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- How to show that safety pays

I show how safety can be pitched as a business improvement.

A version of this article appeared in Risk & Insurance Magazine

I present to you three sparkling case studies of worksite safety as a business investment. They illuminate, provocatively, how safety might mesh with good all-around working conditions to boost success of a business. Remove one, remove the other. Those of you who need to show how safety pays, look no further.

Consider this finding: for every ten ergonomic reviews of injuries, three of them will result in not just removing injury risk, but also in boosting productivity. Paul recovers from injury and returns to his now safer job, then produces more output than he did pre-injury. The Windham Group, a New Hampshire firm, arrived at the three out of ten ratio by analyzing the findings from several hundred post-injury reviews. The firm routinely searches for productivity improvement during ergonomic reviews. Safety experts at Marsh and elsewhere tell me they’ve noticed productivity dividends from safety projects.

So, inside every third work injury a productivity improvement struggles to get out. A good number of accidents must arise out of botched job and workflow plans. Of course accident records will likely not show this; only a few safety engineers think as business consultants. To find and exploit the connection between safety remedies and productivity, you need brains switched to “on” at the site of the accident, readied for seemingly serendipitous solutions.

A second fertile approach to safety analysis comes from a West Coast workers comp consultant. He associates high workers comp costs in part with defective manpower planning by management. A large share of the very few high cost claims involve workers who do not recover because for personal reasons they do not wish to recover. The consultant estimates that in a “tension” driven workplace these holdouts to recovery
comprise 4 out of 100 injuries, but that in a “support” driven workplace they comprise as little as 1 out of a 100 injuries. If you can shift the work culture from tension to supportive you’ll reduce the holdout phenomenon even if the count injuries fail to decline.

A culture of tension is often arises out of a company’s struggle to maintain its fluctuating flow of production in the faces of shortages in qualified workers. Labor shortages can cause overtime that workers view as excessively punitive on their other responsibilities and pleasures. If worker time schedules are arbitrarily juggled due to what the workers perceive as corporate incompetence, lot more injured workers are tempted to behave in a recalcitrant manner. A well-run safety committee can serve as a mediating instrument for better workforce planning.

Benefits of safety committees show up also in a survey-based study by a team led by Tim Morse of the University of Connecticut. He finds that safety committees are associated with both sharp reductions in frequency of injuries and higher rates of claiming for the fewer injuries that occur. The end number of filed claims may not greatly change. But the workers are far better off, and the employer has a much better understanding of its loss exposures and its safety agenda. Any business textbook on risk management will tell you, in straight English or elaborate math, about the economic value of reducing uncertainty. So will the underwriters of workers compensation insurers.

Take a non-union, non-manufacturing workplace without a safety committee of 1,000 employees. It might have about 140 plausibly work-related upper extremity incidents a year, a frequency of 14%. Of these only about 5% would become workers comp claims. So few claims, yet so much poorly understood problems.

This same workplace with a safety committee would have only about 65 upper extremity incidents a year. Of these 20% would turn into claims. If we add a union along with a health and safety committee, the number of incidents drops to about 30. Of these about 30% become claims. In the end, perhaps the same dollar cost but more insight into work injury risks and less uncertainty.

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