It might be described as a $21 million wakeup call when sixyears ago senior management at Starwood Hotels & ResortsWorldwide Inc. discovered that their workers' compensation claimshad spiked dramatically.

“It was a shocker. It took us allby surprise,” said Starwood's director of claims, Cameron Shirley,recalling events of 2003.

That news was the spark for a remarkable turnaround tale,helping earn Starwood the coveted title of “2009 Champion” as oneof three winners in the third annual National UnderwriterAward For Excellence in Workers' Compensation Risk Managementprogram, sponsored by NCCI.

The company learned in 2003 that because of huge losses, itwould have to take $21 million from earnings to shore up depletedreserves at its captive insurance program for workers' comp.

“That was sort of the final straw… Management said: 'This cannever happen again,'” related Stephen Truono, vice president forglobal risk management and insurance at the company, who joinedStarwood in 2005.

In 2004, the company launched its three-phase “Be Safe” effort.Since then, the 53,000-employee corporation has seen:

o Claim frequency decrease 33 percent.

o Claim severity fall 41 percent.

o Ultimate loss experience fall 50 percent.

Starwood calculates the bottom-line impact has been $80 millionin direct savings and cost avoidance since implementation of the“Be Safe” program began, rolled out in three phases.

o Phase one focused on management accountability, safetyrecognition programs, new hire safety training, annual retraining,daily observation, management walk-throughs and safety tips.

o Phase two focused on claim-reporting responsibility, accidentinvestigations, rest-and-assess guidelines, return-to-work programsand communication with injured employees.

o The final element of the program, brought on line in 2006, wasa focus on slips-and-trips incidents.

Mr. Truono, who works out of WhitePlains, N.Y., said when the company addressed this last problem,Starwood found that many housekeepers who “lacked height” wouldtake a tumble when they stood on the edge of bathroom tubs to cleanthe top of shower walls.

To solve this problem, the company found a simple solution–itissued sponges on an extendable handle and focused onslip-resistant footwear and job safety training. “A lot of the[risk management] stuff is very basic fundamentals,” he noted.

For its banquet hall and restaurant employees, changes involvedimproved lighting in work areas, installation of slip-resistantmats, and a focus on keeping floor surfaces clean andslip-free.

Mr. Truono explained that one of the challenges Starwood dealswith in doing safety training is that for a great majority ofworkers, English is their second language.

“We do the best we can in translating materials,” he said,noting that in some urban hotels, there may be up to five or sixnative languages spoken by employees.

Besides basic OSHA training for new hires, the hotels providerefresher training–generally to groups.

“We like to make it interactive and ask questions, and there iscoaching and mentoring from supervisors,” Mr. Truono related.

Computer training is generally not an option, since most workersare not doing their jobs at computers and the programs that areavailable are limited to English, he explained.

Meanwhile, risk management materials often used by otherbusinesses–such as power tools for lifting–are not available forhousekeeping and other tasks. Also, there is no opportunity to havestaff work at different tasks and vary the daily repetitive stressthey endure on muscles, he noted.

Still, Starwood is maintaining a singularly effective programand the key, according to Mr. Truono and Mr. Shirley, is managementattention and accountability.

The company has dashboard tracking reports that measure ahotel's performance compared with the previous year, as well asagainst other hotel locations in the chain.

“We rank the top-10 and the worst-10,” noted Mr. Truono, whosaid those at the bottom can expect an inquiry from the president'soffice.

Starwood employs the methodologyknown as Six Sigma developed by Motorola to minimize defects andnegative outcomes.

Mr. Truono noted that the company, following the philosophy thatwhat gets measured gets managed, employs performance indices andlooks at such factors as claim frequency rates per 100 full-timeemployees and claim severity in terms of incurred claim dollars perthousand-dollars of payroll as benchmarks.

Starwood has also allocated a portion of the cost of claimsdirectly to the individual hotels. Their financial responsibilityfor each claim is capped at $50,000 for all states (with theexception of California–capped at $100,000). Mr. Truono says thatdirect allocation of loss has made regional managers “keenly awareof claim costs.”

The chain pays particular attention to hotels where there isnotable success to see what methods are bringing good results.

At hotels with good experience, according to Mr. Truono, the keyis having general managers who make the issue of worker safety apriority. “It's about the tone from the top,” he said. Indeed, thefirm has seen where the change of a general manager can have animpact and spur a turnaround within a few months, he added.

However, attention comes not just from the general managers–itstarts with the president of the North American Division andfilters down. “General managers take it seriously; HR people takeit seriously,” said Mr. Truono, who reports to the chief operatingofficer.

Part of the incentive to pay attention is that workers' compresults are a factor in setting general manager bonuses, henoted.

However, the drive to decentralize responsibility for workersafety doesn't stop with local management, Mr. Truono emphasized,pointing to the fact that the workers' comp risk management programinvolves safety committees–the best of which are run by hotelworkers themselves, with an executive committee facilitating.

The loss control effort, he explained, is “grass root, not topdown.”

Mr. Shirley said that until the “Recovery and Return” portion ofthe risk management program was started, the company found that noteveryone in the system understood that the key to handling injuredemployees was “care and concern.”

“Before that, hotels would just send them off to the doctor andnot manage that whole step very well,” he recounted.

Now, noted Mr. Truono, if an employee feels they may havesustained an injury they are encouraged to rest and relax, and anassociate may accompany them to a clinic.

If a worker needs to take time off for an injury to heal, Mr.Truono said the focus is then on keeping them engaged, withsupervisors calling to show empathy and let them know they have notbeen forgotten.

He said there is limited opportunity to bring workers back withlighter or modified duties–particularly at locations with a unionshop. “You are not taking someone from housekeeping and puttingthem at the front desk,” he noted.

However, Mr. Truono said the company has found some success inbringing back rehabilitating employees on a shorter work week toease the strain of transition.

Starwood Hotels & Resorts Worldwide Inc., while listingZurich as its workers' comp insurer, employs several alternativerisk-transfer mechanisms–including self-insured retentions, aVermont captive, qualified self-insured employer status in stateswhere allowed, and deductibles at the operations level.

In general, Mr. Truono noted that good risk management is abarometer of overall management tone, adding that in his career hecannot ever recall “walking into a well-run operation with ahorrible safety record.”

He does remember visiting one plant where the manager listenedto his safety suggestions but indicated they would not be apriority because “it's not one of the items I'm held accountablefor.”

That's not the case where he works now.

“At Starwood we made [safety] important. We said we're not goingto accept the status quo, and we haven't,” he emphasized.