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Published: January, 2016; Vol 12, Num 8

 

Making Dollars and Sense of the Business Case for Safety

By Scott Schneider

For years now, safety professionals in the construction industry have been told to make the “business case” for safety. In other words, show how safety improvements pay for themselves by improving the bottom line. But the benefits, which include lower injury costs, lower workers’ comp premiums and higher productivity, are difficult to calculate.

What is the probability of a fatality or a serious injury? With about 750 construction fatalities a year spread over tens of thousands of projects, the risk can seem low. About 75,000 serious injuries involving lost work time occur in construction each year. The chances of those happening on any one site are much greater.

But the business cost of lost work time injuries varies widely. After all, serious injuries from falls and issues such as chronic back pain both keep workers sidelined, but at much different costs. Then there are the unseen business costs. Aside from the human toll, how much does an injury cost the company in terms of lost productivity, company reputation or the ability to win and carry out future work? Making the business case can be difficult.

The problem facing owners is when to make safety improvements if the business case doesn’t support the cost. Money invested in guard rails for fall protection, for example, could be seen as money better used elsewhere or going into profits. But does everything have to be justified by saving the company money? While most owners have an eye on the “bottom line,” the question is whether they are focused on the short term or have a vision for the long term.

At the LHSFNA, we work with many companies that have great safety programs. Almost without fail, it is because of a commitment from top management. When I ask business owners why they have a great safety program, they never say, “Because it saves us a lot of money,” although that is certainly true. They invariably talk about experiencing a fatality or serious injury on one of their jobsites, and the decision to never let that happen again. For these people, saving money is a side effect of committing to safety as a top priority.

Former Alcoa CEO Paul O’Neill famously threatened to fire his safety director if he ever tried to justify their safety program as saving Alcoa money. O’Neill argued that if workers felt the company only cared about safety because of the money, its safety program would suffer. A year after O’Neill publicly committed to putting worker safety first no matter the cost, injury rates were down and the company experienced record profits.

While costs can’t be ignored, particularly for small businesses that have less capital to spend on safety improvements, they also shouldn’t rule. Costs should never be used as a justification for not protecting workers, for cutting corners or for not complying with OSHA rules. The focus should be on developing more cost-effective ways to protect workers, not ignoring safety. Money talks, but it shouldn’t drown out everything else when it comes to worker safety.

[Scott Schneider is the LHSFNA’s Director of Occupational Safety and Health.]