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Turn your safety culture into a profit center

By David Leng

Face it, your employees power your company, much like the engine drives a race car. A well-maintained, high performance team can endure challenges and go the distance, while achieving victory for you. They can help you stay ahead of your competition and create a profitable company. They let you open the throttle and GO! A poor performing team holds you back, and causes you to lose the race - and profits.

For many employers, the success or failure of a company's workers' compensation program is similar to a "dipstick test." Is the engine performing well with a full supply of clean oil or is it being slowed down by thick, sludgy oil? Workers' compensation success can be measured by a company's injury frequency and severity, and how those injuries are managed. Companies suffering from production and profitability issues have a significant number of injuries, while the reverse is also true: the most profitable and productive operations have fewer injuries.

When there are injuries, your company has higher medical expenses and wage costs that lead to higher future premiums. There are also a number of items Workers Comp doesn't cover. For example, workplace disruption, investigation time, production delays, damaged goods, upset customers, overtime/additional payroll for employees to cover for an injured employee, and the cost of hiring, and/or training replacements. All of which damages your bottom line, in the same way that contaminates harm an engine. Injury costs also increase expenses, and therefore, affect a company's ability to compete for work. It's a perfect storm.

When Alcoa, the giant aluminum processing company, hired Paul O'Neill as CEO many years ago, he stunned his first stockholder's meeting by saying his top priority wasn't the company's bottom-line; it was tracking lost-time injuries of all employees (as you might imagine, it was not a well-received speech).

But at Alcoa every plant manager had to report every injury to O'Neill within 24 hours. Each Friday a report was sent to the home office of injuries that occurred during the week and what corrective action was planned. This report was distributed company wide. Quickly, Alcoa became much more profitable and enjoyed an enviable record in paying dividends to its shareholders (who suddenly cheered the speech).

This wasn't something O'Neill had to do. Alcoa's safety program was already excellent, better than the industry average. Yet, he believed it could be better. He understood that safety touches all employees, no matter their job. This is where he started the company's cultural change, so that it became a better-performing organization. Safety was everyone's responsibility, not just that of the loss control people. Alcoa's productivity soared and injuries were dramatically reduced. In other words, the best and most productive way of doing something is the safest way.

Many employers view safety as an expense, but Paul O'Neill and Alcoa showed how safety can be a profit maker, and it works for companies the size of Alcoa or those with just five employees.

With that said, how do you go about creating a safety culture with the goal of increased profitability?

First, let's give OSHA some credit here. The watchdogs have done an effective job of reducing injuries and creating safer work environments. However, the focus has mainly been on the physical conditions and making sure required training is being done. But just being OSHA compliant doesn't mean you're a safe company. In the same way, it doesn't mean the employees understand and put their training into practice.

While most company safety training is necessary and good, it often gets squeezed in with other training activities. For example, a roofing company executive said they were a safe operation, providing ongoing training to their employees. But it turned out that the safety program is only one part of an all-day training session conducted by an outside firm.

Then, there are employers who say accidents are inevitable. However, reviewing the records indicates that there are few actual "accidents." These employers make excuses for their poor practices and almost invite employees to get hurt with their laissez-faire attitude.

DuPont is a case in point. The company studied more than 40,000 injuries, grouping the findings into three types of injury causes: an unsafe condition or environment, an unsafe employee action, or an accident when no cause could be determined. The result was that over 80% of all injuries came from unsafe employee actions, while only 19% from unsafe conditions, and a miniscule one percent from employee accidents.

Both OSHA compliance and safety training are necessary, but fail to answer the question of why most injuries occur. In too many injuries, employees say they tripped over this, fell over that, or were struck by this. But many times, it's because an employee ignored the current situation, did not correct something that became an unsafe condition or environment, or the employer and employees ignored general housekeeping.

Based on this, if employees eliminated unsafe conditions that they themselves may have created, it's fair to assume that over 90%, or possibly all 99% (leaving only the 1% that are "true" accidents), of all injuries would be preventable.

Therefore, the best solution to eliminating injuries is a behavior-based safety approach, one that focuses on the entire employee from head to toe, building a culture, an attitude, an employee behavior that prevents incidents from occurring and encourages an employee to identify potential hazards before they occur.

In other words, it's getting employees to take a second or two to think, "Should I stick my hand this close to a blade?" It is also about employees recognizing and speaking out about a co-worker or a supervisor who is not doing something safely or creating a situation that is becoming unsafe.

Still, changing the culture and implementing a robust behavior-based safety program is a marathon, not a sprint. It's not something introduced at one meeting and then ignored. It takes time. Here is a suggested outline that can be an effective starting point.

  1. The Mission Statement

    Senior leadership, owners and executives must be involved, so the message is communicated down through the organization and delivered with a sense of the urgency that it's safety over just productivity. Doing something safely doesn't mean doing something slowly. But doing something too quickly can certainly mean doing something unsafely.

  2. Benchmarking

    If you don't measure and record, you can't determine process improvement. These factors might include OSHA recordables and DART rates (Days Away, Restricted Duty, or Transitional Duty), so they can be compared with peer organizations. You should also include items such as near misses and observed unsafe actions that did not result in an injury or property damage, but were "near misses."

    Keep in mind that OSHA recordables, DART, and near misses should all have specific numeric goals established that drop over time. This way you can determine the program's success. Senior management must track and measure various components to hold supervisors accountable. Yes, even the executives must monitor those below them to establish their supervisors are doing their job. Nothing undoes a safety program quicker than a supervisor who is only focused on productivity with no regard for safety.

    Establish a line of communication for feedback from bottom to top. If employees feel their supervisor is ignoring a situation that has been brought to their attention, they must know whom they can go to above the supervisor without fear of repercussions.

  3. Establishing accountability and a peer review process

    This starts with the owners, executives, or CEO reviewing senior management, senior management reviewing supervisory, and supervisory reviewing workers. There is also a peer review process. This includes a co-worker, maybe acting as the safety person of the day, or simply a longer tenured employee in a work group who is responsible for observing the operations of their co-workers because a supervisor may not always be present or even fully aware of all the exposures associated with doing a job.

    Basically, create a checklist of unsafe behaviors and safe behaviors for use by supervisors and peer observers. Measuring and recording is the key to this process. Observers need training so they can learn from each other, as well as from the outside. More importantly, as your team learns these items and actions, corrections must be recorded in the training manual.

  4. Responsibility

    In establishing organizational responsibility levels, those below must feel free to "go up the ladder" to ensure that key issues and situations are addressed. All goals and actions should be result-oriented. Everything requires reporting and measuring otherwise it ends up meaningless and without consequences. All of this will end up improving behavior.

    To do this, employees must be empowered and responsible for their own actions. And make sure there is internal accountability, not only laterally up and down the chain, but also externally to those who are working at a jobsite.

    The actions of other contractors could put your employees in harm's way or vice versa. From an accountability standpoint, you have the obligation to make certain the other contractors are aware of an unsafe situation so that your employees are not put in harm's way, or correct a situation you may be causing so their employees are kept safe and productive.

    A good example is a building materials dealer where a delivery truck arrived at 4:30 pm on a Friday afternoon loaded with kitchen cabinets. With the loading docks filled with trucks, the impatient driver asked an employee to help him unload his truck. Then, while helping the driver, the employee fell off the truck, shattering his elbow.

    What then occurred was a chain-reaction of lost productivity: the injured employee, already pulled off his regular duties, was now on his way to the emergency room, accompanied by another employee who was now away from his job. Plus, the injury spiked the company's Experience Mod and increased the dealer's premiums by $130,000.

    All this could have been easily avoided. An employee was put in harm's way because the company was focused on getting the truck out as quickly as possible rather than safety issues. It would have taken less than five minutes to move a fully loaded truck so the delivery truck could come to the dock and be unloaded safely. This incident could have been avoided if the supervisor had asked the driver to wait until loading dock space was available. This all occurred because the supervisor put perceived productivity ahead of safety.

David R. Leng, CPCU, CIC, CBWA, CRM, CWCA, is author of Stop Being Frustrated & Overcharged and vice president and executive partner of the Duncan Financial Group in Irwin, Pa. He is also an instructor for the Institute of WorkComp Professionals (IWCP)