Redefining Success in Workers’ Compensation: Shifting Towards Human Impact & Collaboration

Scorecards have long been utilized in the workers’ compensation industry to measure performance and manage claims. While they provide a simple and objective way to establish metrics, they often lead to a narrow, short-term perspective that hinders collaboration and fails to consider the more significant objectives. It is time to adjust key performance indicators (KPIs) in the workers’ compensation industry to shift the focus towards a more substantial impact on human lives and organizational culture.

Scorecards, although beneficial for performance appraisals, have their limitations. These scorecards are arbitrary and prone to individual biases. Scorecards can be challenging to comprehend and overly focused on quantitative measurements. Quantitative measurement of this capacity is particularly relevant in the case of claims adjusters, where the size of caseloads lacks a significant factor: emotional intelligence. Emotional intelligence plays a crucial role in the success of claims adjusters, accounting for 80% of their effectiveness compared to the 20% attributed to technical aptitude. Embracing emotional intelligence and other human elements into the KPIs is essential to drive effective and meaningful change in the workers’ compensation industry.

Another challenge with scorecards is the time and effort required to construct and maintain them. They often rely heavily on quantitative indicators and fail to adequately reflect the qualitative aspects of an employee’s success, such as customer satisfaction. This discrepancy is especially problematic in workers’ compensation, where claims management involves a significant relational component. Operating with a checkbox mentality around scorecard metrics and audit specifications needs to pay more attention to customer satisfaction and effective communication. To overcome these challenges, we need to rethink our KPIs and incorporate components that account for the human elements within this unique space.

We can look to other industries to exemplify the effectiveness of adjusting KPIs. For instance, TechCo, an organization in the financial sector, switched to a four-part performance scorecard with shared goals across the company. This approach enabled dynamic goal setting, leading to increased customer service company-wide. By encouraging managers from different branches and departments to communicate and share strategies, TechCo successfully increased customer service scores by 8%, resulting in a 17% improvement in financial performance. The increase in customer service scores suggests that a shift towards increased empathy and emotional intelligence in the workers’ compensation industry could positively impact medical outcomes and cost reduction.

Motivating claims adjusters through the scope of corporate goals requires careful consideration. Here are some “Dos and Don’ts” to consider when revising key performance indicators:

1.         Do: Tie rewards to output rather than input. Instead of focusing on input-driven metrics encouraging system manipulation, emphasize outcomes directly impacting injured workers. Metrics such as timeliness of payments and customer satisfaction can provide valuable insights into the performance of claims adjusters and the overall effectiveness of a claims operation.

2.         Do Not: Lump rewards for visionary goals with those for short-term objectives. Encourage outside-the-box thinking and reward initiatives that drive long-term innovation. The workers’ compensation adjudication system needs to embrace technology and innovation to keep pace with the industry’s changing landscape.

3.         Do: Use creative rewards. Take a page from NASA’s book and personalize incentives to recognize and appreciate individual employees’ efforts. Highlight the achievements of claims adjusters who connect with injured workers, leading to positive outcomes. Positivity can attract new talent and improve the overall perception of workers’ compensation.

4.         Do Not: Assign numerical ratings. Instead of comparing claims adjusters with their peers, focus on individual performance trajectories during monthly, quarterly, and year-end development discussions. Ask questions encouraging self-reflection and growth, such as whether the adjuster is growing in their position, working effectively across departments, and increasing their impact on the broader organization and industry. By shifting the focus away from numerical ratings and fostering individual development, claims leaders can cultivate a sense of purpose, meaning, and belonging among claims professionals.

Encouraging claims adjusters and claims leadership to contribute to organizational objectives is crucial for aligning everyone toward a common goal. This approach can boost engagement, productivity, and job satisfaction. It instills a sense of purpose and belonging and highlights the importance of their role beyond mere numerical metrics. Furthermore, when claims professionals collectively contribute to meaningful objectives, it fosters a healthy work environment, enhances morale, and ultimately leads to better customer support and greater customer satisfaction.

The focus of the workers’ compensation industry needs to shift towards making a significant impact on human lives and organizational culture. By adjusting key performance indicators and embracing emotional intelligence, empathy, and innovation, the industry can transform from a process-oriented delivery system into a dynamic field where claims professionals focus on changing lives and creating positive outcomes for injured workers. It is time to rebrand and showcase the greatness within the industry, attract new talent, and drive practical, meaningful change.

The traditional use of scorecards and narrow focus on numerical metrics in the workers’ compensation industry has hindered collaboration, neglected emotional intelligence, and failed to consider the more significant objectives. The industry must shift its perspective, foster a healthy work environment, and recognize its crucial role in improving lives and organizational culture. By adjusting key performance indicators, embracing empathy and emotional intelligence, and rewarding outcomes that truly impact injured workers, claims leaders can motivate and inspire claims adjusters to achieve a more significant impact. Let us embrace this opportunity for change and redefine the future of workers’ compensation.