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Risk Management Bulletin


By April 1, 2012No Comments

Too many businesses undervalue the benefits of workplace safety because of communication barriers between safety professionals and managers, as well as the challenge of demonstrating safety performance in financial or bottom-line terms. To turn this situation around and enhance the business value of safety programs, use these basic strategies.

Identify safety as a core business value. Obviously, profitability drives corporate value; but so do brand name, compliance risk, and worker productivity Workplace safety programs influence all of these drivers to some degree.

A few years ago, Liberty Mutual Insurance Company surveyed senior financial executives at large and medium-sized companies about their views on safety and insurance. These executives cited increased productivity and reduced costs as the top benefits of workplace safety and health. In an earlier survey, an overwhelming majority of executives believed that workplace safety had a positive impact on their companies’ financial performance. Many cited a return of investment of $3 for every $1 invested in workplace safety programs.

View safety as an investment in continuous improvement. An “investment” is a commitment to earn a financial return or gain future advantages. Safety programs correlate directly to the benefits of increased productivity and efficiency. For example, one container manufacturer reported a 20% increase in the number of boxes produced per day on an assembly line after an ergonomics consultant recommended operational changes to eliminate repetitive arm and shoulder injuries.

Combine leading and trailing indicators of safety performance. Leading indicators tell you about the future value or direction of performance. For example, your employee turnover rate can indicate future changes in productivity and/or injury rates. The number and frequency of near misses can help predict the risk of future accidents. Hours of employee safety training completed or the number of employees trained can indicate changes in productivity and safety. The number and/or frequency of completed inspections can indicate the level of compliance risk, integrity of equipment, and changes in productivity.

You can learn where you’ve been by using such trailing indicators as injury and illness reports, lost workdays, and Workers Compensation claims. Although trailing indicators can highlight past costs, they are inconsistent and often unreliable indicators of future performance.

Enhance employee involvement. It’s not effective just to tell employees what to do and judge them on how well they do it. Because they’re in the trenches, workers are more sensitive than managers to the integrity of safety and productivity data. For example, workers can see what’s really going on behind the statistics in injury and illness reports when management often can’t do so. Employee involvement should play a key role in effective safety performance evaluation.