My main purpose and key reason for asking the question is because it is one asked of many HSE practitioners and professionals by the bean counters and financial planners in our companies and industry. Especially in our waning, diminishing and disappearing economies internationally. Now is the time every manager, CEO, company and or business turns to HSE looking to cut costs and save money and as usual normally the first things to go is safety management systems, officer’s, managers and personnel often with devastating and far reaching tragedies and results. Just look at international media reports this proves it all the major accidents and incidents occurring regularly. Can safety management within a company or business be justified? The BIG Question is: Do we as safety professionals and our safety and health management systems and programs improve our company's bottom line? Or are we just another unnecessary cost. And is it worth spending money on our safety programs and investing as much money and time as we do “OR SHOULD BE DOING” as part of our legal and moral obligations. In the bigger picture, the answer generally received is a BIG resounding "YES". Although benefits may be somewhat hard to identify and more often than not to qualify and quantify. This is why we and our systems and controls are looked on begrudgingly and are the first to suffer. CEO’s managers and the bean counters do not see this and as it has been said. The pursuit of good business is not only and just always about production and profits, but the management and prevention of loss. CEO’s managers and the bean counters do not see this, very important fact. In addition to our efforts and outright savings on worker's compensation benefit claims, civil liability damages and litigation expenses, not only having a solid safety and health management program with senior management commitment will improve productivity and employee morale. But it can also make the difference between winning and losing bids and even government contracts. This is what justifies investing in a Health and safety program does it not? We and our profession and programs prevent: Negligent or willful injury and wrongful death suits which can be brought where contractors or work site visitors may be involved, as well as under certain laws, which permit employees or their survivors to sue employers in tort where egregious or intentional behaviour, or where ultra-hazardous activities are involved. But we do our jobs”In most cases so well” that these costs and losses are never seen; by our CEO’s, managers, bean counters and financial planners in our companies and industry. Hence it is believed and they believe that we and our services are not required or can be watered down. Ha ha! They think we professionals and our safety management systems are expensive and costly, wait until they see and realize what amateurs cost them. Companies and businesses need to take the position that the days are over where they can view safety and health violations as the status quo, and regard SH&E violations and the attendant civil penalties as another plain old "cost of doing business."(What did I say about “The pursuit of good business not only being about production and profits, but the MANAGEMENT and PREVENTION of loss”) ? For one thing, penalties have been increasing in large amounts. In addition, knowing THAT violations result in the death or serious injury of a worker may be prosecuted at the government level under criminal laws, or in a reference to a government department. i.e. Department of Labour\ HSE Exec\ OSHA or the department of justice. Then there after civil law courts. With devastating effect and ruin of the whole company in many cases. In terms of “The Hidden Costs of Failed Safety and Health Systems” The Hidden Costs of Failed Safety and Health Systems Anyone person, company and or business be it big or small, that has had the misfortune of witnessing or handling the aftermath of a serious or fatal on-the-job injury knows that, without question, the costs go far beyond those that appear in a company's ledger book. For those who survive, or who work with the accident or illness victim, the costs continue with psychological stress that may require years of counseling, loss or earnings and permanent disability. Many times, co-workers who witness a serious event find themselves unable to return to the work site for a significant period of time, this presents additional costs to the company through the abrupt loss of skilled workers. A company business or plant with a singularly bad reputation for safety and health may find itself unable to attract workers at all, and or may have to pay wages well above market value to do so. These are just a few of the "hidden" costs of a poor safety and health program. Again I point out that because we “Well some of us”, DO OUR JOBS SO WELL that our employers CEO’s, managers, bean counters and financial planners never see or envisage these hidden costs OR THE RETURN OF INVESTMENT ON A HEALTH AND SAFETY PROGRAM. Moreover, as more information concerning a company's compliance and injury/illness experience and records (if any?) become publicly available over the Internet and from the government departments and news and media agencies or social networks,”Twitter, Facebook and others or via our countries Freedom of Information Act (FOIA) requests, foes of industrial growth may use this data to defeat permit applications or zoning change requests. Then instead of being a "GOOD CORPORATE CITIZEN" but become - a company that no one wants in their backyard – As we the company cannot or are seen as being unable to offer a safe and healthful work environment to employees and the local residents. NOW ?? Mr CEO, CEO’s, managers, bean counters and financial planners where are your profits, and how do you propose to improve your company's bottom line? All this! Just because you did not believe in the importance and urgency of safety or its prophet. Please note I said PROPHET not PROFIT. Yes sure, Companies may also "externalize" costs associated with workplace injuries or illnesses, to the detriment of their safety and health program management. If some other organization (such as worker's compensation, social security, welfare or other insurance) pay the costs, corporate management may have a disincentive to control hazards. Here in lies an excellent example of being: "PENNY WISE AND POUND FOOLISH." When the company or business insurers pay all the immediate costs of employee injuries, ultimately we all pay either in the form of higher premiums, inability to obtain insurance completely, or pass - through costs to the consumer. Making the company less competitive in the market place. Conversely, when there are fewer accidents, the company or business and society communities in general saves as a whole lot. Fewer hospitals, medical professionals and rehabilitation facilities will be needed, and employee productive capacity will not be reduced as a result of occupational injury, disease, and death. Investment in safety, health, and the environment is good for the economy, country, the firm, and its workers. Part of a company's key business strategy must include strong emphasis on occupational safety, health, and environmental management. The belief is that investment in SH&E makes sounds business sense and should be a cornerstone of an organization's goals and objectives. Ongoing investment in SH&E must be seen as positive generator for companies, businesses and largely all organizations in general Some statistics and examples to consider when reviewing the "Economics of Safety" and the How do We Get It or “How do we achieve it question need to be considered and you need to be asked, Do You Know How Much Accidents Are Really COSTING Your Business? When trying to evaluate you return on investment of a safety and health program and the value of a good safety professional. (Like Me,worth my weigh in gold) LOL. Ha ha. Please consider these statistics and examples. Random Facts Nearly 50 workers are injured every minute of the work week. Internationally? this would be much more. Nearly 17 workers die on-the-job each day, internationally? I do not want to research or calculate this you can do it yourself. Workplace injuries will cost society in excess of 128 billion, Rands in losses this year alone and increases annually, this most likely equals one-quarter of GDP or each currency amount equivalent to the dollar of pre-tax and or corporate profits. Please!!! Mr CEO, CEO’s, managers, bean counters and financial planners tells us? Now how important do you think a professional health and safety manager, officer, team and system is worth, and do they definitely represent a return of investment in a successful safety management program? Especially when: • Indirect costs of injuries may be 20 times the DIRECT costs -- Indirect costs include: the re training, training and compensation of replacement workers; repairing damages to property; accident investigations and implementation of corrective action plans; scheduling of delays and lost productivity; administrative expenses; low employee morale and increased absenteeism; poor customer and community relations. For example: Relevant to any particular industry in this case Bottling, Baking and Transport. To Make Up, Cover or Re Cover costs • To cover the cost of a 500 rand accident, an employer would have to: * Bottle and sell 61,000 cans of Coca Cola * Bake and sell 235,000 doughnuts * Deliver 20 truckloads of PPC cement
Hi Brian, Brilliant post! I think we must introduce a POTM (Post of the month) award, yours will win hands down. Excellent read, not just for the CEO's and CFO's but also for the young and aspiring OHS practitioners. Keep them rolling in, this forum can do with these kind of postings.
"What is the ROI of HSE?" Good Morning SafetyCulture. No. It is definitely Brian. As for a Brain I do not have one. I have general knowledge and what I can learn from others who have brains,read in books, magazines, study guides and teach myself. Age and experience that is all I have, so I no undoubtedly learn much from the intelligence of others such as yourself,and am not ashamed to admit my lack of knowledge or understanding and am grateful to learn from masters such as you. I say definitely no brains as I do not understand the abbreviation EML as referred to in the context. Is it or could it be "Details for file extension: EML: or Ecological Metadata Language (EML) or maybe EML is a file extension for an e-mail,or EML. Estimated Maximum Loss, Of What? So could you perhaps reduce your use of terminology and abbreviations to something which others not in the business or field can understand. Kindergarten level would be just fine. "You did not answer the question. What is the ROI of HSE? Because, I did not set out to answer the question, all I was asking was "What is the return on investment of a safety and health program?" I did this because we, YES go on, yes. Well,well Because "We do not know, because we do not measure!!!" exactly my point. "Well, I'm not going to answer the question either, because...." Because you have already put some of us on the right track in your rendition of. "Right...now add cost of safety and insurance and SACF/FEM/RMI and self-insurance. Get it? Now divide by EML." See my point? Nope? Shame! Well actually YES I do see your point,much clearer now thank you, and so do many others as I really appreciate that,what you have explained its the truth and realistic.Thank you I am and I am sure many others will now be more the wiser for your examples and explanations and I am being very sincere when I say this.I have been educated. However I am also sure that many bean counters and financial planners out there CEO's and company directors or Boards of trustees have the Brian power to know this too,if you know surely there must be a few others who know this as well. One of the points I was also hoping to make was that bean counters,CEO's and financial planners need to very cautious when telling the safety department and managers. Sorry there is no money for safety now. so get on with the job at all costs as it is about production and profits.They do not know or understand The Hidden Costs of Failed Safety and Health Systems or the connected misery safety and disability or death of workers and the loss of life or a loved one and bread winner in family. What I was trying to bring out was amongst other things. That the basic principle of business economics must not only be about the maximization of profit"AT all Costs" but also the avoidance of LOSS. Thank you for your very usefull and enlightening information,I have learned from it but will still not be answering the question "What is the ROI of HSE?" As this was not my intention. With Honour,Respect and Dignity. I bow to your Knowledge. Thank You.
