Sustainability - Employee Risk in the Environmentally Aware Age

By Daniel Link Assistant Vice President of Analytics, Gallagher Bassett | March 10, 2019

The last time I traveled for work, I found the tag on my bed indicating the hotel participated in a sustainability "green" program. By hanging the tag on my door, I could forgo daily room cleaning for the duration of my two-night stay. In exchange I'd earn loyalty points or a discounted meal on the property. I hung the tag on my door. The next morning, I made my bed and started my day.

Why wouldn't I do it? I am being a good environmental steward and enjoying biscotti in the process.

Hotel guests see "green room" programs as a good way to support sustainability initiatives as they travel for both business and pleasure. But after check-out, how are the housekeepers and other hotel employees affected?

"Green" Programs

Starting in October 2018, nearly 8,000 workers of a large international organization picketed in multiple U.S. cities, seeking several demands, including improved safety in the workplace. After almost two months of picket lines, striking hotel workers concluded their walk out, following a deal struck in San Francisco.

According to The New York Times article explaining the conditions surrounding the strike, workers alleged that the hotels' "green" program, which asks guests to forgo daily housekeeping for environmental reasons, is a good cause. However, it can result in tight turnarounds for deep-cleaning rooms depending on when guests check out. On Dec. 5, 2018, when the strike concluded, the publicized terms said housekeepers will receive a reduced workload that increases over the life of their contract, especially if they have a number of rooms that don't receive daily cleaning as part of the "green" program.

A more demanding work environment with a "green" program needs to consider the shifting job market. In review of exposure data, a tighter labor market (with low unemployment, high consolidation and aging workforce) increases instances where hotel executives could have a staff with a large population of older, less tenured workers. These employees have to work harder to clean a room that has been maintained by a guest for several days, but in the same amount of time as a room that was maintained daily.

Similar to the general population, our hotel and hospitality clients have experienced a definite shift towards older workers. Five years ago, approximately 31% of all claims in this industry were generated by workers aged 50 or over. In 2017, 35% of claims were generated by workers aged 50 or over, including 12% of claims generated by workers aged 60 or older.

Not surprisingly, average claim costs directly correlate with the age of a worker. In Gallagher Bassett's hotel and hospitality space, in 2017, older workers (aged 50+) generated claims costs that were 155% higher on average ($9,700) than workers aged 20-30 ($3,800).

In addition, average lost work days and average claim duration are significantly higher for older workers. To put this in perspective, older workers on average miss more than three weeks of work relative to younger workers and are likely to have higher wages. Thus, this population can quickly contribute to higher claim costs, particularly indemnity claim costs. Due to co-morbidities and other age-related health factors, older workers are more susceptible to severe or complicated injuries. They also often take longer to heal and get back to work.

However, age is only one factor driving additional costs. Often, the combination of age combined with tenure is critical to consider as a risk manager when evaluating the increased exposure of an aging workforce.

Today's labor market in the hotel space is particularly competitive. With unemployment at near record lows and significant consolidation in the industry, it is a fight for talent as the workforce ages. This dynamic will likely lead to increased turnover and influxes of less tenured workers. When you consider the significance of both age and tenure on claim costs, duration and litigation, this combination can greatly increase the complexity of claim experiences.

In 2017, we saw a sharp uptick in average lost work days, relative to 2013, which were particularly high for workers 50 or older. Among these workers, the average lost work days for those who had been on the job less than a year was 62, compared to 54 for those with more than one year of tenure. Since employees with more tenure tend to be better trained and more motivated to return to work, it is imperative as a risk manager to consider the impact of both age and tenure of a shifting workforce.  

The claims within this sub-segment of the hotel industry were 31% more complex, relative to the rest of the industry population. This translates into claims that cost $9,700 compared to $7,200 for the population as whole.

So, for every 100 claims, you could expect to incur $250,000 of additional claims spend.

Management of Risk – Another Sustainability Strategy.

In 2013, a large international hotel company shared its room cleaning techniques with Forbes Magazine. It opened the manual and shared the 66 steps to cleaning a room, citing that it "has taken something as seemingly simple as tidying up a hotel room in under 30 minutes and turned it into an exact science."

In an exercise to help our resolution managers (adjusters) understand what activities are required of housekeeping staff to clean a room to standard, they attended a timed demonstration during a corporate meeting for one of our hotel clients. We wanted our team to understand the physical requirements of a deep room cleaning within the rigorous industry standard time constraints, and apply that knowledge to their decision-making process regarding the mechanism of injury. By partnering with our client, our claims operation team understood what risks the housekeeping staff could face as they tackled their daily workload. We found that this leads to a better understanding of the injured worker's description of the claim, as well as the employer's business model. This also helps facilitate meaningful communication with injured workers, leading to better lost-time outcomes.

Other techniques to consider as a risk manager for controlling a less tenured, aging workforce are:

Increase and earlier engagement with injured workers– Often, workers who are neglected shortly after an injury or not contacted at all are the first to seek attorney involvement. Early and proactive communication with injured workers is critical to mitigating the risk of litigation. Make sure your supervisory or time-keeping staff knows how to report a claim timely to ensure that an injured worker is referred to an authorized physician quickly.

Adoption of nurse triage program – Nurse triage programs offer a low-cost means of immediate, third-party nurse evaluation of a worker's injuries and assurance to injured workers that they are getting the right course of action following an injury. They also direct the injured worker to the appropriate treating networks where applicable. We have found that top-performing clients realize a 23% reduction in average claim cost and 37% reduction in litigation rate, along with a 40% reduction in actual number of claims when implementing a nurse triage program.

Utilization of return to work coordinators and formal return to work programs –Having a formal return to work program is imperative in any risk management operation. Our top-performing clients are twice as likely to have a return to work program. A coordinator who can help guide individuals through the healing process is critical to ensure they continue on an optimal path. Your own staff may perform this function. Ensuring your supervisory staff knows how to engage this resource when an injured worker is released to work, in any capacity, can make a favorable impact on indemnity costs. Alternatively, this can be outsourced to another organization that will communicate with your staff and the injured worker for a speedy return to the workplace.

Appropriate utilization of nurse case managers on high-severity claims – Early nurse case management on high-severity claims can help drive down cost and return injured workers back to work faster. On claims where a case manager was assigned within 30 days versus those where a case manager was assigned 180 days after a claim was initiated, we found a 40% difference in average cost.

Faster settlements –In some instances, it may make sense to settle litigated claims faster. This will help reduce the duration of the claim and additional costs associated from prolonged legal cases, additional medical procedures undertaken and additional time away from work. Of course, this is subject to your organization's policy requirements and overall claims philosophy.

Supplemental safety training in targeted areas –For those new to any organization, supplemental safety training, in addition to traditional onboarding is worth considering. For older, less tenured workers, this is especially true as claims from this population are likely to be among the costliest, based upon trending data across our book of business.

Utilizing sound claims processes and having a fundamental understanding of how initiatives, even well-meaning "green" ones, will help the savvy hotel risk manager navigate the claims landscape, while limiting costs and getting their workers back where they can continue to safely service your clientele.

 

Mr. Link Dan Link currently serves as Assistant Vice President of Analytics at Gallagher Bassett. Gallagher Bassett is the world's premier provider of risk and claims management services, including workers' compensation, liability, property, risk control, and appraisal services. Mr. Link has been with Gallagher Bassett for nearly three years and currently oversees client and prospect analytics, including new business opportunities, custom benchmark reports, client stewardships and proactive analytics that support ongoing program health and actionable insights. Mr. Link consults with both clients and prospects to identify loss drivers, areas of program improvement, and potential cost saving opportunities. In his insurance career, which spans over 10 years of experience at GB, CNA and Zurich, he has held a variety of leadership positions, with experience across Property, WC, GL and Auto lines. He has held previous roles as a Director of Small Business Underwriting, CNA; Practice Leader for the manufacturing and real estate segments . Mr. Link can be contacted at 630-438-1697 or daniel_link@gbtpa.com Please visit http://www.gbtpa.com for more information. Extended Biography

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