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Senior Claims Manager
HD Supply Inc.
Orlando, Fla.

Solving the Puzzle

Between Oct. 31, 2007, and this fall, HD Supply has seen enough ups and downs to make any employee queasy, but throughout this period Melanie Stanisic has kept the company's claims management program on a steady course.

At the end of October 2007, HD Supply was spun off from Home Depot in a move of major proportions. The new company has 24,000 associates in 1,000 locations.

Stanisic, an HD Supply senior claims manager based in Orlando, Fla., was confronted with two challenges that required a personal talent for innovation and an ability to manage team members and partners in ways that encouraged them to contribute innovative ideas.

The challenges Stanisic faced in helping steer the new company, which had businesses in infrastructure and energy, repair and maintenance and specialty construction, were:

-- Each of HD Supply's 11 component business units had its own deeply ingrained risk management culture, loss control and safety procedures, and legacy programs that had survived multiple mergers and divestitures. The need, therefore, was for the creation from the ground up of unified and effective workers' compensation, managed care and auto liability programs.

-- Barely two years into the launch of the new company, HD Supply encountered a severe economic challenge to its operations due to a sharp downturn in the construction industry, an industry which provided the company's principal customers.

"The way we managed the downturn was we reached out to our partners in the human resources department, legal department and the environmental safety group to consolidate operations," Stanisic said. "As there were reductions in force that occurred with the downturn in the economy we had to look at each particular claim on the reduction-in-force list to make sure we were compliant."

Stanisic partnered with the legal department and the environmental health and safety (EHS) group to make sure the company wasn't terminating anybody who had an active workers' comp claim. Stanisic's experience during this difficult period turned up some surprises.

"We worked with the EHS department looking at what we could do about reducing accidents," she said. "Having fewer associates, we thought that as a result of them working longer hours they might be getting more fatigued when they were driving making deliveries, so we wanted to make sure we didn't have an increase in claims."

To Stanisic's pleasant surprise, there have been less auto accidents.

In another area, in which terminated associates still carried active claims, Stanisic and her colleagues braced for an increase in litigation. Again, that proved a false alarm.

Finally, Stanisic thought store associates might be more inclined to file claims to protect their jobs. Once again, though, the statistics showed a decrease in claims.

"In other words, the associates wanted to protect their jobs," she said. "The result was the opposite of what we had been planning for."

One of the highlights of Stanisic's systematic revamping of the claims management system at HD Supply was to conduct a comprehensive search for a new third-party administrator.

She embarked on this journey by participating in a request for proposal to a group of nationally recognized TPAs, eventually hiring Sedgwick Claims Management Services.

"She has had a great variety of experience," said a source who has known Stanisic professionally for a number of years. "She's worked for insurance companies, for TPAs, as well as having been on the private side and working as an examiner."

Stanisic's challenge at HD Supply was to build the claims program from the ground up, and not just a claims program. She had to piece together a jigsaw that included a managed care program, a cost center, and an Occupational Safety & Health Administration reporting unit.

--Steve Yahn

Risk Manager
Kimmins Contracting Corp.
Tampa, Fla.

A Hazard Analyst Digs In

The challenge that faced veteran construction industry risk manager Tom Worischeck was how to deliver constantly changing risk information to field employees in a format they could easily understand.

"In a factory or a manufacturing environment, things are more static and you can do a hazard analysis for a particular activity and unless somethingg changes that hazard analysis can stand for a year or two or three years," Worischeck said.

Worischeck, the risk manager for the Kimmins Contracting Corp. in Tampa, Fla., said the quest for a hazard analysis for the construction industry was to find one that accomplished the goal of identifying all the hazards to the employees who would be performing the work and what their expected behaviors and solutions would be.

"In construction every project is different," he said. "Sometimes every day on every project is different."

When Worischeck joined Kimmins in early 2006, there was no systematic way to do hazard analysis. "For my first year, I began really digging in, and the need for a field-specific hazard form was clearly evident. I was hired to straighten this out," he said.

Worischeck's innovation was what he dubbed the project risk assessment. The problem was that traditional job safety analyses and hazard analyses were either too basic or too cumbersome to be useful documents for field personnel, at the points where the real risks occur.

"They also did not involve or solicit the input of field personnel," Worischeck said.

The project assessment provides a simple and practical approach to identifying and controlling organizational risks. All the necessary information is assembled to be easily digested by field personnel.

"The idea was implemented by first gaining the support of top management and then rolled out in a top-down fashion," said Worischeck.

Though the assessment was a Kimmins-specific project, Worischeck had been working on developing a hazard analysis form for the past 10 years.

"The quest really was to find a form that accomplished the goal of identifying all the hazards to the employees who will be performing the work and what their expected behaviors and solutions were," Worischeck said.

"All the engineering controls and personal protective equipment and procedural controls had to be part of this, and it had to be delivered to field employees in a format they can understand."

In addition to the project risk assessment, the safety culture within Kimmins has undergone a vast improvement in recent years. People often reference "the way things used to be," said Worischeck, referring to unsafe practices that were at one time considered acceptable.

The assessment encourages a teamwork approach to risk control. It is very easy for safety people to behave like "safety cops." It is, however, more difficult and more rewarding to be involved in project planning from the beginning and to help solve problems before they arise, Worischeck said.

"That way everyone wins: employees, customers, the public and Kimmins," he said.

One metric that Worischeck proudly pointed to is the reduction in the number of workers' comp claims since he joined Kimmins five years ago.

In the four years preceding his arrival at Kimmins, the average annual total dollar amount of workers' comp claims stood at $1.5 million. In the years since, that average annual total has dropped to about $150,000, or a drop of 90 percent.

In another common measure, when Worischeck first came to Kimmins, the Occupational Safety & Health Administration recordable injury rate there was 6.2 percent which was about 15 percent above the construction industry average. In 2009, that rate had dropped to 2.4 percent, far below the industry average of 5.5 percent.

"For construction, demolition and mining that's very low," Worischeck said.

One top insurance industry executive said of Worischeck: "He has tons of experience. I deal with hundreds of people and Tom is by far the best risk manager I do business with. He is always on top of his game, from OSHA requirements to basic liability to whatever comes his way. He can handle a gamut of challenges, and he gets better every day. He is constantly finding ways to fix the business."

--Steve Yahn