Downsizing tends to impact on claims numbers and duration, and it can also wreak havoc with organisational morale and levels of work-related stress.

This article provides you with information about what needs to be considered from an injury management perspective when downsizing is on the cards. It also outlines how best to reduce the potentially negative long term health effects of lay-offs, on both retained and retrenched staff, which should allow you to keep claims costs to a minimum.

What to expect

• A short-term  increase in workers' compensation claims. There are a variety of reasons people may make claims when lay-offs occur, including:
  • The removal of barriers to claiming, for example organisational loyalty and goodwill, which may have prevented employees from lodging genuine claims when they thought their job was secure;
  • Increased employee stress, which may exacerbate existing health problems, including musculoskeletal  disorders;
  • Cultural factors, or “copycat claims”. Over 50% of the population have an ongoing musculoskeletal  issue such as a sore back, shoulder or elbow.  When a large number of coworkers start lodging claims, other employees may follow suit; and
  • Fraudulent claiming.

Bear in mind that opportunistic and fraudulent claims are more likely in organisations which have a poor workplace culture, typified by an “us and them” mentality.

• After the lay-offs have occurred, expect a drop in claims numbers.  Claim numbers tend to drop in periods of financial insecurity due to:
  • Reduced payrolls;
  • Employees’ increasing reluctance to submit claims, fearing it will impact job security;
  • Less new, inexperienced employees as a result of a slower rate of hiring; and
  • A higher proportion of experienced – and therefore safer – employees.

• However, you might also see an increase in claim duration, possibly due to:
  • Greater difficulties in providing light / modified duties;
  • The increased severity of injuries likely to be suffered by older, more experienced workers;
  • Workers who are retrenched while on modified duties being more likely to remain certified for modified duties;
  • Workers with minor injuries and illnesses being reluctant to claim for fear of compromising job security, thus increasing the proportion of serious claims; or
  • Supervisors and other managers being too busy to manage return to work effectively.

• If there is ongoing speculation about further cutbacks and fears about job security, you can expect the working population to experience increased levels of stress, which may have a negative impact on physical and mental health. Ongoing uncertainty over employment is associated with:
  • Stress;
  • Sleep disturbances;
  • Increased smoking;
  • High blood pressure;
  • Poor diet;
  • Depression; and
  • Strain on families.

What to do

• Communicate honestly and sensitively with the workforce about downsizing. Be aware of the corrosive cultural impact of gossip and uncertainty. Don't withhold information unnecessarily, or leave the timing or content of important announcements and conversations to chance. Consider how and when to inform employees of the organisation's decisions, and make support services available to those who need them.
• Expect people to react like people, not robots. Be ready for workers to have emotional reactions to news about downsizing and try and respond to these empathetically and non-judgmentally. Give people time to process the information, and also provide them with opportunities to vent their anxieties without fear of reprisal.
• If there is a claims spike, assume good faith. Many of these claims will be genuine, so don’t cause an even greater blowout by greeting them all with autopilot suspicion.
• If there is a reduction in claims, don’t drop the ball on health and safety. Remember that health issues may be brewing during the period following downsizing, even if there is a reduction in claims. When people perceive the organisation to have picked up again, you could well be inundated with problems. It might seem counterintuitive, but perhaps now is the time to invest in a workplace health and wellbeing program.
• Continue to educate supervisors in the importance of RTW. Busy, stressed supervisors sometimes forget their pivotal role in RTW, and lose sight of the bigger picture amongst daily pressures. Help them remain focused, to rein in long-term claims.
• Clarify and communicate the organisation’s commitment to best practice injury management. People need good news stories to counter the morale-draining impact of downsizing. Why not make yours about injury management and return to work?
• Encourage a culture of "We're in this together" instead of "Every man for himself." Hard times can bring people together or push them apart. While a little competition in the workplace can be good for productivity, too much competition can result in people feeling alienated from and mistrustful of one another. Research has shown that this is bad for health. On the bright side, even during situations as stressful as war, a "we're in this together" attitude has been shown to lead to improvements in health. Investing in team building is vitally important after downsizing - and again, health and wellbeing programs are an effective way to bring people together in the workplace.