In safety, like in many careers, you are expected to perform a certain task with a fairly high level of efficiency. In other words, you have to have some sort of measurable worth to your company to show them that your employment is important to them. It is important to show that you are a valuable asset obviously. Unfortunately, in safety, if you are doing your job correctly then it is hard to show that measurable value. Let’s say, when your company only has 5 incidents last year, that’s all they tend to see. Not the fact that there would have been 20, therefore you actually saved them 15 incidents or had an efficiency of 80%.
So, the big question is, how do you keep your company involved and interested when they see no measurable worth? Especially today, with decision layers in business shrinking, you’re probably more directly accountable for proving your worth than a few years ago. This can be a source of some discomfort, especially if most of your learning and experience has focused on protecting workers’ lives, not competing for limited financial resources. But this is the day that we live in and adaptation is paramount to a secure future for our profession.
Through some research and interviews we will explore how to sell your safety program to your company in hopes to find the best answer or answers. One way that is most obvious is using actual dollar signs to show the importance of your program. As you get closer to the top decision-maker in your organization the more readily you see, and hopefully appreciate, the fact that cost justification for every aspect of business is the name of the game. After all, if your program costs them more money in the long run, then what’s the point? They would just assume the risk and move on.
And why wouldn’t they, they are a for-profit business. Its only after an accident happens that they look to safety to save them money. British Petroleum’s Deep Water Horizon oil spill is a prime example. A friend of mine actually worked for BP as a fire protection supervisor leading up to this accident. He told me that on an inspection of that rig a year earlier, he recommended 3 million dollars in upgrades. Of course, they didn’t feel like it was worth it. As of February 2013, criminal and civil settlements and payments had cost the company $42. 2 billion.
Would you say they probably regret not spending the 3 million dollars for upgrades? I’d say that they are. But, everyday companies make gambles like these. Some turn out alright, and some turn out like Deepwater Horizons. Hind sight is 20/20 as they say and it’s up to us to sway the company to make a smarter choice. So how do you sell the value of a safety and health program? Looking at how someone else does it is a good start. Joseph Dear, the head of OSHA, gives us many fine examples on cost-justifying safety and health programs. He has to sell this message before Congress all the time.
Mr. Dear is competing for limited resources just like us and as you could imagine, senators aren’t the easiest people to sell an idea to. For some motivation you can read Dear’s speeches and Congressional testimony on OSHA’s Home Page online. Statistics and dollars, just as we practiced in class, are played up in almost every one of his speeches. So are success stories. How many statistics or metrics have you gathered for your safety and health program? Can you attach dollars to these statistics? And don’t be shy about flaunting successes.
They may seem to you to be simply part of doing your job, but they’re more than that. They’re bits of proof that what you’re doing has value. From Mr. Dear we also learn that bigger numbers make stronger points. He states in speeches that injuries and illnesses cost American business $100 billion a year. This is a huge number far exceeding medical costs being borne by business for workplace injuries. How did the figure get so big? As we discussed in class, the number assumes a multiplier to account for indirect costs associated with injuries and illnesses.
Various estimates put the indirect cost for an injury or illness at two to seven or more times the direct cost! Indirect costs include items such as lost time from other workers who watched, talked or helped respond to the injury; repair costs for damaged equipment; and so on. So, if an employee has a simple injury and receives medical treatment costing $200, the more accurate cost to the company may be $400 to $1,400 or more. You can accept the estimates or try to calculate them yourself. Many safety and health text books provide worksheets for attempting this task.
Or OSHA actually has a cost estimator on their website that I’d suggest you use. If you’re looking for even bigger numbers, don’t stop at just calculating direct and indirect costs of an injury or illness. Find out what the sales impact of that incident means to your company. What if your company operates on a 15 percent profit margin, meaning that for $10,000 in sales, the company gets back $1,500 in profit. All that profit might have to be spent to cover the direct and indirect costs of the simple injury described above. So really, a $10,000 sales effort is needed to cover that injury cost.
The financial impact of one injury may not raise eyebrows. But say your company’s annual direct costs for workers’ compensation is $1 million, factor in a multiplier (conservative four times) to account for indirect costs, then calculate how much your company would have to sell to cover this $4 million cost. Big number isn’t it! One that will get more attention and respect than just citing the direct dollar loss from workers’ compensation costs alone. After you’ve shown a portion of what injuries and illnesses are costing your company, you then need to show how much savings come from your safety and health program.
The easiest way to show this is to determine how many incidents have been avoided. To accomplish this task take your industry frequency rate (calculated from the OSHA 200s), multiply it by the employment at your site and divide the result by 100. This number will give you the expected number of incidences. Subtract from this number the actual number of incidences at your worksite. You are now left with the number of incidences avoided. Use the information above to help find the average cost per incident at your workplace and tally up the figures to see how much has been saved.
Don’t forget to figure how much sales would have been necessary to achieve this number. This is referred to as cost benefit analysis as we learned this semester. Indirect costs don’t just end there. They could go for as long as your imagination takes you! What if you have an incident that makes the news! Now all of your clients see what kind of business you run. What kind of numbers results in the loss of your reputation? You could potentially lose half of your sales! Then you have your insurance premiums for next year to worry about as well. There are many ways of cost-justifying a safety and health program.
The bottom line today, like it or not, is that we must constantly prove our value. Motherhood and apple pie doesn’t work very well anymore. Now, to ask the professional. My dad, Greg Feegle, happens to be the man that has to listen to these sales pitches on a daily basis. He is the VP of Engineering and Environmental for Exxon Mobile in Houston, TX. So, what does he look for when approving monies to be spent for his safety programs? I spoke with him on the phone and this is what he had to say about it all: “When an employee comes to me about spending money the first thing I ask for is numbers.
Not just dollar signs but statistics. How likely is this to happen etc. I mean, a satellite could fall and hit a rig, but im not going to build domes over all of our off shores. You know? ” “So if the dollars make sense and the probability is high enough then you normally approve it? ” “For the most part, yes. I’ve learned in the last 30 plus years that preventative medicine is always less invasive than trying to correct a bigger problem once it occurs. ” “Well as an engineer yourself, does it make it easier to look at the problem and make a decision?
Like, if you were an MBA, would it be the same? ” “Not at all. Our company always has the engineers look at it first. If Mr. Tillerson (Exxon CEO) looked at it, he would probably have no idea what to think except that he’d be spending a lot of money. It helps to know what the problem actually is and maybe even crunching the numbers myself to come up with other options even. Many companies do it this way. Unfortunately some smaller companies don’t and you might be pitching the idea to someone that has no technical knowledge. That’s hard to do. ”
As he mentioned in the last paragraph, not all of your bosses are going to have technical knowledge. He might be an accountant by profession and has no clue if the roof is safe or not. In these cases the above methods are most important. They might not know structural engineering, but they know numbers and dollar signs. Use your imagination and make the sale. In most cases you are able to make the decision obvious and once they buy into your program and see the results and or savings, they will share in the success making them get involved. If you’re lucky they might make you a regular person to help them “save money”.