Ahhh, the $64-million-dollar question, says Gordon Miller, director of health, safety, and environment for Rexam, Inc. (he says he adjusted the dollar amount for inflation). Every professional deals with it. Over the years the only agreement seems to be that there's no simple answer.
The question is more timely today, given worries about downsizing. It doesn't help that some of the old standbys for getting management's attention are, well, old.
OSHA compliance? Many companies have been there, done that. Dangerous machines and toxic exposures? Found and fixed over the years. Injury rates? For two years now they have been at a national all-time low. Workers' comp? Costs are largely under control after skyrocketing in the 1980s.
For this article, we contacted more than 20 executives, health and safety professionals, consultants, and OSHA officials to give you a wide range of ideas for getting that elusive management commitment. But remember, every manager has different values and priorities. How you gain and sustain their support also depends on circumstances. One safety director told us he recently traded a job working at a company whose culture was far beyond basic compliance for one where his first job was to convince the CEO that $400,000 worth of machine guards was needed.
One way of learning what gets executives excited is to study OSHA's Voluntary Protection Program. Companies can't qualify for the program without serious management leadership. And managers are committing to VPP like never before. Ten years ago, 64 work sites were participating; in February of this year the number was up to 507, with 42 more waiting to be approved.
We begin by examining why three of those companies made the commitment - not just to VPP, but to the idea of health and safety excellence. Read their stories. And take in the tips from the other experts we talked with. Hopefully you'll come away with some new answers to that age-old question: What makes executives tick?
Case Study #1
American Ref-Fuel Paul Varello, chairman of American Ref-Fuel, wanted to send a safety message to his employees, customers, peers and the community, and he found the vehicle in OSHA's Voluntary Protection Program.
"It is the best indicator of our company's commitment to safety," he says. "It confirms the quality of our safety program - one that we can say has been validated by the regulatory body."
But VPP involvement was not a top-down edict from Varello. It began with an employee-driven process at the company's Hempstead, N.Y., plant. Encouraged by OSHA's Long Island area director, and having seen the benefits of VPP involvement at the national conference of participating companies, several employees formed a VPP Task Force in the early 1990s. The facility attained Star status in 1994. In the following two years, American Ref-Fuel's three other waste-to-energy facilities became Star sites as well.
Andrew Szurgot, the company's vice president of safety and environment, explains the intangible benefits: "Employee attitude, reputation of our safety and environmental performance, community leadership . . . these cannot be distilled into dollars and cents. Safety is itself a value to our business."
Since 1994, workers' comp rates at American Ref-Fuel have dropped 50 percent and lost-time injury rates by 67 percent. And during this time, the company was making acquisitions and hiring employees, Szurgot says.
Company officials also cite these benefits from their concerted efforts in safety and health:
- Multiple safety awards underscore the message that American Ref-Fuel is a good corporate citizen in the communities where it provides waste-to-energy services.
- Safety leadership bolsters public confidence in the company's ability to protect the environment.
- Employees take pride in their contributions, and many have grown as individuals due to the key roles they play.
- Safety has enhanced, not detracted from, profits and business focus - American Ref-Fuel doubled in size while gaining its recognition from OSHA.
Case Study #2
International Paper "It's an investment that has the highest possible return," says John T. Dillon, chairman and CEO of International Paper, speaking about his company's participation in OSHA's Voluntary Protection Program. The company has qualified more than 20 plants for membership.
What motivates this CEO to make such a significant commitment?
"The VPP culture is based on trust and mutual respect, a key part of our [overall] competitive strategy," Dillon told an audience at the 1997 National Conference of the Voluntary Protection Programs Participants' Association. Trust cannot be mandated from the top, but once achieved it can break down walls, build teams, change adversarial relationships and improve performance throughout an organization - in productivity, quality, labor relations, profitability and customer satisfaction, Dillon said.
Key elements of VPP (and good safety practices in general), such as management leadership and employee involvement, are "the same as those that promote success" in the domestic and global marketplace, according to Dillon. They are also the same characteristics that "allow you to fulfill customer requirements, reach your financial objectives, protect the environment, operate efficiently, and most important, build trust and respect."
To remain competitive in the global market, companies must adapt to change, said Dillon. A push is on to get rid of old confrontational relationships and introduce a new cooperative approach, he explained. The VPP is a model for nurturing good management-labor relations.
Stanley Weinrich, International Paper's manager of environmental health and safety, explains these additional benefits of the company's safety and health emphasis:
- Facilities are motivated to pursue continual improvements in safety performance.
- Employee ownership and participation are strengthened.
- Through VPP, facilities learn best practices from other companies as well as mentor those striving to attain VPP status.
- Tying safety performance to other business goals shows managers that safety and health is not just a cost of doing business - it's also a competitive business opportunity.
Case Study #3
Potlatch Consumer Products Division When the Consumer Products Division of Potlatch, a paper manufacturer in Lewiston, Idaho, announced layoffs in 1994, production, quality, morale, and safety performance took a hit, according to company officials.
"We read about the Voluntary Protection Program in a pulp and paper trade magazine," says Craig Nelson, vice president of the division. "We visited other (VPP) mills, saw the VPP requirements list and found it covered all the areas where we had goofed." With its emphasis on employee, management and government cooperation; employee involvement; efficient and safe production processes; and goals to reduce injury rates, VPP created a win-win situation for all parties involved, he says.
With cooperation from Steve Brown, Potlatch's union safety representative, Kent Lang, union safety representative and VPP facilitator, and other safety personnel, Nelson, who was vice president of manufacturing for the Consumer Products Division at the time, directed resources and his time to getting the program underway.
"My guess is if managers and other folks responsible for safety sit down to identify six weaknesses and failures in their system, I guarantee all six will be addressed by the VPP and more," Nelson says. "And it starts spilling into all other areas - quality, production, better decisions, employee attitude."
For example, when Potlatch joined the VPP in 1995, workers' comp costs were 53 cents per man hour. By the time the company became a Star site in 1998, the workers' comp costs had gone down to 11 cents per man hour.
"VPP has a very good common sense list of things that actually work," Nelson says. "You would never guess the government was involved."
For Brown and his co-workers, a crucial element has been the cooperation between labor and management.
"Everyone had to be on board to make this happen," he says.
How to overcome four common management mindsets about safety and health 1 Cruising along
What do you do about the exec who has checked out when it comes to safety and health? He was interested; he did invest himself. Then performance improved. Now he's moved on to other pressure points. And your safety program is on cruise control.
Some call this the 'thumbs up, thumbs down' school of safety. Consultant Tom Lawrence explains: Some execs tend to put the pressure on when safety performance is not good, and take it off once injury rates improve, even if the improvement is only a statistical fluke.
So what do you do? "Our job is to coach our executives on the true nature of safety," says Lawrence. "As long as risks remain in the operation, the safety job is never done - even at zero incidents or zero injuries/illnesses. Safety is not a static issue. Either the site continues to work to improve or the site will start downhill."
2 Can't be bothered
Managers up to their armpits in alligators can easily toss aside safety as another headache they don't need. "Really don't have the time for this," they protest. Here's how one industrial hygienist responded:
"OK, just memo me that you won't be doing management leadership in safety," he told the exec.
"Oh, but we will," replied the manager.
"And you won't be doing any employee involvement in safety?"
"Will you be doing safety training?"
"Hazard assessments and control?"
"Well, I don't understand. You'll be doing all the things I want to do . . ."
A few months later the hygienist got word that this manager's plant would go along with the initiative, in this case enrolling in OSHA's Voluntary Protection Program.
A key to selling overworked managers is convincing them that safety will actually save them time.
Educating and empowering employees through programs like the VPP or behavior-based safety takes safety decision-making and problem-solving off the hands of managers. "The work is shared by many more people," says one safety pro.
3 Compliance is enough
Many companies want to follow the mandates and leave it at that. "For more than 20 years our goal was OSHA compliance. Do the traditional safety stuff," says the safety director of a heavy equipment manufacturer. He says he used to think achieving compliance "was utopia." Then he realized "it's not. We had everything in place, no OSHA violations, and still people were getting hurt, even killed."
He pinpointed for execs where the problems were, digging out data on injuries and costs specifically by department. Then he made comparisons to competitors who were doing better.
Industrial hygienist Dan Markiewicz says it's hard to get execs excited by traditional EHS programs. Look at the limitations: Safety meetings and committees are often poorly organized. Inspections mostly document symptoms of larger problems. Investigations often turn into blame games. Trained employees still take shortcuts. Incentives won't fix systemic problems.
Instead of relying on tradition, use your "creative energy" to show managers how safety lines up with the effectiveness of their business, says Bob Veazi, a production manager for Hewlett-Packard.
4 Can't make a profit
Can you "do safety" and still make a profit? Some execs simply don't believe it. Others think safety bleeds the bottom line. But Cathy Oliver, chief of voluntary programs for OSHA, says companies in the VPP prove you can invest in safety "and make a better profit."
She cites as examples:
- ABB Air Preheater, a manufacturer and assembler of gas to gas heat exchangers with 611 employees, has sustained lost-workday case rates at 73 percent below the average of its industry for 15 years. Using OSHA's estimate of $27,000 for the direct and indirect costs of a lost-workday injury, that amounts to average savings of $1,069,200 per year.
- Alumax Aluminum, with 689 workers, saw its workers' comp costs drop 90 percent, from $713,766 in 1991 to $66,522 in 1995, after putting into place an effective safety and health management program.
- A Milliken and Company textile mill with 181 employees has had only one lost-workday injury since 1992, a rate 98 percent below average. The site has saved an average of $238,500 per year.
- Tell execs that "we have achieved safety" and you create a mindset that will lead to the next downturn in safety performance, says consultant Tom Lawrence. Why? If all your focus and energy goes into achieving a single goal, a letdown is sure to follow. Complacency sets in, and the top brass move on to other issues.
"Flavor of the Month"
- Quality-minded execs are interested in management systems that are built to last, consistent and measured performance, and continuous improvement - not gimmicks and promotions.
- Yes it will, but only to a point. Then you'll need other reasons to support safety. In a recent study of 17 major firms, workers' compensation accounted for only $393, or five percent, of the more than $8,000 per employee annually spent for health care.
- Aurora Packing Company saved $1.6 million in insurance premiums over ten years after joining the VPP, but safety director Mike Fagel says, "We didn't do this to get lower insurance. What dollar figure can you put on an arm, finger or toe?" Still, the cost-savings "are a pretty cool fallout," he allows.
- "Workers' comp costs are not going to drive us in some of our units. You can reduce injuries but the cost-savings won't amount to enough," says one corporate safety director.
- Fact is, decades can go by before an OSHA inspector knocks on your door. "Compliance is still out there and real, but an hour inspection every 23 years or so is just not a major motivator," says corporate EHS director Gordon Miller.
"Safety Equals Productivity"
- "Safety and quality are first cousins. Productivity is not. You can increase productivity and damage safety. But when safety improves, quality improves, and vice versa," explains Gary Higbee, a corporate safety and health director.
Playing the Cop
- "Management has to be educated to the fact that 'safety police' are not the answer to reducing injuries. Management must understand that what's important to them is what ultimately gets achieved," says Dan O'Brien, division safety manager with Engineered Carbons, Inc.
- Compliance is now just part of the job, not the major function," says Miller.
Mind Your BusinessHere are 10 issues, values, priorities, and worries that are on the minds of executives - and that can be addressed by EHS activities. Which ones are your managers thinking about today?
- OSHA estimates each lost-workday injury costs $27,000. In 1997, the 368 work sites in OSHA's VPP each averaged savings of $340,141 by being below their respective industry averages for lost-workday injuries.
- "In profit-making America, people aren't organized around safety and fulfillment of human life," says one safety professional. "We're organized for profit. I don't like it, but I've come to see this is reality. We're short-term focused on profit and Wall Street's reaction." This is the daily reality of executive life, the reality that safety must plug in to, he says.
- "Our role in EHS is to reduce costs, not just control costs," says Gordon Miller, director of health, safety, and environment for Rexam, Inc.
- This card is probably overplayed by professionals. You can only cry wolf so many times. In most industries, OSHA inspects less than 10 percent of all worksites annually. Putting executives behind bars for workplace accidents, even deaths, is almost unheard of because prosecutors must prove a deliberate intent to harm. No wonder some companies will roll the dice and gamble on not getting caught.
- Some companies are 'born again' after having to clean up old hazardous waste sites, or feeling the sting of bad press after violations, accidents, explosions, and other headline-makers.
- "Sometimes companies choose to be good guys, to get out of the muck and turn themselves around," says a former OSHA official.
4 Public image
- "Our good name with the public is one of our key equities," says a Fortune 500 company EHS director. It helps safety pros if their company is big, or in a business that relies on consumer confidence (food, health care products) or community trust (utilities, chemical companies).
- "The public expects that companies will operate all their facilities consistently and responsibly."- Eastman Kodak CEO George Fisher.
- "Productivity Gains Help Keep Economy on a Roll," said a New York Times headline this past March. This is one way companies deal with stagnant pricing and global competition. Keeping workers healthy and avoiding absenteeism, turnover and downtime helps the cause.
- "Most organizations do not have extra people, we are all very lean and very mean," says one EHS director.
6 Product quality
- Safety and health programs mirror quality programs if they are set up as documented systems that emphasize accountability, responsibility, work procedures, and employee communication and education. That's why Craig Nelson, vice president of Potlatch's Consumer Products Division, says safety "spills into other areas" such as quality, better decisions, and employee attitude.
- One of the reasons DuPont got serious about safety early on was because it was in the business of making explosives at the time. And why do you think 116 chemical worksites are members of the federal VPP, by far the most of any industry group. Among the reasons, says a safety consultant, are the "historical loss events within the industry."
8 'World class' status
- You'll frequently find good safety performance in companies that are generally respected for having good products, good product quality and good customer service, says Frank White, vice president with Organization Resources Counselors.
9 Peer pressure
- There's a tendency in some industries to play follow the leader, or keep up with your neighbor. Tight-knit and active trade groups like the Chemical Manufacturers Association can also motivate execs, which is another reason so many chemical companies participate in the VPP.
- "If our competitor has lower workers' comp costs per employee, lower total recordable incidence rates, lower costs per product, or lower labor costs, I make sure our execs know about it," says one safety director. Execs have come back and asked him, "What do we have to do to get to where our competitors are?"
10 Employee involvement
- Safety is a very good way to change adverse relations with labor, says Sheila Misner, OSHA VPP coordinator in Region V. "It makes sense. Employees know more about the hazards. Bring them in to solve problems. Then encourage employees to be part of the solution for whatever the problem is. It makes for a more effective organization. Safety is a way to involve employees and get their support for the well-being of the whole company."
What It Takes
Some advice for gaining support: Work At It
- Just keep reminding execs that despite even excellent performance or compliance achievement, if the company is not continually striving to get better, it will inevitably get worse, says Tom Lawrence, a consultant with Risk, Reliability, and Safety Engineering.
- "Execs understand that if you treat people as a consumable resource your long-term sustainability is damaged. They just need us to continually remind them," says Bob Veazie, a production manager and behavioral safety leader for Hewlett-Packard.
Hang In There
- "Seems to me the process of enlisting support is more evolutionary than based on pushing 'hot buttons'," says Tom Hawkinson, director of environmental health and safety for General Mills.
- "We often will go into a decision-maker's office and give it our best shot. Then comes NO. We need to understand that NO does not mean NEVER. It means NOT JUST RIGHT NOW. Being patient will allow you to repackage the ideas, do more homework, get others involved, and then sell the idea," says Gordon Miller, director of health, safety, and environment for Rexam, Inc.
Get Some Help
- "Safety people hang together, even from competitive companies," says Gary Higbee, corporate director of safety and health for Maytag Corp. For benchmarking purposes, he's obtained injury rates and workers' comp costs per employee from competitors.
- "We take for granted that safety 'should' just be part of what organizations do," says Bob Veazie. "Then we get frustrated with those at the top for not focusing on what 'should' be happening. We must get creative about how our safety initiatives directly impact their priorities - profitability, productivity, quality, cost management, doing more with less."
Break It Down
- "Too often, a large administrative staff's hours will make the OSHA incidence rate look much better than it actually is in the high-risk areas," says Bob Brown, a supervisor with a major petrochemical company. "It helps to look at rates broken down by area."
Make It Personal
- Too often, managers are not close enough to injuries, says Brown. He shares actual injury cases with them. Sometimes in a meeting he'll ask a number of managers to stand up, representing the percentage of workers who get hurt in the trenches. Then he describes how each of the standing managers could have gotten injured, based on actual cases.
Get In Touch
"The greatest mistake you can make is not knowing what your management staff values," says Brown.
- "How good do you want to be in safety?" safety director Gary Higbee has asked managers.
- "How many injuries a year are acceptable?" Bob Brown asks.
- "Do you want true safety performance or the illusion of safety performance?" asks Charlie Hart, an Exxon plant safety manager.
- "You might be surprised how hard it is for a manager to say 'No' when it comes to safety," says one safety pro.
Stick Your Neck Out
- "If all you do is put in time, you're less likely to gain the support you're looking for," says Ernie Huelke, a transportation industry safety manager and owner of SafetywoRx consulting. Execs respond to passion, but you have to be careful not to become a zealot, he says. Know your business, your executives, the rules of the game in your organization - and be open to a change in employment, says Huelke.