Specializing in COR™ Program & Safety Management Systems Development
MINISTRY OF LABOUR - SUPPORTING SAFE EMPLOYERS PROGRAM
TORONTO - Ontario will reward its safest employers with an estimated $140 million for excellence in occupational health and safety as part of a first-of-its-kind in Canada program unveiled today.
The program, Supporting Ontario's Safe Employers, will formally recognize employers who successfully implement health and safety programs in their workplaces. The financial rewards will come in the form of Workplace Safety and Insurance Board (WSIB) rebates over a three-year period.
"We know that good health and safety practices save lives," said Monte McNaughton, Minister of Labour, Training and Skills Development. "But they also save money. This program is a reflection of that fact. Our government wants to do everything it can to make workers safer and help businesses save money."
Research has shown that organized, systematic approaches to health and safety increase worker participation in health and safety practices, encourage ongoing improvement and help reduce workplace injuries and illness. Similar programs in Europe and Japan have resulted in a decline in workplace accidents.
"This is a big step for Ontario's health and safety community as we continue to move forward in protecting workers," said Ron Kelusky, Ontario's Chief Prevention Officer (CPO). "We're adopting innovative approaches to become a modern regulator. Industry has long asked for rewards for employers who successfully promote health and safety in their workplace."
The program is open to any employer in Ontario, regardless of size or sector. Led by the Office of the CPO, this ministry program was developed based on feedback from labour, employers and other stakeholders.
The WSIB is also building on the program by launching Health and Safety Excellence, a new program that will promote continual health and safety improvement in Ontario workplaces.
While the provincial program recognizes employers who have already implemented a health and safety management system, the WSIB's program will encourage employers without an existing program to develop one.
"We know that businesses across the province strive to make their workplaces as healthy and safe as possible for their employees," said Elizabeth Witmer, WSIB Chair. "Our new Health and Safety Excellence program gives them a roadmap to improve health and safety, whether they're just getting started or want to optimize processes they already have in place."
These initiatives are part of the government's commitment to encouraging a culture of health and safety to protect workers on the job and build a prosperous province.
- Supporting Ontario’s Safe Employers is the first program of its kind in Canada.
- The names of recognized employers will be posted on the Ministry of Labour, Training and Skills Development’s website. These employers will be able to brand themselves as CPO-recognized.
- An occupational health and safety management system (OHSMS) is a tool that provides an employer with a systematic approach to managing health and safety in the workplace.
- Employers may use one of the existing OHSMS standards accredited by the Chief Prevention Officer or they may develop their own system and apply to have it accredited by the province.
- For more information, employers can contact the Ontario Ministry of Labour, Training and Skills Development’s Prevention Office at SOSE@ontario.ca.
THE TRUE VALUE PROPOSITION (ROI) OF SAFETY
Would you spend $1 to save $2 in the future? How would you feel about $3 or $4 or $6 in future savings for every dollar you spend now?
The choice may seem like an easy one, but when that first dollar becomes millions of dollars, and the savings may not be seen until years later, spending money up front can become harder to justify. This is a situation in which many occupational safety and health professionals find themselves when trying to convince upper management that investing in training or equipment will lead to safer workplaces.
But experts say the savings exist, and – armed with the right figures on the costs of injuries – safety pros should be able to successfully argue that investments in safety will result in savings down the line.
The cost of injuries
Safety’s return on investment is dependent on knowing one important thing: How much does an injury actually cost?
Fully understanding all the costs associated with a workplace injury can be difficult. Several organizations – including the National Safety Council and the Centers for Disease Control and Prevention – have models that attempt to estimate the costs, but these different models can vary greatly, according to Ken Kolosh, manager of the NSC statistics department.
For example, CDC’s estimate shows a fatal injury carries an average cost of about $991,027. This average includes only hospital costs. In contrast, the NSC model puts the average fatality’s cost to society at $1.42 million.
These figures, although high, are likely to be lower than the actual cost of a single death because both models reflect only direct costs. Direct costs include workers’ compensation, medical expenses, civil liability or litigation costs, and property losses.
Indirect costs can be much more expensive: For every dollar in direct costs, indirect costs could be as much as $2.12, according to NSC. Indirect costs include workplace disruptions, loss of productivity, worker replacement, training, increased insurance premiums and attorney fees.
Using this math, a single fatal workplace injury goes from costing an average of $1.42 million to costing nearly $3 million on average.
And this may be on the low end of the scale. Some studies have indicated that indirect costs for injuries in the construction industry can be as much as 17 times more than direct costs, depending on the type of incident, NSC states.
Despite the variances in the cost-estimate models, Kolosh stressed that the cost savings from safety are real. “Safety’s not just a nice thing to do,” he said. “It has a lot of economic relevance as well.”
In 2002, France-based Schneider Electric believed it already had a good safety program. The company’s OSHA recordable injury rate was 3.6 per 100 full-time workers – below the industry average at the time. Still, the company wanted to do more to minimize the likelihood of a worker getting injured or worse, according to Rich Widdowson, Schneider Electric’s vice president of safety, environment and real estate.
Direct Cost x Cost Multiplier = Indirect Cost
“We knew thatwe had some issues we had to deal with, and we really wanted to improve and build a safety culture,” Widdowson said.
For Schneider Electric, the focus was less about building a business case for safety, Widdowson said, and more about identifying and eliminating hazards that could hurt someone. As a result of investing in safety, the company saw its injury rate drop to 0.5 in 2013. That equals about 900 fewer people injured than would have been a decade ago, according to Widdowson.
On top of that, Schneider Electric is seeing more than $15 million annual savings in direct costs alone – which, as previously noted, pales in comparison with indirect costs that could be 2 to 3 times more than direct costs.
Other companies have seen similar improvement. Alcoa states that when it began focusing on becoming a safer company, the Pittsburgh-based aluminum manufacturer saw its earnings increase from $0.20 a share to $1.41 in only five years, and sales grew 15 percent each year during the same period. Along with increased profits, the company reported that its lost time due to employee injuries declined over the course of 10 years.
OSHA programs also display evidence of safety’s return on investment. The agency’s Voluntary Protection Programs features companies that go above and beyond OSHA requirements and institute workplace safety and health management systems. VPP participants, on average, have a days away, restricted or transferred rate that is more than 50 percent lower than the industry average, according to OSHA, which says participation in the program can lead to increased productivity and cost savings.
For safety professionals whose bosses, managers or employers don’t “get it,” Widdowson admitted that selling the idea of investing in safety can be difficult. He suggested safety professionals first argue from the “people” side of things – invest in safety so workers do not get hurt, for example. But the financial return on investment – increased productivity, improved customer service, money savings from fewer injuries – could help with the sell too, he added.
Not every workplace safety improvement will have an obvious business benefit at first other than improved safety, Widdowson said. As an example, he pointed to a Schneider Electric facility that had a conveyer system at floor level. Although the system was considered a tripping hazard, the company believed elevating the conveyor off the ground would be too expensive. However, after an employee tripped over the conveyor and broke a hip, the company knew the system had to be raised.
The conveyer system cost about $1 million to elevate. But in addition to improving safety by reducing a trip hazard, the move improved the process and increased productivity. Since then, the conveyer system has more than paid for itself, Widdowson said.
“On the onset of the business case, there was no justification for it,” he said. “But at the end of the day, we see improvements and productivity that we didn’t see up front.”
This is something that has happened many times at Schneider Electric, Widdowson said – a process or change is approved with safety improvement being the justification, and unforeseen benefits to business coming later.
Even though cost savings are a motivator, safety’s biggest return on investment may be human capital. Employers should not base decisions on whether a particular change will result in cost savings, but instead on whether it will keep workers safe, according to Widdowson.
“I hate to go into the dollar savings. They’re there, but that’s not why we do it,” Widdowson said. “We don’t do this because of the dollars. We do this because of the people.”
THE BUSINESS CASE FOR INVESTMENT IN SAFETY
A GUIDE FOR EXECUTIVES
If you’re an executive or a business owner, consider the following facts that can
have a direct impact on your operational performance and revenues:
- Employers paid $51.1 billion in 2010 — nearly $1 billion per week — for direct workers compensation costs (medical plus indemnity) for the most disabling workplace injuries and illnesses.
- Each prevented lost-time injury or illness saves $37,000, and each avoided occupational fatality saves $1,390,000.
- Investors are increasingly using workplace safety and health measures to screen out under-performing stocks, and are showing stronger returns for doing so.
- Over 60% of CFOs reported that each $1 invested in injury prevention returned $2 or more, and over 40% said productivity was the greatest benefit of an effective workplace safety program.
- OSHA continues to ramp up its enforcement efforts for companies ignoring safety, conducting nearly 41,000 inspections resulting in over 96,000 safety and health violations in 2010 – a 15% increase over the previous 5-year period.
That’s just a very tiny snapshot of both the potential costs of injury and illness, as well as some of the potential benefits of deploying a structured safety program. While there are many demands vying for the attention of today’s executives, decision makers at the highest levels need to have a solid understanding of why investing in health and safety makes sense for their business.
Consider, too, the following scenario:
The financial officer of a small business arrives at work, pulls into the parking lot outside her office and steps into the lobby, only to trip on the weather mat that has a fairly substantial wrinkle in it. Falling to the floor and not able to catch herself, she breaks her fall with her right elbow and lands on her laptop that she was carrying, breaking her elbow and cracking two ribs.
Fast forward fourteen hours and having missed a complete day of work due to a trip to thehospital and in a lot of pain, she’s at home resting, in a cast up to her shoulder, and on pain medication prescribed by the doctor. She continues to stay home to heal for two weeks. Meanwhile, the business is in dire need of its CFO. Contract negotiations for a large customer have stalled. The company’s new product rollout has hit a snag because the analysis cannot be performed during the CFO’s recovery. In addition, the day-to-day activities like vendor payments and payroll approvals are lacking crucial oversight during this downtime.
In a small business, every person counts. Each person wears multiple hats and is a critical member of the business family. A single incident involving one employee such as an accident, a serious illness, or family crisis can affect everyone around them, not to mention the effects the business interruption has on production or service. How do you ensure that your small business continues to operate when a key employee — or even the boss — is suddenly out of commission? As with many aspects of running a business, you need a plan.
The simple fact is that the many benefits of safety and health initiatives cut across every size organization and industry. Studies show that these efforts can have a positive outcome on financial performance, worker productivity and satisfaction, regulatory compliance, and the environment.
This white paper looks at existing safety and health research from peer-reviewed journals, as well as best practices from some of the most well respected organizations in the U.S. We’ll explore how safety — or lack thereof — affects business, attempt to quantify the cost of workplace injury and illness, review the impact of regulation on injuries, and examine the benefits of some of the most common safety practices found in companies exhibiting world-class results. The goal is to provide today’s business owners and executives with an opportunity to gain a competitive advantage via a proven source – investment in your organization’s safety and health management systems.
THE BOTTOM LINE
We hope that the wealth of information here presents a solid business case for investing in your organization’s safety and health management systems.
From a less calculated and more human perspective, investing in the safety and health of your greatest assets – your people– is perhaps the strongest case any business leader can make.
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