Identifying and Demonstrating the Value of Safety

Contributed by Safety Management Group

Construction is an increasingly complex business. As buildings become more sophisticated and owners more sensitized to issues such as energy efficiency and “green” materials, and as organizations become smaller in an effort to “right-size,” managers find their attention being dragged in more directions at once.

In that kind of environment, it’s easy for safety to slide out of view. But no company can afford to move safety and safe work practices to the back burner. Beyond the potential for death or serious injuries to workers, failing to address safety practices can cause significant damage to a company’s reputation.

The key is to stop thinking of safety as just another matter that competes for attention, and to recognize it as a central value of doing business. That way, safety becomes part of every decision and every action, and it isn’t as likely to get pushed aside by the crisis of the day.

Of course, “value” has two meanings, and both of those meanings are important where a culture of safety is concerned. The first meaning is a shared belief. That’s what happens when we say that an organization values safety. It means that there is a shared belief among owners, managers, workers, and others that safety is a way of life.

The second meaning can be even more important when trying to convince people of safety’s importance, and that is “value” as an economic concept. When using this definition, identifying the value of safety requires finding a way to show the economic benefits it provides, or the economic costs it avoids.

One way to look at the economic value of safety is to determine the cost of a lack of safety, or the potential losses when there isn’t an effective safety function. At the very least, that includes in direct and indirect costs associated with accidents — such as medical bills and downtime — along with other costs that may result, such as increases in workers compensation and liability insurance premiums.

It’s usually fairly easy to contrast these amounts with the cost of maintaining an effective level of safety. Workers compensation costs can be measured as a function of a percentage of the hours worked, and costs for liability insurance, training, and safety supervision can be factored into costs of the project.

Quantifying the indirect costs of an incident is more difficult, but it is worthwhile. In most situations, the indirect costs are a multiple of the direct costs, and the amount of that multiplier is directly related to the severity of the incident. Other indirect costs that may result from an incident may be legal costs related to claims from those who have been injured, as well as fines levied by government regulators. (It’s worth noting that the increased regulatory scrutiny that follows an incident also adds to cost, as management time must be diverted to ensure that the company is in compliance with safety rules.)

The other component impacting value is even more difficult to quantify, but it can be significant. That is the many intangible benefits created by an effective safety program and a deeply held safety culture. These benefits and their impacts vary greatly, but they all have an impact on a business.

One of the biggest intangible benefits involves publicity, or the lack of it. Construction accidents are nearly always high-profile incidents that draw a great deal of media attention. Television stations in particular thrive upon images of fire trucks and ambulances. Such negative publicity can cause long-lasting damage to an organization’s reputation, perhaps impairing its ability to land future work from some owners.

Several studies have determined that organizations with strong safety cultures attain higher levels of productivity and quality. Just as important, employee morale tends to be significantly higher, which reduces turnover and absenteeism.

Given those factors and safety’s bottom-line impact, it should come as no surprise that project owners are increasingly using safety metrics and related factors when evaluating companies to handle their projects. Negative safety-related information such as high EMR scores is often used to screen out companies, because owners don’t want to bring a contractor with a perceived safety problem on their jobsite.

Whether you think in terms of its economic impact, or whether you focus more on the intangible aspects, safety clearly is a desirable value for organizations, and it’s a value that clearly creates economic value. Tacking the time to quantify and track these measures provides powerful evidence of safety’s value to companies.

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