Aligning business values and the benefits of good occupational health and safety

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Safe and healthy working conditions enhance productivity and reduce costs. This maxim may be obvious to a layperson, but when it comes to business owners, they often end up ignoring it, much to their own peril.

Many a times, business owners, senior and middle management, get blinded by the costs of implementing better working conditions for their people that they are unable to see the benefits that come from a safer workplace with lower injury costs, higher productivity, reduced absenteeism, improved staff retention and much more.

Even when safety and risk management audits identify workplace hazards, the cost of hazard removal may deter the management from making the necessary resources available.

Is the lack of OH&S at a workplace just a function of cost? What are the other reasons for lack of management support for good OH&S? We examine the reasons and suggest how management can see value in implementing OH&S programs in the workplace.

Costs of Workplace Injuries and Fatalities
Workplace injuries, fatalities and illnesses cost billions of dollars every year. In the United States alone, it is estimated that, employers paid almost US Dollars 1 billion per week as direct worker compensations costs alone directly impacting employer bottom lines.

According to OSHA, lost productivity from workplace injuries and illnesses costs companies US Dollars 60 billion each year. Further, during an economic or business downturn, slashing of health and safety programs are often the first steps taken by an organisation in a cost-cutting mode.

On the other hand, employers that invest in workplace safety and health practices generally reduce injuries, illnesses and fatalities. This results in not only lower compensation and medical costs, lower non-compliance penalties and lower costs to investigate accidents.

Lack of Management Support for OHS programs
Health and safety professionals in an organisation get frequently frustrated by the lack of consistent management commitment to their programs which enhance occupational safety and health conditions at workplaces.

So what are some of the barriers which prevent management from pursuing safety and health programs with consistency?

  1. Lack of standard terminology to describe EHS performance. Various studies use different measures, some report number of injury incidents per 1000 hours worked, others use number of incidents per 100 employees and yet others report in terms of financial cost per employee or per hours worked.
    This prevents managers from comparing their performance viz. others or against industry benchmarks.

  2. Inadequate technical skills to understand how occupational health programs and strategies affect financial outcomes. The lack of means to translate the benefits and cost (which are both monetary, non monetary) of these programs into financial numbers used and understood by financial analysts restricts the widespread use of these programs. Moreover, the nature of benefits and costs, and hence their methods of measurement, vary across industry, compounding the issue.

Common Health and Safety Functions in an Organisation
There are various tasks linked to OH&S within an organisation which are sometimes viewed as a cost rather than as an investment.

  • Health and Safety Programs – development and implementation

  • Training

  • Safety Compliance

  • Studies, audits, reports

  • Recordkeeping – as required by WHS Act, insurance companies

Each of these activities requires staff time, equipment purchase or lease, administrative supplies and sometimes even consultant fees.

What can be done?
In order to get increased support of management for OH&S activities, each of the above activities should be assigned a business value objective and should be measured in financial terms.

Task

Business Value Objective

Measure

Health and Safety Programs Development

  • Productivity

  • Shareholder value

  • Employee Satisfaction

  • % Increase in productivity

  • Rise in share price

  • Employee satisfaction index

Training

  • Man-days lost

  • Near misses

  • Numbers of man-day lost

  • Number of near misses

Safety Compliance

  • Reduce compliance risk

  • % Reduction in compliance incidents

Studies, audits, reports

  • Medical, legal costs associated with incidents

  • % Reduction in these costs

  • $/year Insurance premium paid reduction

Recordkeeping

  • Increase compliance

  • Number of compliance incidents

Tools to Measure Efficacy of OH&S programs
The situation is improving as people responsible for health and safety of the workforce now have available tools to measure the effectiveness and performance of their programs in financial and monetary terms. These tools help not just the management and senior finance officials, but also financial analysts to understand the benefit of these programs in a language easily understood by them.

The balanced scorecard, the Six Sigma, the EMS/ISO 14,000 are some of the tools that are commonly being used to measure the business value of health and safety programs at workplaces.

Increasing Awareness
A survey of Chief Financial Officers of 231 large and mid-sized companies about safety and insurance issues found that these executives found value in an effective workplace safety program.

Over 40 percent of the executives cited productivity as the top benefit of an effective workplace safety and health program, while over 28 percent mentioned reduced costs, 7 percent said employee retention and 6% percent said employee morale.

Over 60 percent of these senior finance executives mentioned that every dollar invested in injury prevention returns double their investment in productivity and reduced costs. So, senior management of large organisations have started to view expenditure on improving occupational safety and health as a great investment and clearly not a sunk cost.

Way Forward
Productivity can be driven and through health and safety programs. It is essential to have a solid OHS program, developed with employee inputs to ensure plant, manufacturing shop and other parts of the premises are safe.

With safety equipment such as Alsco’s hospital grade first aid kits, proper messaging to employees including through the use of a rental lift-and-lay, safety-message mat program from Alsco, these programs can be easier to implement.

Finally, with clearly defined business value objective of each activity, an OHS program will align with management objectives, resulting in adequate support for such tasks.


This article was contributed by Alsco, one of Australia’s leading providers of linen, workwear, commercial floor mats, industrial cleaners, first aid kits and washroom hygiene services across Australia and New Zealand. It offers rental solutions for healthy, safe and green workplaces for businesses across Australia. For more information, contact Alsco.

Photo Courtesy: Elvert Barnes

 

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