We all know protecting workers is the right thing to do. But it’s also good business.
There are many reasons good worker safety practices are important — to prevent injuries, to comply with regulations, and more.
High-risk industries like gas and electric understand the importance of safety best of all. What does productivity matter when lives are on the line?
Except, in reality, productivity doesn’t have to come at the expense of safety. There’s a good business case for utility safety: The safest way of working is usually the most cost-effective.
The true cost of unsafe work
While it seems counterintuitive that taking the time to institute proper safety precautions raises efficiency, leaders in utility safety have known it for years.
“Safety and efficiency are synonymous,” says Nick Stavropoulos, utility safety expert and former COO of PG&E. “If you invest the time, effort, and energy to make sure the work is done as safely as possible, the work will also be as efficient as possible.”
Operating safely is better for utilities’ business than letting unsafe work take place. Every serious illness or injury that occurs in your workplace can cost millions of dollars in direct and indirect costs.
Worker’s compensation and other insurance premiums can skyrocket after injuries — or if companies are found to flout best practices for safe work. Occupational Safety and Health Administration (OSHA) fines can reach $14,502 per violation. Lawsuits and settlements can rise into the millions.
Indirect costs quickly mount too. Every injury requires work to stop — potentially for hours. Nothing productive happens during the time your staff tends to an injured colleague. Once they can get back to work, utility crews are likely to be distracted and have less capacity than before. If your injured worker is a senior team member, you may lose crucial knowledge required to accomplish tasks effectively. You may even risk injury to other crew members because their experience and oversight are no longer available.
Ultimately, it’s much more cost-effective to operate safely in the first place.
Why you need a business case for utility safety innovation
Still, even safety-forward companies sometimes struggle to fund new safety initiatives. With tight budgets, safety innovations often compete against programs that directly generate revenue or that regulators require for operation.
To secure approval for new ventures, EH&S managers need to enter budget negotiations with a strong business case and hard numbers in hand. Fortunately, the National Safety Council (NSC) has tools to help them do exactly that.
“Preparing the Business Case for Investment in Safety” is a white paper that walks safety professionals through a pragmatic plan for implementing safety systems that produce clear return on investment.
Investment in safety and health, just as in any other investment, goes beyond just doing the right thing. It still needs to make good business sense. Understanding how your management defines “good business sense” can make all the difference in their receptivity to your health and safety agenda.
The business case is vitally important for health and safety because the cost of risk, both direct and indirect, are largely underestimated and many times obscured in a business’ financial statements. Often times this cost of risk is viewed only in terms of direct expenses, such as workers compensation, overlooking the indirect cost of business interruption, loss of production time, supervisory time to investigate and replace the injured worker, repair of damaged equipment and many other factors that contribute to the cost.
The paper points out potential roadblocks EH&S managers can anticipate as they prepare their business cases for utility safety, with advice on working around them and which information to include to garner support. It also indicates essential numbers to have on hand during discussions, such as the number of incidents your company has had in the past five years, the median cost of injuries associated with them, and indirect cost multipliers (two to four times the direct cost, for a conservative estimate). Combined, these figures show the real cost of operating without the kind of safety controls now available.
Over $1.7 million saved … from a safety system?
Senior management may expect their new utility safety programs to help operations stick to business as usual — just with fewer incidents. But the NSC has found that organizations that invest in safety typically improve their efficiency and quality of work. Not only do these companies break even on their investment in a year or two, but they see 5-, 6-, or 7-figure savings thereafter from any safety system they introduce.
In April, the Work to Zero program of the NSC introduced their Safety Technology Investment Calculator to put real numbers behind investments in safety technologies. This tool works out the number of your personnel who interact with a prospective technology, along with typical costs and outcomes, to arrive at a dollar figure you can expect from investment in any of eight different safety technologies.
In one example, a 200-500 person company looking to implement permit-to-work software for 60 users could expect to see a return on investment within its first year and $18,320 in savings by Year 5. The same calculator projected a large construction company considering proximity wearables could expect $1.7 million in savings by its fifth year as a result of reduced absences, medical costs, wage losses, and other factors.
Technologies are a proven and effective way to heighten safety. But improvements really begin with changing attitudes and expectations.
Of course no one wants workers to get injured. Senior management just may not fully grasp the burden that illnesses and injuries place on your organization. Laying out the business case for utility safety makes it clear that safety doesn’t have to come at the expense of productivity, efficiency, or profits. Rather, it reduces the risks to your operation that drain its potential, which everyone can support — from the field to the CFO’s office.
Want to know more about utility safety? Join our newsletter for a weekly update on stories you may have missed.