Identifying and Demonstrating the Value of Safety
By Paul Cotter
In today’s fast-paced environment, it’s easy for safety to slide out of view. But no company can afford to move safety and safe work practices to the back burner. Beyond the potential for death or serious injuries to workers, failing to address safety practices can cause significant damage to a company’s reputation.
The key is to stop thinking of safety as just another matter that competes for attention, and to recognize it as a core value of doing business. By doing so, safety becomes part of every decision and every action, and it isn’t as likely to get pushed aside by the crisis of the day.
Of course, “value” has two meanings, and both of those meanings are important where a culture of safety is concerned. The first meaning is a shared belief. That’s what happens when we say that an organization values safety. It means that there is a shared belief among owners, managers, workers and others that safety is a way of life. The second meaning can be more critical when trying to convince people of safety’s importance, and that is “value” as an economic concept. When using this definition, identifying the value of safety requires finding a way to show its economic benefits or the costs avoided.
One way to look at the economic value of safety is to determine the cost of a lack of safety, or the potential losses when there isn’t an effective safety function. At the very least, that includes the direct and indirect costs associated with accidents – costs such as medical bills and downtime – along with other costs that may result, such as increases in workers compensation and liability insurance premiums.
It’s usually fairly easy to contrast these amounts with the cost of maintaining an effective level of safety. Workers compensation costs can be measured as a function of a percentage of the hours worked, and costs for liability insurance, training and safety supervision can be factored into costs of the project.
Quantifying the indirect costs of an incident is more difficult, but it is worthwhile. In most situations, the indirect costs are a multiple of the direct costs, and the amount of that multiplier is directly related to the severity of the incident. Other indirect costs that may result from an incident may be legal costs related to claims from those who have been injured, as well as fines levied by government regulators. It is worth noting that the increased regulatory scrutiny that follows an incident also adds to cost, as management time must be diverted to ensure that the company is in compliance with safety rules.
The other component impacting value can be significant, as well. That is the many intangible benefits created by an effective safety program and a deeply held safety culture. These benefits and their impacts vary greatly, but they all have an impact on a business.
One of the biggest intangible benefits involves publicity, or the lack of it. Serious accidents are nearly always high-profile incidents that draw a great deal of media attention. Television stations in particular thrive upon images of fire trucks and ambulances. Such negative publicity can cause lasting damage to an organization’s reputation, perhaps impairing its ability to land future work.
Several studies have determined that organizations with strong safety cultures attain higher levels of productivity and quality. Just as important, employee morale tends to be significantly higher, which reduces turnover and absenteeism.
Whether you think in terms of economic impact or focus more on the intangible aspects, safety clearly is desirable for organizations. Taking the time to quantify and track these measures provides powerful evidence of safety’s value to companies.
Paul Cotter is a unit manager in the Texas Tech Department of Environmental Health and Safety.