WHAT HAPPENED TO THE BUSINESS CASE FOR SAFETY?

September 21, 2005
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Dear Subscriber,

Did you happen to see the seven-page special advertising section - "The ROI of Safety" - in the September 12th issue of BusinessWeek?

Finally, someone - in this case the National Safety Council, Liberty Mutual, and ExxonMobil - splurged with a major cash outlay to carry safety's message to an executive audience.

But talk about the "ROI of Safety" and statements like this from the supplement - "An increasing number of CEOs are realizing that investing in safety is a sound business strategy" - are noteworthy for another reason. In 2005, you seldom see safety pitched as a "sound business strategy" with a healthy ROI.

In this edition of ISHN's monthly E-zine, we ask: What happened to the business case for safety?

SHOW 'EM THE PAIN

Don't believe that making the bottom line case for safety is out of favor these days?

If you were in Dallas in late August for the annual meeting of the Voluntary Protection Programs Participants Association - arguably the fastest-growing safety meeting in the country with a record-breaking attendance of more than 2,400 this year - you had your choice of 112 workshops. Only two even mentioned "costs" or the "business case" in their title.

Keynote speakers wove their themes around culture, leadership, mental toughness, passion and the human side of safety. Nothing about the bottom line or competitive advantages.

CEOs speaking at the American Society of Safety Engineers' "Executive Summit" earlier this year also were silent on the subject of safety's fiscal benefits. They rapped about safety in terms of ethics, values, expectations and plain old doing the right thing.

Instead of looking at a spreadsheet that shows the ROI, the best way to convince a CEO that safety pays is to take him or her to the home of one of your injured workers, said Gary Gregg, executive VP for Liberty Mutual, at the summit. Show them the pain instead of the cost analysis.

Even OSHA has backed away from pushing the business case. Under former boss John Henshaw, one of the most corporate-like administrators ever to run the agency, OSHA used this tagline at the end of its press releases:

"OSHA is dedicated to assuring worker safety and health. Safety and health add value to business, the workplace and life."

Note that business was first in line for receiving safety's value-added benefits.

But today, OSHA's press releases end with this statement:

"OSHA's role is to assure the safety and health of America's workers by setting and enforcing standards; providing training, outreach, and education; establishing partnerships; and encouraging continual process improvement in workplace safety and health."

The mission statement is more verbose, but "business" and "value" are nowhere to be found.

THE GOSPEL ACCORDING TO PAUL (O'NEILL)

What's happened?

Only three years ago ISHN proclaimed 2002, "The Year of the Business of Safety." The second annual Workplace Safety Summit was hosted by Georgetown University's Center for Business and Public Policy. ASSE sponsored a "Business of Safety Symposium." The National Safety Council rolled out a new program, "Awards for Outstanding Achievement in Safety & Productivity."

Turns out the second Workplace Safety Summit would be the last. And the Safety Council has subtly changed the objective of its Robert Campbell Award. Once described as honoring companies that link outstanding EHS practices with "productivity and profitability," the award now goes to organizations demonstrating excellence in "integrating" EHS management into "overall business operations."

What happened to "productivity and profitability"?

Safety expert Dr. Dan Petersen predicted this swing away from the business case for safety in a 2003 interview with ISHN. "When the economy turns around, I don't think we'll see the emphasis on it," he said. Petersen believed job insecurities had safety and health pros scrambling to prove their worth.

But Petersen argued pros were chasing an illusion. "The business case has been talked about for years," he said. "It is hard to prove. I don't think we'll ever be able to prove it."

Worse than their wasting their time, Petersen contended, "It is a very bad message to say safety is about dollars. Don't even talk to (workers) about doing safety for money." Petersen sounds like he's sharing a hymnal with Paul O'Neill. While Secretary of the Treasury, O'Neill gave a speech that's still quoted in safety circles. "Safety needs to be about human value. Cost savings suggest something else. Safety is not about money. It's not a management scheme to save money," asserted O'Neill. As chairman of Alcoa Corporation, he warned his accountants: "If you ever try to calculate how much money we save in safety, you're fired."

Even John Henshaw, who spent three years in the OSHA bully pulpit promoting the business case for safety, changed his tone toward the end of his tenure. "If you think you've got to calculate the business case in hard numbers, you may not be able to do it in all cases," he told ISHN in a 2004 interview. Enlightened professionals should lead on values and principles, he said.

WHERE'S THE BEEF?

Echoing Petersen, other experts argue that rarely will you come up with the hard numbers to prove safety's positive impact on the bottom line.

"The hard fact is this: demonstrating a quantifiable financial return can be very difficult for safety and health-related investments," wrote Tom Cecich in the September, 2005 issue of ISHN.

Cecich, a long-time corporate EHS director, argued, "It's difficult if not impossible to calculate the true cost of injuries and illnesses, organizational inefficiencies from losses, low employee morale, and compliance exposure."

One of the most successful marketers of safety programs, Behavioral Science Technology, has reached a similar conclusion. "(Workers' compensation) claims history and reporting are so highly variable that they seldom provide a reliable measure of the financial benefits of any specific (safety) initiative," BST states in a corporate brochure.

Many safety and health pros agree.

In a 2003 ISHN survey, only 36 percent of respondents planned to increase their efforts at proving the business case for safety. In a 2004 survey, 57 percent of ISHN readers said company values were the main reason for safety investments - compared to 33 percent who pointed to bottom line contributions.

THE NEW BUSINESS CASE

Want an idea of how organizations are promoting the benefits of safety in 2005?

Check out the advertisements in the official program of this year's VPPPA meeting paid for by corporations that have achieved VPP status.

Here's the message: Achieving excellence in safety performance both exemplifies and embellishes corporate vision, boldness, innovation, citizenship, efficiency, global responsibility, commitment, dedication, disciplined execution and high standards of operating excellence.

You won't find one ad boasting of profitability improvements.

Now here's the subtext of these messages: Don't try to engage and motivate employees by informing them safety is a sound business strategy. Don't try to enhance your reputation as being socially responsible and caring by claiming to have bagged tremendous returns on safety investments.

The nature of safety sales pitches run in cycles. Way back in 1944 the senior safety engineer with the U.S. Department of Labor said, "The main driving force behind the industrial safety movement is the fact that accidents are expensive."

But in this era of global branding, with all the strategies that entails, safety isn't about expenses and dividends, it's about execution and reputation and image. That's the new business case for safety.

BONUS: LEARN FROM THE VPP "STARS"

Here are ten themes from the VPPPA meeting in Dallas you can apply in your workplace safety programs:

1. Network, network, network. Talk to as many people in and out of your company as you can about safety ideas and solutions.

2. Have fun, emphasize humor.

3. Find a sponsor for your safety efforts (a management champion).

4. Think big. Always be thinking how you can expand the reach and depth of your safety program.

5. Don't be afraid of a little competition. Set up contests, honors programs, department rivalries.

6. Be a sponsor. Safety professionals cannot do it all, but they can organize and coach employee teams.

7. Turn up the lights, strike up the band. Emphasize recognition. Celebrate safety successes.

8. Don't be superman or superwoman. You need a culture of safety to really achieve sustainable success, with safety roles defined, monitored and rewarded at every level of your organization.

9. Put up a web site. Yes, a specific, safety-only web site for your workplace. It's easier than ever.

10. Curb your enthusiasm. A band of safety-passionate employees can quickly get fired up and want to rush to convert the unconvinced. But you need a plan, you need to target your safety resources at selected priorities, and you need patience. Not everyone is waiting to "get religion."

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