Investing in safety can save billions

Corporate social responsibility does not refer only to environmental practices, but also to workplace safety. MARISKA MORRIS looks at the findings of Dakota Software’s white paper on workplace safety

Most companies think of environmental practices when discussing corporate social responsibility (CSR). While this is important, it is not enough. Think of companies such as Apple Inc, which ranked 26th in Newsweek’s 2016 Green Rankings, yet faces many controversies surrounding working conditions in its factories based in China.

Many companies are now developing strategies which incorporate a more holistic approach – with safety being a key element.

“The top-down approach to safety is leading to cost savings and a host of other benefits,” writes Jay Finegan, compliance service leader at Dakota Software and author of the white paper titled; Safety: The Neglected Corporate Sustainability Metric. The company produces software specifically designed to support safety, health and environmental compliance.

Safety is important for the reputation of a company. A paper published by the United States (US) National Safety Council (NSC) – entitled: Does employee safety influence customer satisfaction? – found a link between higher rates of injury and illness and lower customer satisfaction. Fewer injuries led to happier customers.

The aluminium company Alcoa provides an example of the benefits a safety policy. Finegan explains: “When Paul O’Neill became CEO of Alcoa in 1987, its safety performance was a very respectable one-third of the US average. When O’Neill retired in 2000, Alcoa’s safety performance had improved to 1/20th of the US average.”

During this time the company’s sales increased from US$ 4,2 billion (R55,6 billion) to US$ 22,9 billion (R303,6 billion) with profit rising from US$ 264 million (R3,5 billion) to US$ 1,5 billion (R19,8 billion). Profit isn’t the only advantage, however.

The US Occupational Safety and Health Administration (OSHA) ran a Voluntary Protection Programme (VPP) initiative, which encourages companies to prevent workplace injuries by including worksite analysis and hazard prevention and control in their management strategy.

The New York State Department of Labour’s (DoL’s) fact sheet on the VPP initiative found that there was a 52-percent lower rate of injury among participating businesses. The average cost per work-related injury amounted to US$ 43 000 (R570 000) in 2007, according to the DoL’s fact sheet.

Milbank Quarterly, a peer-reviewed healthcare journal, argues that the cost of occupational injuries and illnesses amounted to US$ 250 billion
(R3,3 trillion) in 2011. “This is more than the cost of cancer, diabetes or chronic obstructive pulmonary disease: US$ 67 billion (R888 billion) resulting from medical expenditures, and US$ 183 billion
(R2,4 trillion) from productivity losses,” Finegan notes in his 2014 report.

A study by the US Center for Disease Control and Prevention found that injured workers were 43 percent more likely to suffer from depression than their non-injured peers. In 2003, Mental Health America reported a loss of US$ 51 billion (R676 billion) in absenteeism and US$ 26 billion (R344 billion) in direct treatment of depressed workers.

According to stats SA, absenteeism costs local companies more than R12 billion annually. Depression also tends to affect people in their prime working years, Mental Health America notes.

One strategy that improves safety and has been found effective is the behaviour-based safety (BBS) protocol.

BBS addresses the fundamental reasons for unsafe behaviour, rather than imposing disciplinary consequences on the workers. “Root cause analysis can contribute to an improved safety culture by digging to the heart of the problem, rather than treating and diagnosing surface-level symptoms,” Finegan writes.

BBS suggests, for example, that employees who fail to follow safety rules are possibly not responsible for workplace injuries. It might be that an employee, who continuously removes his personal protective equipment, could be doing so because he or she is uncomfortable in the equipment.

The American Psychological Association’s figures show a 29-percent decrease in injuries after one year following the implementation of the BBS strategy. After five years, there was a 72-percent decrease and after seven or more years it was 79 percent.

Finegan concludes that a safety culture is as important as the company’s overall culture. “For the long-term benefit of the employees and the company, for greater cost savings, and to avoid the damaging effects of injury and illness, safety must be improved across the board,” he says.

“Changing and elevating the safety culture must be a collective effort,” Finegan comments. Putting safety first not only saves money; it can actually make money.