in the targeted injury category of new employees, again a huge reduction.

Machado is known to colleagues as very bright but also notably self-effacing. "He is fantastic to work with," said Connie Miller, vice president of business development at GTE. "He knows what he wants but he's flexible about how to get there."

Added Marsh's Gary Pohlmann: "Ernie is the most knowledgeable, well-rounded safety and risk management person I've ever dealt with."

--By Steve Yahn

Ernie Machado asked the "responsible" question: Why does it have to be that way? Workers for poultry producers are prone to severe injuries, especially newly hired, young workers.

This problem was "almost considered the cost of doing business" but Machado, risk manager for Foster Farms, refused to accept the status quo.

After attempts to solve the problem using more standard ergonomic solutions, Machado found that testing new employees for the right kind of physical skills would reduce injuries and lower costs. Machado used testing expertise from BTE Technologies to find a post-offer testing process and then expanded its use to experienced workers who may have been looking for a better job within the company. Machado faced push-back from human resources and organized labor, but he wouldn't give up.

Now the successful results are in and all parties agree it was a classic "win-win."

General Manager, Risk Management
Volkswagen Group of America Inc.
Herndon, Va.

Laughter and creativity guide Volkswagen's risk manager, who knows how to bring risk management to those around him.

Given the title of a nicely selling book about giving the insurance industry a little comeuppance you might think it was written by Public Citizen, a public advocacy group started by Ralph Nader.

The title of the book, "Hide! Here Comes the Insurance Guy: Understanding Business and Risk Management" in fact, belongs to Richard G. Vassar, general manager, risk management at Herndon, Va.-based Volkswagen Group of America Inc.

The journey of Vassar's book from idea to rolling off the press is a real saga. After Vassar talked to more book publishers than he cares to remember, he decided to take a bold step: enter the world of print-on-demand, wherein he would foot the bill for every book sold, title by title.

It was a good gamble. With some promotional help from RIMS and speaking engagements, as well as a number of favorable reviews, he knew his approach of simplifying substantial insurance concepts with touches of humor here and there was catching on. That was July of 2006.

Within a year or so about 1,200 print-on-demand copies had been sold.

So in November of last year, in addition to the print-on-demand title, Vassar's publisher, iUniverse, launched a traditional title of the same name and has sold about 300 copies since then. The books are available through the publisher and Amazon.com.

Vassar wrote the book principally for midsize and smaller companies at which the risk manager often wears other hats as well.

Said Vassar: "I wrote the book because most organizations lack the basic knowledge of risk management and insurance. Many look at insurance as a 'necessary evil' and do not know how to take a proactive approach to reducing losses, which in turn reduces insurance costs.

"I also recognized that insurance has its own language, and the book was aimed at being a translator for those with business acumen but who find insurance much too technical to warrant its study."

Vassar said the current target reader for "Hide!" is a larger business audience. "What I've learned working in Corporate America is that when you walk into the CFOs office you've got to speak like they do--in numbers. If you go in talking insurance language then you're not going to get buy-in."

Several people who know Vassar well said he is the ideal person for breaking down insurance speak into understandable business terms.

Joe Donnelly, senior vice president at Kansas City-based Lockton Companies LLC, a construction services business manager, said of Vassar: "Rick is a creative risk manager. Many risk managers will sit back and let things run themselves. Rick is more of a mind to take positive action.

"He works very closely with his broker. Then he takes a very aggressive role in dealing with the market. He can be a challenge to work with at times--but for all the right reasons. I enjoy working with him."

Added Donnelly: "Rick is well versed in his field. He knows what he wants, but at the same time he is easy going. In a business/social situation he is very comfortable; he is well spoken and a genuinely nice guy."

"When working with Rick there was never an easy solution," noted Jim Misselwitz, senior account executive and part owner at ECBM, a very large independent broker in the Philadelphia area. "You always had to keep working a project until everybody was fully satisfied but Rick had a way of dissecting a problem that left everybody feeling comfortable."

"Rick is one of those guys who, when bombs are going off all around you, has a way of being calm, of staying focused on the end game. He had a level of knowledge such that he could communicate at any level in the corporation. Rick also knew how to stay on task. If somebody came and said, 'We've got to this and we've got to do it now,' he would put it in a place it belonged and come back to it at the appropriate time. He always served the company first."

Throughout the years, Vassar has consistently realized a 20 percent first-year cost improvement and maintained or improved on those numbers for every corporation where he's worked more than 20 years: 15 years at Thrifty Car Rental, Inc.; five years at Valcourt Building Services and in the past year at Volkswagen Group of America.

--By Steve Yahn

Vice President, Compensation, Benefits and Safety
Norwood Promotional Products
Indianapolis

Norwood Promotional Products had almost given up on its employee benefit and safety programs ... until Robert Keller stepped into the picture.

When it comes to the resuscitation of a corporate employee benefit and safety program, Robert Keller of Indianapolis-based Norwood Promotional Products is without peer.

"Compared to any other company that has tried to do a revenue and frequency of loss-reduction program in the workers' compensation and safety areas, I have never seen anything come even close to what Bob Keller has done at Norwood," said Brad Hart, senior vice president, risk services practice leader in the New York office of Lockton Cos., LLC and an adviser to Keller on a wide range of matters.

"Bob is focused and driven," noted Hart, whose firm handles claims management for Keller and places all insurance for Norwood. (AIG is the company's carrier.) "Though he is willing to change his mind, he wants his timelines to be short."

Added a former top executive at Norwood when Keller was hired in March, 2004: "He worked in some big companies (General Electric, General Dynamics, R.R. Donnelley. We recruited him. We kept expanding his job responsibilities. His persistence and personal organization were very noteworthy."

Keller moved fast when he joined Norwood. He had to.

By all accounts the company's employee benefits and safety arenas were in a shambles. The claims costs for workers' compensation were way out of control.

Consider some 2005 numbers that confronted Keller: "For a company of about 2,000 plant employees at six manufacturing sites," said one insider, "workers' comp losses were out of control--running at about $625 per employee ($1.22 million) per year for the 2005 calendar year and 838 days away from work due to plant injuries."

By comparison, work-related injury days out of plant costs incurred in the years since were:

--2006. Days out of plant, 651. Costs incurred in calendar year, $774,758; average cost per employee, $387.

--2007. Work-related injury days out of the plant, 109. Costs incurred in calendar year, $432,104; average cost per employee, $242.

--2008. Work-related injury days out of the plant, 51; Costs incurred in calendar year, $210,863; average cost per employee, $107.

Those results were achieved by following a disciplined roadmap Keller set down immediately with the support of management.

Keller, 59, came to a decidedly smaller-sized company because, he said, "I wanted the private company experience. I think smaller private companies are really the growth engine in the United States."

Norwood has revenues of about $300 million a year, with 2,200 employees making more than 4,000 promotional products.

Before Keller joined Norwood, the company had no risk services manager. The company's former insurance carrier was processing claims. There was no companywide workers' comp program, with no modified duty return-to-work program. Safety was a low priority.

Human resources handled safety and workers' comp, with no ownership of safety by operations.

Now, said Keller, "Safety is not done on a corporate level, but on a department-by-department level."

Safety charts are circulated weekly throughout the company. There are monthly safety awards and postings for every plant.

Machine guards are now mandated at all appropriate positions. That was one of the first steps Keller took upon joining Norwood. Other Keller improvements include:

--Safety Power-Point presentation to all employees.

--Biweekly statistical process analysis applied to work-accident days out of the plant by number of medical and indemnity claims and dollar costs.

--Companywide policy/procedure forms to all treating medical practitioners.

--Designated top-seven safety categories with action programs directed at every plant.

--Dedicated safety bulletin boards in every plant.

Savings were used to fund 50 percent of a renewed 401(k) company match plan and medical plan premiums were held to no increase in 2007.

The company had to suspend 401(k) contributions in previous years due to high workers' compensation costs.

"People throughout the company have learned they can rely on Bob," said a former Norwood executive.

--By Steve Yahn

Risk & Insurance Manager
The Hershey Co.
Hershey, Pa.

Megan Marshall has a plan: Speak softly, carry a big stick and send redundant third-party administrators packing.

Recently Megan Marshall, risk and insurance manager at The Hershey Co. in Hershey, Pa., ordered a lot of pizza.

The pizza was for the kind of gathering that never occurred before she joined the company in February of 2006 at the age of 28. Ordering in pizza for meetings has become a Marshall trademark, but this meeting was special: 20-plus people would be in attendance, half from Hershey and half from the company's claims management vendor, Sedgwick Claims Management Services, Inc.

Not only is the pizza a new Marshall trademark, but also the larger number of people attending the meetings--half of the group from Hershey and half from Sedgwick.

"This emphasis on an atmosphere of communication and community has had a positive influence on the culture of the Hershey risk management team and enabled it to operate more effectively and contribute greater value to their organization," said Sheila Clark, area account executive at Sedgwick.

At the time Marshall moved over to Hershey from Aon's Hershey office, the famous chocolate maker had three TPAs--two too many for Marshall. Hers was a vision of a more efficient, quantifiable and value-added claims management program.

It was time for Marshall to consolidate the three TPAs, all of whom had a long history with the company. "The challenges Marshall faced were huge in light of the fact that it meant legacy practices and procedures had to be changed, updated or eliminated," noted Sheila Clark.

Marshall's first move was to call for a RFP to nationally recognized claims managers. That proposal went out in early 2007 with the goal of having a new claims management firm in place by the summer of that year, and with implementation to start on October 15.

Sedgwick was hired for the task but it was a challenging one. Marshall wanted all of Hershey's 10 facilities to be under the Sedgwick umbrella by Jan. 1, 2008 (half of the company's renewable cycle occurs on Jan. 1, the other half on June 30/July 1 to balance the workload).

Marshall, who earned a double undergraduate major in finance and risk and insurance from Temple University in Philadelphia and an M.B.A. from there as well, is known as a soft-spoken executive who in the Teddy Roosevelt tradition carries a big stick.

Doug Lopaga, senior claims consultant with Aon's global risk consulting group based in Philadelphia, said of her: "Megan and I worked together at Aon for six years. Her internal drive to do well for her company stands out. She has brought about major change in a short time at Hershey with a minimal staff--just her and one other person. But she works tirelessly. "She has made her program much more efficient," added Lopaga. "The Hershey staff at plants really rely on her. She's very thorough in what she does."

"Megan treats each Hershey factory location as a customer," said Clark. "She is tenacious. She absolutely won't settle for less than perfection. When she came to Hershey she replaced somebody who had been there a long time. But that didn't daunt her."

All of this has added up to some impressive results for the risk and management group since Marshall joined Hershey. Workers' comp claim management metrics:

--2008: $3.7 million reserve reduction

--2009 through March 31: $300,000 reserve reduction

--2008 medical cost avoidance of $1.75 million by leveraging national managed care network of Sedgwick

General Liability/Automobile Liability Metrics, claim management metrics:

--2008: $600,000 reserve reduction

--2009 through March 31, 2009: $700,000 reserve reduction

In addition, noted Marshall: "Through consolidation to a single TPA we were able to reduce our service fees paid by $250,000."

"We simultaneously marketed our workers' comp, general liability and auto liability programs on an unbundled basis (i.e., not taking the insurance company's claim service) and were able to reduce our insurance premiums over our large deductibles by $500,000," she also said.

--By Steve Yahn

Workers' Compensation Manager
International Paper
Memphis, Tenn.

Intl. Paper switches to an owner-controlled insurance program, with impressive results.

Give credit to Bill Wainscott, International Paper's workers' compensation claim manager. He's spent hours integrating his company's owner controlled insurance program (OCIP) for contractors and subcontractors, into its overall insurance and services program, effective Jan. 1 of this year.

The switch to a large-deductible OCIP is projected to save $1.25 million annually for each of the next three years. "The contractors' and subcontractors' insurance costs were killing us," said Wainscott. "That's why we decided to take on the risk ourselves."

Intl. Paper subcontracts much of the maintenance, retooling, installation and construction at their large mills to complete specialized, time-sensitive, high-exposure jobs. As a result the workers' comp and general liability coverage as part of the bid process was being passed directly through to Intl. Paper.

Wainscott saw the opportunity to achieve more savings for the contractors and subcontractors. Working with Intl. Paper's risk management department, finance department and broker, he conducted a comprehensive underwriting and loss review. This allowed for rates to be established that were less than contractors and subcontractors were able to purchase separately.

Now, when contractors and subcontractors submit their bids, an insurance cost is developed based upon the payroll, NCCI codes and past experience. The contractor or subcontractor then pays Intl. Paper, which in turn assumes all the liabilities within the deductible/retention associated with the specific job on their site. Intl. Paper purchases excess coverage to protect itself on large and catastrophic losses.

In implementing this solution, the company moved oversight and claims management to the master self-insured program, which allowed the company to implement a comprehensive loss prevention program. All claims, incidents and near misses are now reported through Intl. Paper's internal reporting system, which is connected to the third-party administrator, Sedgwick CMS' claims management system.

Mills now control their costs based partly on the workers' comp costs of its contractors and subcontractors. If a contractor or subcontractor has severe losses and refuses to embrace loss prevention and return-to-work programs, then the mill can save money by using a different contractor.

Wainscott is quick to share credit for these monumental changes with David Arick, head of the risk management department and the rest of Wainscott's workers' comp team.

"What I think is special or unique is that we found the opportunity to achieve substantial savings and actually improve performance," noted Wainscott.

"The real reason for Bill's success is he has probably done a better job than I've ever seen of putting himself in another person's position," said Richard Schroder a Fort Thomas, Ky.-based area account executive for Sedgwick. "If he's dealing with his facilities he puts on their hat."

--By Steve Yahn