Turning Your Safety Culture Into a Profit Center

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Face it, your employees are the engine that power your company, much like a race car engine. If you have a well maintained, high performance team, they can endure challenges and go the distance while achieving victory for you.  In terms of business, they can help you stay ahead of your competition and create a long- time, profitable company. They allow you to open the throttle and GO!

A poor performing team, can hold you back, and cause you to lose the race—and profits.

For many employers, we have seen that the success or failure of a company’s workers’ compensation program and results is similar to a dipstick test that often relates to the quality of their team.  Is the engine performing well with clear and full oil, or is it being bogged down by thick, dark, and low oil levels?

Workers’ compensation success can be defined by looking and benchmarking a company’s injury frequency, injury severity, and how those injuries are managed. We routinely see that those companies suffering from production and profitability issues have a significant number of injuries, and the reverse is typically true as well, that the most profitable and productive operations have fewer injuries.

When you have injuries, not only do you have to pay for the medical expenses and wages (directly or through increased future premiums) out of your profits, you have to pay for a great number of items workers compensation does not cover. For example, workplace disruption, investigation time, production delays, damaged goods, upset customers, overtime/additional payroll for employees to cover for an injured employee, cost of hiring and/or training a replacement, etc. All of which damage your bottom line like contaminates will damage your engine.

Higher employee injury costs not only affect a company’s bottom line, they also increase expenses, and therefore affect a company’s ability to compete for work. 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). Alcoa set in place that every plant manager had to report every injury to O’Neill within 24 hours of its occurrence. Each Friday a report was sent to the home office of what injuries occurred during the week and what corrective action was planned. This report was distributed company wide. In a very short amount of time, Alcoa became much more profitable and experienced a most 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 every employee in the organization, top to bottom, no matter what position they are in. This is where he wanted to start to change the culture of the organization; to make it a better-performing organization. He made safety everyone’s responsibility, not just the loss control people on staff. Alcoa’s productivity soared and injuries were dramatically reduced. He proved safety and productivity can work in harmony and, in fact, safer practices can lead to better production and profit.  In other words, the best and most productive way of doing something is the safest way. And so every time Alcoa made a safety upgrade, it added to its profitability because the company operated even more efficiently.

We run into many employers who think that safety is an expense, but Paul O’Neill and Alcoa showed how safety can become a true profit maker for the company. This works for companies the size of Alcoa, or with just five employees.

So that being said, how do we start to change the safety culture with the goal of increased profitability?

First off, let’s give OSHA some credit here. The watchdog giants have done a great job over the years of reducing injuries and creating safer work environments. However, the focus has mainly been on the physical conditions and making sure required training is done. But just being OSHA compliant does not mean you are a safe company, and it does not mean the employees will understand and follow your training.

Most training done by companies is necessary and good, but often times it gets lumped in amongst other trainings, or it takes such a long period of time that it gets to the point where the employees’ eyes glaze over and they begin to lose focus.  For example, I met with an executive of a roofing contractor who said they are a safe company and provide ongoing training to their employees.  But when you dig into their safety program, it consists of training from a “safety” company that comes in once a year, every year, and conducts the same required training – all in one very, very long day.

Then there are employers who tell me no one can prevent accidents from happening. However, years of experience tells me that the number of actual accidents is few and far between. These employers are making excuses for their poor practices and almost inviting their employees to get hurt through their laissez faire attitude. Case in point, DuPont conducted a study of over 40,000 injuries.  They broke their findings into three categories 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 come from unsafe employee actions, 19% from unsafe conditions, and 1% from employee accidents.

OSHA compliance and conducting safety training is necessary, but it is not attacking the heart of why most injuries occur. In too many injuries an employee says they tripped over this or fell over that or were struck by this. But many times it is because an employee ignored the current situation and 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, you could safely assume that over 90%, or possibly all 99% (leaving only the 1% that are “true” accidents), of all injuries 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 instances from occurring and encourages an employee to identify those potential hazards before they occur.  In other words, getting the employee to take that 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. This is not something you are going to introduce in one meeting and everything is all set. It is going to take time. But here is a general outline that might prove to be an effective starting point.

The Mission Statement.

Senior leadership, owners and executives must be involved. This must be communicated downwards through the organization and must be delivered with a sense of the priority being safety over just productivity. Doing something safe does not mean doing something slowly. But doing something too quickly can certainly mean doing something unsafely.

Benchmarking.

If you do not measure and record; you cannot determine if you are achieving improvement. Items you may want to record and benchmark might include OSHA recordables and DART rates (Days Away, Restricted Duty, or Transitional Duty), so you can compare them to other 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 reduce over time. This way you can determine the success of your program.

Senior management must track and measure various components to hold the supervisors accountable. Yes, even the executives of the organization must monitor those below them to establish the supervisor is doing his or her 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. In other words, if an employee feels their supervisor is ignoring a situation that has been brought to their attention, they must feel safe that they can go above their supervisor without fear of repercussions and know who they can go to in such a circumstance.

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

Responsibility.

In establishing organizational responsibility levels, those below must feel free to “go up the ladder” in order 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. You must empower and make each employee 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 job site. 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 you make the other contractors aware of an unsafe situation so that your employees are not 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 who had a delivery truck show up at 4:30pm on a Friday afternoon delivering kitchen cabinets. All the loading dock spots were full of trucks, but the impatient driver wanted to leave as quickly as possible, so he asked one employee to help unload the truck. In the course of unloading the truck, the employee fell off the back of 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 their premiums by $130,000.

This could have all been easily avoided. The employee was put in harm’s way because the company was focused on getting the truck out as quickly as possible instead of safety issues.  They could have easily moved a fully loaded truck, thereby allowing the truck to come to the dock and be unloaded safely. Moving it would have taken less than five minutes and probably would have shortened the amount of time needed to unload the truck.  This incident could have been prevented by the supervisor simply telling the driver to wait till a truck was moved and he could pull in. This all occurred because the supervisor put perceived productivity ahead of safety.

For Cutting-Edge Strategies on slashing Workers’ Compensation Costs visit www.PremiumReductionCenter.com

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