Driving profitability while protecting employees

The perfect storm is looming. The majority of workers are now over 40, and the median age will continue to rise for years, presenting a slew of challenges. Companies will have to change how they look at their health and safety programs to ensure integration of bottom-line objectives with their overall employee and workplace health, safety, and well-being goals.

Most companies’ health protection programs are separate from health promotion programs. The two programs are from two drastically different schools of thought, and their lack of integration impedes their effectiveness to maximize the overall health and productivity of the workforce.

Despite the lack of overall action in bringing together these two lines of thinking, some companies are finding early success in developing a unified approach to employee safety, health, and wellness. These companies have created a culture where everyone feels responsible for identifying, reporting, and reducing potential risks, greatly improving their ability to take proactive corrective action before anything bad happens.

Upshifting Safety Performance

Safety can improve—or break down—in six key areas. Like gears, these areas are interrelated, and when near misses or injuries are avoided, the company progresses toward peak performance.

The first two gears are fundamental: worksite conditions and employee behaviors. Regulations in these areas get everyone moving toward safety by mandating hazard management, appropriate equipment, and training. Most programs accelerate well beyond compliance, but companies that focus on these areas alone will discover limits to the quality and consistency of safety performance. It’s akin to shifting gears; a car has limits in terms of how fast it can go if you keep it in first or second gear.

Almost every safety program has stated processes, such as “This is our incident investigation process.” Also, many companies use the word system when talking about their programs as a whole. But the third and fourth gears of safety improvement can be reached only when management goes beyond generic definitions of processes and systems.

A process must provide clear structure and guidance for the workforce, as well as solidify how safety professionals track and measure safety. This is the third gear.

A safety management system must define the values, goals, and strategies that will align diverse processes and functions, while also providing benchmarks to gauge progress and guide corrections. Clarifying roles, responsibilities, and lines of authority and providing reliable means for communication within processes and systems are also essential for accountability and clarity. This shifts the safety effort into fourth gear.

Continuous improvement in the safety arena depends on these gears—and on the quality, quantity, and frequency of data that they provide. Opportunities for improvement are limited if data comes only from traditional lagging indicators, such as total recordable incident rates or workers’ compensation claims. Such indicators are valuable, but they drive improvements too late—after the damage is done. By themselves, they also can be misleading because they describe a past state rather than what’s happening in the workplace right now.

The most effective safety management systems are engineered to collect and respond to leading indicators. A simple example is a company creating a process to perform weekly observations and track leading indicators, such as the number of unsafe behaviors observed; another is using a scorecard to gauge a broader range of assessments. Combine that with other processes, such as conducting workforce surveys and reporting near misses, and a company has a steady stream of updated information that can help management spot potential problems and address them proactively before incidents occur. Correlating leading indicators with lagging indicators over time makes them even more valuable, guiding the allocation of health and safety resources to where they’re needed most.

The fifth gear, safety culture, is both the sum of the first four and a powerful force that feeds back down the chain, driving and sustaining improvement in each previous step. Top-performing companies take a proactive approach to strengthening their culture. This starts with clearly defining what “stronger” looks like, strategies to get there, and ways to measure and assess strength. New-hire orientation, training, the setting and enforcement of high safety standards, and corporate messaging are all vital culture-building activities. Organizations with highly evolved processes and systems have a framework in which this type of culture-building permeates every activity.

The payoff can be profound. Worksite safety improves because everyone helps to identify potential areas for improvement. Workers employ safe behaviors every time, not just when an incentive is introduced or the threat of punishment hangs over their heads. Safety processes continuously improve because of a higher level of participation, and safety management systems become more effective because different departments are united under a common system of values and goals.

The Age of Greater Safety Awareness

Demographic data and direct observation make one thing clear: The U.S. workforce is aging, which calls for increased awareness of safety hazards that more likely occur with a graying workforce—the sixth gear. Statistically, older workers have a greater risk of injury and illness and slower recovery times, meaning more lost workdays and higher related costs. For example, the National Council on Compensation Insurance estimates that claim costs for workers in the 55 to 64 age group are 60 percent higher for indemnity claims and 40 percent higher for medical claims than for workers in the 20 to 24 age group. Similarly, a 2005 U.S. Bureau of Labor Statistics chart of median days away from work due to injury shows that workers 35 years of age and younger are away from work a maximum of six days annually. For the 45 to 54 age group, the median jumps to 10 days away from work, and maximum number of days away from work increases again in the next two age groups.

An aging workforce’s increased absenteeism (or even presenteeism, whereby an older worker is conducting everyday functions while in some way impaired) can undermine productivity.

A related issue is the “brain drain” that is happening as older workers retire. It is more critical than ever to capture institutional knowledge and incorporate it into formal training to prepare younger workers for the jobs they are inheriting. Otherwise, much of this knowledge—whether it involves safety, health, quality, or basic job skills—could literally disappear when workers leave. This not only highlights the value of a well-organized training management system, but also a new understanding and improved focus on healthy actions and accident prevention.

Bottom line, the risks inherent in an aging workforce provide a powerful incentive to expand and improve efforts in key areas such as health and wellness, medical surveillance, safety training, and job safety analysis. From a front-office perspective, management might be motivated to improve on case and claims management and return-to-work policies.

The need to understand and analyze demographic data underscores the value of tools to help manage this growing risk. Similarly, the complexity of managing an aging workforce provides further justification for uniting health protection and promotion efforts enterprisewide.

Delivering Meaningful Business Benefits

The expanded role of accident and illness prevention and healthy living awareness in the corporate big picture is not a matter of idealism. These efforts deliver real business benefits. C-level executives and front-line leaders need to realize that improved health and safety programs are an investment in an organization’s most important asset: people.

Each of the challenges discussed in this article justifies greater investment in workforce health, safety, and wellness initiatives. But what is more uniquely pertinent—and exciting—about today’s initiatives is that, like quality initiatives in the U.S. in the 1970s and 1980s, they also present extraordinary opportunities to improve business performance and to create a competitive edge.

Plenty of mathematical models and case studies demonstrate the return on investment (ROI) of quality initiatives. For example, if a manufacturer can take small steps to introduce quality checks in the welding department, it likely will see rework costs decrease and profit margins increase. Such efforts effectively add value to every project and deliver impressive cost-benefit ratios.

Similar models exist for health and safety initiatives. However, they generally have been limited to the most obvious areas measured by lagging indicators, such as workers’ compensation claim costs. The more advanced models that take into account proactive measurement of key safety performance indicators hold great potential to drive business performance.

What are some of these proactive leading indicators?

• The number of inspections being conducted. The inspections can be tracked by department and category. The company can learn of potential problem areas simply by keeping track of where the inspections are occurring.
• The number of findings. Uncovering more safety and health hazards is actually a good sign. That means the culture has reached a point where a majority of employees are engaged, and their concern for a safe work environment trumps everything else.
• Employee participation. How many employees are on committees and involved in audits? If everyone is involved in a formal safety and health program of some sort, they can’t escape the companywide focus. In addition, they are contributing to compliance efforts and to the achievement of company goals and objectives.
• Corrective actions. One of the greatest impacts a company can make is to ensure that all safety- and health-related issues that generated a corrective action are actually resolved. The goal should be to resolve 80 percent of those cases within 48 hours.

A company committed to developing this type of safety-first and health-conscious culture is one that is also on its way to fully engaging its employees and having everyone contributing to a more profitable operation.