Doug's Local Chamber Article

The business world is full of clichés:

• “Think outside the box"
• "Taking it to the next level"
• "Giving it 110 %,"
• "The only thing certain is change"
• ...etc., etc., ad nauseum...

I hate clichés!

As business owners and entrepreneurs, however, all of us right now are looking for ways to survive and prosper in this nearly unprecedented downward spiraling economy. We need to be looking at any way in which we can lower our operational costs. We can put a freeze on everything and hope to hold on, kind of like a deer in the headlights, or we can look to new ways of doing things that may help us reduce our costs and overhead, and enable us to weather out this recession.

There are many things we could examine about the way we do business, but this article will focus on one area that maybe we have never considered before: our workforce.

Based on research conducted by the U. S. Department of Health and Human Services, and the Department of Labor, it is estimated that substance abuse disorders cost the U. S. economy $276 billion a year. Much of that is due to lost productivity and increased healthcare spending. It is estimated that in 2006, 20.4 million people used illegal drugs, and 7 million abused prescription drugs.

"Not MY workers," you say?! Ask yourself if you or any other business owner you know would knowingly hire an abuser of drugs/alcohol. Of course not!! Yet the DOL tells us that 74.9% of all substance abusers are employed, either full or part-time.

Now here’s what a substance abuser who works for us can do to our bottom line, according to the Department of Labor:

Substance abusers:

· Are 25% less productive
· Use 3 times more sick benefits
· Are 4 times more likely to steal from employers or co-workers
· Have turnover rates 2 times that of non-abusers
· Account for 3.6 times as many work related accidents
· Are 5 times more likely to file a Workers’ Comp claim

The DOL also suggests that if your company does not conduct drug testing, up to 20% of your workers could be alcohol/drug abusers.

Here’s a case in point: My fellow AccuDiagnostics franchisee in Rancho Cucamonga has a long-time friend who owns an auto parts wholesale company with 40 drivers. This owner recently decided to establish a drug-free workplace. A policy was developed and put in place with all the workers notified. To implement the program, all workers had to do an initial drug screen.

The owner and several managers were taking bets on the side on how many drivers would show up as positive on their drug screens. Most said there would be 1 or 2, but one of them stuck his neck out and bet there would be 5. When the results came in, they were all wrong. This company had 8 drivers show up positive! That’s 20% of his workforce! At a 25% reduction in productivity, you can do the math on how much the owner was losing, just on performance - let alone sick days, absenteeism, theft, etc.

Next, let’s look at another area of possible cost savings: Workman’s Comp. Any company that has a Safety Program in place that includes a Drug Free Workplace, can get a mod rate adjustment on your premiums. (Check with your provider).

Another thing on Workman’s Comp ... the Government Accounting Office estimates that between 38 – 50 % of all Workman’s Comp claims involve the use of drugs or alcohol. Not everyone is aware of this, but in the state of California, if an injury or accident occurs under the influence of alcohol or drugs, that Workman’s Comp claim can be denied. That can save any company a lot of money! In order to take advantage of this, your company needs an established Drug Free Workplace policy, which would include post injury/accident testing.

Finally, the Department of Health and Human Services points out that an employee with alcohol problems incurs twice the healthcare costs of other employees. Their recommendation is that if a company has an Employee Assistance Program, then a Substance Abuse Program should be part of it.

Companies that did this saw major reductions in costs for:

· Employee turnover
· Short- and long-term disability and workman’s compensation
· Accidents and corporate liability
· Savings from investing in substance abuse treatment can exceed costs by a ratio of 12 to 1

Hopefully, this information will give the reader something to think about, and maybe provide ways to cut operational costs that might not have otherwise been considered.

Doug Kimball
Lancaster/Palmdale
AccuDiagnostics

See tomorrow's blog posting on how to leverage these types of articles.