Poor hiring decisions: A recipe for higher workers’ compensation costs

By Higginbotham on November 12 , 2015

Hiring practices

Your employees can be your greatest asset – or your biggest liability. One on hand, you need to attract and retain the best workers possible to have a strong organization. On the other hand, hiring new employees always involves a certain amount of risk. An ill-advised hiring decision can mean turnover, duplicate training, missed opportunities, and even lost customers. In short, hiring the wrong people can kill your bottom line.

Poor hires also drive up your workers’ compensation costs.

Workers’ compensation continues to be a big, costly headache for many employers. If you run a small business, even one claim can turn into a serious financial setback. And according to, 30 to 40 percent of injured workers have been on the job for less than a year. So how do you cut down on the number of bad hires and control these costs? From the beginning, with careful hiring and screening practices.

Follow these eight tips to strengthen your first line of defense against rising workers’ compensation costs:

  1. Polish up job descriptions. Your job descriptions need to clearly define the responsibilities, skills, education, and experience required for the position, and the expectations you have of new hires, including behavioral characteristics. This helps narrow down who gets targeted and who applies, and ensures that all new hires are classified correctly for insurance purposes.
  1. Target your talent search. Throwing an ad in your local newspaper just won’t cut it anymore. Your potential hires may not even read the paper, choosing online job boards, social media, and other outlets instead. So don’t stick to one method to find talent – go where the candidates are.
  1. Promote your unique value. Does your company offer a more casual atmosphere? A better benefits package? More opportunity for advancement? Whatever your edge, take advantage of it and promote the unique value-added benefits your company offers.
  1. Use pre-screening interviews. A pre-screening phone interview can help confirm the applicant’s sincerity about the position, weed out those who don’t meet the requirements, and save you time.
  1. Screen thoroughly. Review all applications, resumes, and cover letters to ensure the applicant has the required skills, experience, qualifications, and characteristics. Be thorough in checking work references, educational credentials, and criminal history. Require drug screening and pre-employment physicals. Consider personality screening, which can give you clues about traits such as entitlement mentality, theft, deception, cheating, dishonesty, drugs, hostility, and propensity for violence.
  1. Mind the law. The last thing you need is a costly lawsuit or a run-in with the Equal Employment Opportunity Commission (EEOC). Use caution when conducting background checks and screening to avoid violations of the Americans with Disabilities Act (ADA), state disability laws, and laws prohibiting retaliation against employees who file workers’ compensation claims.
  1. Conduct thoughtful job interviews. Give applicants thought-provoking questions and hypothetical scenarios, then pay close attention to how they answer and their manner of presentation. Have a conversation with them. Are they polite and friendly? Would you trust them with your customers and current employees?
  1. Document everything. Keep a thorough paper trail of every step in the hiring process, including the use of professionally written employment letters for rejecting unqualified candidates, extending employment offers to desirable applicants, and welcoming your new hires.

Avoid the high cost of poor hiring decisions by implementing effective screening and hiring procedures. It’s the first crucial step in finding the best talent, reducing the incidence and severity of workers’ compensation claims, and protecting your bottom line.

Want more ideas to control the cost of workers’ compensation insurance? Contact the business insurance experts at Higginbotham.

Tags: Risk Management