A comprehensive EHS platform can also restructure once-manual safety procedures and contribute to the company’s digital transformation efforts.
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 Culture
A 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 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.