A comprehensive EHS platform
can also restructure once-manual safety procedures and contribute to the
company’s digital transformation efforts.
By Jagan Garimella
Jul 01, 2017
The numbers are staggering: In 2016, nearly 3 million people
suffered an employer-reported illness or injury in the private sector
and more than half required days away from work, job transfers, or
restrictions on ability to work, according to the Department of Labor's
Bureau of Labor Statistics. According to the bureau, based on rates of
injuries, the most injury-prone sectors are animal production, nursing
and residential care facilities, couriers and messengers, wood product
manufacturing, and air transportation.
One of the most important assets for any organization is its
employees, and company leadership must ensure employee safety and
well-being to abide by OSHA guidelines, maintain productivity, and
mitigate high workers' compensation costs. Further, when profit margins
are not met, laying off workers or closing plants that are producing
below average may seem like a smart approach to save money; however,
these organizations should take a closer look at their safety practices
and invest in human capital instead.
The Hidden Costs of Deferred Risk
Today, many organizations have fallen into the practice of accepting
that accidents on the job are the norm, leading to thousands spent on
employee compensation. In fact, according to the National Safety Council
(NSC), U.S. companies can spend more than $1 billion per week on direct
workers' compensation costs—medical plus indemnity—significantly
impacting gross profits.
Not investing in the right safety resources can also hurt a company
in the long run. Just recently, a construction company was fined
$135,000 for the head, spinal, and chest injuries an employee suffered
last year after falling down stairs at a construction site. The stairway
had no intermediate rail or protective meshing, failing to meet
industry safety standards.
OSHA continues to ramp up its enforcement efforts for companies
ignoring safety. It conducts nearly 41,000 inspections and, in 2016,
issued more than 35,000 citations. OSHA identified fall protection as
the most-cited violation for the sixth straight year, with hazard
communication and scaffolding completing the list of the top three
most-cited categories—unchanged from 2015. By creating a strong safety
environment, organizations can reduce costs significantly while
mitigating risks and protecting brand reputation.
Fostering a Safety CultureA successful workplace safety culture ensures organizational safety is
efficiently and effectively managed and reflective of employee and
management values, and it starts from the top. To fully embrace safety
as a key component of work life, company leadership must promote and
foster a safe environment, setting the tone that organizational safety
is a top priority.
Recommendations for creating a successful safety culture include:
Having a clear vision: Recognize that safety should be
of the utmost importance for the organization and focus the overall
strategy around taking the necessary steps to ensure it is.
Incorporating the right team: When building a safety
culture, it's important to not only appoint a task force, but also to
speak with supervisors and employees on the ground. They can provide
valuable insights on pain points that need to be addressed and
incorporated into a safety program.
Communicating the change: Rally all employees around
the safety initiative and provide them with the tools and resources
needed to embrace safety as a core part of their daily work lives.
Creating a culture that promotes safety can mean big savings for
companies. For example, according to the American Society of Safety
Engineers, a Massachusetts company saw a return on investment of $8 for
every $1 it invested in its environmental, health, and safety program.
Each injury prevented is estimated to save a company $37,000, and a
fatality avoided puts nearly $1.4 million back in the financial coffers.
This is a tremendous saving for any organization, especially one with
hundreds of employees.
Safety as an Investment
Sometimes there is an archaic way of thinking across multiple
industries, such as manufacturing, logistics management, and health
care: that safety is just a line item, not an investment in the company. However,
preventing injuries is only a piece of the savings puzzle when it comes
to the benefits of a safety culture. Companies also can reap indirect
savings related to investing in safety. Specifically, according to the
NSC, more than 60 percent of CFOs reported that each $1 invested in
injury prevention returned $2 or more. The report also found that 40
percent of CEOs see increased productivity as the No. 1 asset gained
from improving workplace safety. Fewer injuries mean not only lower
costs, but also fewer distractions for workers on the job.
Furthermore, according to the ASSE, indirect costs from injuries,
such as workers' compensation, legal fees, and the inevitable need to
hire another employee, can be 20 times higher than direct expenses. The
indirect costs of injuries on the job include:
Training new and old workers
Reduced employee morale
Fixing old equipment or buying a replacement
Poor public relations and brand reputation
The need to recoup lost productivity
Clerical administration for filing form 300 and other paperwork
Costs such as on-the-job training can average as much as $1,200 per
employee, and employee turnover typically costs an organization $5,000
per turnover, according to the 2014 Training Industry Report. Publicly
traded companies have an extra incentive to revamp their safety
protocols because investors are increasingly using workplace safety and
health measures to screen out underperforming stocks. Investors
typically see a higher return when incorporating this practice for
identifying which stocks to buy into.
It's important for top management to understand just how valuable
safety practices are for an organization. By viewing this "cost" as an
investment in human capital, companies can see a significant return.
Software as the Linchpin for Safety Success
Creating an effective EHS strategy can be daunting, but with the right
solution and partner, it doesn't have to be. In fact, not having a
robust solution for employee safety can be the one thing holding an
organization back from an improved bottom line. For example, when
Alcoa's former CEO, Paul O'Neill, began focusing on being a zero-harm
company, sales grew an average of 15 percent per year.
When deploying a solution, it's important to communicate with key
stakeholders in the organization to understand the real pain points and
what components of an EHS software solution are needed. Depending on the
organization’s sector and types of on-the-job tasks, different forms,
metrics, and dashboards will be required for supervisors and/or safety
managers. A comprehensive EHS platform can also restructure once-manual
safety procedures and contribute to the company’s digital transformation
efforts. When an incident occurs, key safety information can be easily
inputted and reported to the right department heads in the organization.
What's more, a solution that utilizes the cloud ensures that incident
information is easily accessed and any issues are quickly addressed to
prevent future employee incidents or injuries.
EHS software plays a critical role in maintaining a safety culture
and compliance. NSC found that manufacturers in 13 states with mandatory
regulations for both injury and illness programs, or health and safety
committee requirements, were effective in reducing injury and illness
incidence rates. One of the many benefits of EHS software solutions is
that they can help companies stay organized and keep up with
ever-changing regulations. For example, software solutions can
streamline, standardize, and track processes essential to ISO 9001
compliance. With reporting and alert features, the organization is held
accountable and always audit-ready should an event occur.
While revamping your company's workplace safety culture can boost
cash flow, doing so without the help of EHS software can create more
confusion than cohesion among employees. Employees must hear and see
from management how significant a zero-incident culture is for them to
be invested in it. By focusing resources on human capital, employees
will be more productive with improved morale, customers will benefit
from increased response times, and the organization will bolster
competitive standing while mitigating risks.
When adopting EHS software solutions, utilize a platform that
fulfills all organizational needs and choose the right technology
partner that helps you go beyond ensuring regulatory compliance—giving
you decision-ready intelligence to optimize performance and mitigate
risks. By establishing a sustainable, proactive safety culture, any
organization can realize the broad and proliferating impact on its
bottom line.
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