How-To: Supporting Safety & Math That Connects with CEOs
We believe you shouldn’t have to ‘sell safety’, and assume that occupational safety and health are the foremost priorities for all organizations. Still, Environmental Health & Safety (EHS) professionals ask us the same question, time after time: How do I get management to ‘buy in’? This Selling Safety Series has the answers that will help you take your great safety idea to management teams with a winning strategy. If you’re a safety pro needing to build advocacy for organizational improvements, know that you’re not alone!
The Department of Labor says a good occupational safety and health program can save $4 dollars for every $6 dollars invested.
Yet many people—even occupational safety insiders—struggle to understand how organizational safety translates to return on investment (ROI).
Well, it’s no wonder why; this is a big topic, with many possibilities unique to each organization and whichever safety consideration (or investment) happens to be on the table at the moment.
For instance, there are savings to be realized from injury & illness reduction, lower workers comp experience modifiers, training efficiency, business competiveness, productivity enhancements, etc.
For now, let’s focus on training efficiency—that’s one we know.
In any organization, employee time is the most valuable commodity; payroll (and benefits) is the employer’s largest expense.
It’s a widely discredited—yet stubbornly common notion—that safety comes only at the expenses of productivity, but we know from experience that it isn’t true.
We believe in a healthy balance of safety and productivity, with safety, of course, as the foremost consideration. We also know that some improvements can increase both of those qualitative values at the same time.
Now, most businesses have some sort of production metric—from cost per unit and business overhead, or even billable hours.
For a basic example, let’s examine a mining operation generating ‘tons per hour’. The commodity—1 ton of crushed rock—is worth X number of dollars.
When work is stopped for any reason—safety training, an accident-related injury, impromptu meetings, equipment breakdowns, maintenance, or weather—production isn’t happening and money is lost.
Let’s say that our mine site is generating 600 tons of product per hour when it is unexpectedly shut down for an 8 hour workday to handle compliance training (MSHA and OSHA). Let’s also say that the price of 1 ton of crushed rock is $40 dollars per, okay?
The 8 hour pause in production pencils out to $200,000 in lost productivity; and that’s not to mention the hourly labor expenses of employees, for wages paid.
This time out of production, with no customers being served, no products being created, shipped, or manufactured, is often a forgotten consideration in the safety world.
With this example, if you were to reduce the amount of time spent in training and return the workforce to production for any amount of time, that would be a recovery of operational efficiency.
A better question: What if we didn’t have to interrupt production for safety training at all?
Here’s the true story of one customer who answered that question: Montana Limestone Company
The point is, training efficiency—like out of production time—is an actual number that can be calculated, figured, and accounted for, and the math is (or can be) fairly basic:
- Total Cost of Training = Annual Time in Training for Employees + Materials & Resource Development + Facility & Equipment Costs
- Cost to Produce Goods & Services = Total Labor Investment + Infrastructure Expenses + Maintenance + Time Out of Production
Regardless of your industry, if your organization is in the business of making money, there’s math to show safety as a profit center and productivity enhancer, supporting your organization’s production quotas or goals.
If you need help doing safety ROI math, get in touch with us.
In the meanwhile, challenge yourself to identify how much injuries & illnesses are costing your organization annually.