Exploring Financial Ramifications of Safety
June 18, 2007
Meet America’s safest worker, Mr. Doolittle. You’ll find him pictured with this article. Note that both Mr. Doolittle and his room are equipped with numerous safety conveniences, including a HAZMAT suit, work gloves, a radiation detector, an eyewash station, an emergency exit map, a motivational safety poster, even wall padding and bubble-wrap. There is no work equipment in the room, so a machine will never injure him. He isn’t interacting with anyone, so workplace violence is out of the question.
Unfortunately, his productivity is low. In fact, it’s holding steady at zero.
Certainly it is important to protect workers from harm. But, the work still needs to get done. Products must be produced and services must be rendered. That will entail movement and interaction, and that means risk.
Safety must be integrated into the workplace in an efficient manner that will not hamper productivity. Before that can happen, some attitude adjustment may need to take place.
MANAGEMENT MIND-FRAMESSometimes management perceives workplace safety as optional - an ‘add-on.’ That’s an unsafe attitude. Safety is integral to all aspects of work. If you want to improve safety at your company, you can change unsafe management mind-frames by talking the talk. Explain what they need to know in ways that will make sense to them.
Here’s a metaphor especially appropriate to the air conditioning/heating/refrigeration industry. Let’s say you are a typical Midwesterner who pays heating bills during the winter. If you insulate your home, you will save money. Bills are lowered and you will live in comfort. A win-win situation. You would never say, “It’s cold out, but this week, we can’t afford heat.” You are going to keep the house heated no matter what - otherwise, water pipes will freeze and burst, and you’ll catch pneumonia and frostbite. Keeping the house warm is part of your budget, and to some degree, part of most of your household decisions.
Think of workplace safety like home heating in winter. The threat of injuries and illnesses is always out there, like cold weather, and you must keep that threat from becoming a real-life danger.
Of course, making the case for safety doesn’t stop with one metaphor. Bear this in mind: In business, we’re asked to stress benefits, not features. When discussing the merits of workplace safety, always remember that it satisfies the five Essential E’s of company benefits:
1. Earnings - Workplace safety raises the bottom line.
2. Efficiency - Workplace safety saves time and increases productivity.
3. Enjoyment - Fewer injuries/illnesses mean happier workers.
4. Esteem - A fine safety record impresses potential employees and investors.
5. Endurance - Workplace safety contributes to the company’s longevity.
FOUR CHANNELSAs you interact with people in your company to forward the cause of safety, be aware of the four channels through which any type of progress is made in the workplace:
Management - Deciding how things get done.
Processes - How things get done.
Education - The ‘theory’ side of learning.
Training - The ‘application’ side of learning.
MANAGEMENT: Various branches of management include human resources, production, purchasing, marketing, and finance, and safety touches them all.
Human resources personnel focus on people, so they are receptive to safety issues - they know the high cost of employee turnover. Production leaders naturally want to increase productivity, and safety measures can help meet their objectives. Staff members in purchasing want to know what criteria they should apply to their selections, and might appreciate input from the company’s Safety & Health (S&H) Professional.
The marketing department wants to protect the company’s image, and certainly workplace injuries and illnesses are not good public relations. The folks in finance want to save money, and fortunately, monetary savings, such as lower workers compensation premiums, are a wonderful byproduct of an excellent safety plan.
PROCESSES: While many companies with great safety programs often say, “Safety First!” we all realize that businesses produce products and render services first. If safety is first, the workers had better just shut down the equipment and stand in a bunker, just like Mr. Doolittle. Then nothing would get done. That is why safety needs to be integrated into every decision and built into every process.
With that in mind, the next question would be: just how are these workplace safety objectives achieved? They are carried out through such measures as: creation of, and adherence to, safety policies, safety training and follow-up, effective investigation of unsafe incidents, including near misses, questioning the obvious: just look around for problems, or employee drug testing.
Every workplace needs to consider whether drug testing is appropriate for their employee selection process. Employee drug testing can positively affect employee health and attendance, since users have more “sick days.” Poor performance by users often leads to their dismissal, so employee drug testing also helps to reduce turnover.
As for the quality of job candidates: Drug testing won’t deter the best applicants. They will appreciate that your company is selective about who is being hired.
EDUCATION: You may need to educate management that safety is part of the process - especially the decision-makers who focus on figures. They are held accountable by three financial documents:
1. Income statement - The bottom line: company earnings for the period.
2. Balance sheet - A quantitative summary of the company’s financial status.
3. Statement of cash flow - Measuring the flow of cash in and out of the company.
Return on Investment (ROI) is also a high priority. For those who are math-minded, ROI equals the net present value of savings minus investment, divided by the net present value of the investment.
But for everyone else, ROI means: How much will safety measures cost, and will they be worth the investment? Those are just some of the questions for which they will turn to you for quantifiable answers.
In your answers, you may wish to share reasons why workplace safety raises the bottom line. Workplace safety helps to:
• Reduce injuries/illnesses - Injuries and illnesses come with a high price tag; and recuperation can be extremely expensive, too.
• Enhance corporate image - A positive image encourages community interaction, including sales.
• Improve employee morale - Happy workers are productive workers.
• Lower turnover - Turnover necessitates time-consuming recruitment effort and training.
• Foster a family atmosphere - Safety measures foster camaraderie.
• Improve productivity - Time isn’t tied up by accidents.
• Hold the work quality - Experienced workers do a better job, and if they are injured, a less experienced replacement worker might not do the job as well.
• Reduce business expenses - Money is saved in a variety of ways including lowered workers’ compensation costs, lowered health insurance costs, reduced overtime of staff who must make up for lost workdays, less risk of government citations (which are not tax-deductible), and reduced expenses are especially important because they are much like an increase in profit.
To make $1 million at a 5 percent profit, you must make $20 million in sales. Therefore, saving a million in safety is like making $20 million in sales.
TRAINING: Training teaches compliance, and compliance was designed with workers in mind. For every safety regulation, there was probably some worker injured in a manner which the regulation is meant to prevent. Employee training becomes a key element in all safety initiatives, since it helps to prevent the incidents that can lead to workplace injuries and illnesses.
Here’s a thought that should make any company realize the merits of training: Any employee who isn’t trained by the company usually ends up being “trained” by the nearest employee with the most free time. Is that who you want providing safety training to your new employees?
Ultimately, both employee and management buy in to safety to establish the right workplace safety culture. Management and employees alike see the benefits inherent in an enhanced safety culture when they realize it can save the company money. After all, who wants to work for a company that loses money to constant accidents? What quality employee wants to work under unsafe conditions?
The changes in attitudes addressed here would lead to new levels of safety excellence. Workers everywhere would be just as safe as our friend Mr. Doolittle - and they’d get a lot more work done, too!
COUNT THE OSHA VIOLATIONSSee the OSHA picture with this story above to test your understanding of safety. Send an e-mail to email@example.com by July 2 with the 17 violations. All winning entries will be eligible for a grand prize of a three-year free subscription to The NEWS and a set of OSHA safety manuals.
Publication date: 06/18/2007