Safety – It’s About Money and Lives
by Richard D. Galbreath, SPHR
rick@performtogrow.com
Please pull out a roster of your employees.
If you are in a goods producing business, select 6 out of every 100 employees. If you are in a service industry, select 4 out of every 100 employees. Put a red circle around each name selected.
The employees selected are someone’s son or daughter, father or mother, brother or sister, uncle or aunt, friend, valued co-worker, neighbor or community member. These are good people who have active and important lives outside of work. They also have important responsibilities on the job. They would be hard to replace in today’s tight labor market; harder to train. From a personal perspective, their plate is full - they don’t need any additional problems or concerns.
Statistically, the people you circled may be hurt on the job this year. OSHA reports that 6 out of every 100 full-time equivalent goods producing employees (4 of 100 service jobs) will be injured seriously enough to be recorded on the annual OSHA 300 log. The unfortunate fact is that this number is probably far, far less than the real number of employees injured due to chronic under-reporting in some industries.
Worse yet, 2.2 million of these injuries and illnesses are so severe that they will require one or more days away from work. Tragically, OSHA announced that 5702 people lost their lives in the most recently reported year.
These severe injuries don’t happen “somewhere else”. They happen in your workforce and many of us know families and companies affected by severe injuries, illnesses or loss of life. We all know people and companies that have been affected by the run of the mill, less than severe, but still expensive, injury.
No one plans an accident. Many, many groups don’t plan to avoid them either. The costs, both financial and personal, are huge.
According to the American Society of Safety Engineers, workplace injuries cost society $128 billion in losses in 2002. In 2002, this number equaled one-quarter of each dollar of pre-tax corporate profits. The cost has increased significantly since then.
For every one dollar you spend on medical costs for an injured worker, you will probably spend twenty dollars in “hidden”, indirect costs. Indirect costs include training and compensating replacement workers, overtime, repairing damaged property, accident investigation and implementation of corrective action, scheduling delays and lost productivity, administrative expense, low employee morale, increased absenteeism and turnover; poor customer and community relations, distraction from revenue producing activity while dealing with accident, legal fees, increased workers’ compensation fees, regulatory fines, additional and unneeded headaches for managers and employees alike. The list goes on and on. Injuries are much more expensive than we sometimes think.
If your business generates a 5% net income, a $1000 direct cost injury (this is an inexpensive injury today), will require you to sell $20,000 more product or services just to break even. If you include indirect costs, you will need to sell up to $400,000 to break even. Eliminating workplace injuries and related costs can easily add 10 to 100% more net profit for a business.
Why We Don’t Take Action
We are just too busy to do the work it takes (program development, training, recordkeeping, etc.) to do a good job on safety related issues. We know that safety is important; but it can wait.
Another important cause is that many business professionals really feel the pain of injuries quickly enough. Most organizations set up worker’s compensation costs as a corporate expense. It doesn’t show up as an operating cost and isn’t directly tied to the performance of operating managers. I’ve seen Plant Managers suffer apoplexy when a mechanic damages a $50 tool yet pass a $10,000 accident with little more than a “too bad, we should fix this”.
Finally, many organizations, even those with full-time safety professionals on staff, don’t can’t fix the problem themselves – either because they lack time, needed skills and experience or passion to do so.
What You Should Do
First, make an absolute commitment to keeping your employees (and profits) safe. Safety must no longer be relegated to “important but not urgent” status.
Second, make sure you have the right resources to help you develop a truly effective program. Your worker’s compensation carrier will offer help through the occasional walk through inspection. That is never enough. Look at your current safety results. If they don’t satisfy you, you must change something.
Often this means adding internal or external safety resources to get the job done. As safety consultants ourselves, we often see clients avoid spending money for consulting and then spend multiples of that amount on injury costs. Get help, you need it.
Third, involve your employees in safety in a meaningful way. Develop a good safety committee, recognize employees who keep their work area clean, who follow proper procedure, who wear their personal protective equipment properly.
Finally, and most importantly, model the importance of safety yourself. I can’t tell you how many times I’ve been told by a plant manager that safety is important while he or she is standing in a hard hat, and hearing and eye protection area – without any on. You’ll need to do as you say if you want to send the message that safety is important.
Safety isn’t only about money, it impacts a lot of people’s lives. Do the right thing morally and financially, and make safety a priority. You will have fewer headaches; have happier employees, customers and shareholders.
Rick Galbreath is president of Performance Growth Partners Inc., a full service organizational improvement firm specializing in HR audits, corporate outplacement services, customer service assessments, customer service training, supervisory training, employee surveys, employee handbooks, teambuilding programs and team training, on-call and project based HR consulting services, outsourced HR services, employee retention programs, performance improvement programs, executive coaching, manufacturing process and operations improvement consulting, training and programs, safety assessments, safety training, strategic planning, employee retention programs, performance improvement programs, interim executive placement, conference speaking, keynote addresses, business turnaround consulting, healthcare consulting and a wide range of other services. Contact Rick toll-free at (877) 739-4747 or e-mail him at rick@performtogrow.com.
© 2008 Performance Growth Partners Inc.
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