By Marcia Carruthers, MBA, ARM, CPDM
Part 1 of this series examined the ability of American Electric Power’s “Recovery Center” to reduce corporate costs resulting from disability. This final article examines payback in terms of human cost and quality of life for participating employees.
Human Cost Savings
Although financial cost savings are an important factor in AEP’s success, their focus on customer service and employee advocacy provides another significant accomplishment—human cost savings. This is a line that is not easy to walk. Currently they enjoy a remarkable return-to-work rate of 93.6%. All of these “recovered” employees complete a survey assessing their satisfaction with the program. During 2006, employees who used the Recovery Center rated performance as a 4.25 out of a possible 5.0—clearly a reflection of the personal benefits to employees of this Center.
Because of the work at the Recovery Center, AEP has 310 more productive full-time employees (FTEs) at work than it did five years ago. That is enough employees to run and operate an entire coal-fired power plant!
Gains not Drains: Productivity Gains as a Result of Disability Management
The story of AEP and its Recovery Center would be remarkable just in terms of an integrated program that was able to successfully produce costs savings over a long period of time through continuous process improvement and careful attention to data tracking. But the special value of this type of program comes from analyzing the disability and absence rolls to seek the root cause of absence from productive work, identifying the underlying productivity losses, and developing processes that promote a return-to-work culture.
Integrated disability management can work for all organizations regardless of the size and industry class. Best practice strategies that companies can use to reduce costs, improve service, and provide employee advocacy while increasing company productivity include:
- Analyzing the incidence of chronic conditions and injuries that can lead to proactive disease management, safety interventions, and health promotion. Unhealthy behaviors, injury prevalence, and top drivers can be traced back from disability data.
- Engaging the employee during the disability or absence recovery period serves to treat the whole person. It sends a message that employees are valued, which in turn leads to loyalty. It works to break the disability spiral that inevitably leads to permanent severance from the workplace and focuses on return-to-work.
- Capturing data over time and internal bench-marking serve to identify areas for needed improvement and single out effectiveness and success.
- Identifying the effects of productivity losses throughout the organization. The domino effect of disability is felt especially hard in environments that rely on a team oriented approach. One manufacturer of durable goods has noted a 40% decline in team productivity due to the absence of a key team member and as much as 20% loss for any member of a production team.
- Calculating intangibles like morale due to absent or disabled employees. While hard to calculate, this is a cost nonetheless on others who must pick up the pieces in a corporate environment already overrun with the “do more with less” mentality.
Preserving Human Capital Assets: The Productivity Continuum
Human capital asset scarcity, and the pending crisis, provides a perfect opportunity for employers to look no further than their disability rolls in order to retain valuable human capital assets. The impact of the 74 million aging Baby Boomers will create new opportunities to view disability management as a key assessment point. At AEP the average employee is 46 years old, with 18% eligible to retire at any time. Given a technical workforce involved in a 5-year apprenticeship training program, retention and RTW for older workers becomes a critical corporate strategy.
As employers look to the future, productivity gains will need to be developed from a dwindling workforce. More effort will need to be put into retaining, retraining and recovering the current workforce in order to increase productivity.
Managing and measuring disability and absence rolls as a source of workforce improvement, as shown by AEP’s Recovery Center efforts, will be a prime opportunity to decrease disability and positively impact the productivity of future generations.