How does work safety affect performance and culture?

A recent Standards Australia forum involving key stakeholders saw attendees unanimously agree that an identical adoption of ISO 45001, as soon as possible, was the best possible outcome for the country.

Typically, the benefits of health and safety systems are framed in terms of cost-avoidance. Organisations are constantly reminded that health and safety failure is expensive. And whilst this is certainly true, there are benefits to health and safety success that go beyond cost-avoidance.

Today, successful organisations view safety as an asset, and health and safety spending as an investment. This is because a safe workplace adds measurable business value, and can drive tangible improvements in performance, profit, and culture.

This notion that safety is good for business is not a new concept, but it is one that is gaining increasing traction as more in-depth research is released. One study puts the return on investment of health and safety spending at 2.2. Others have this number even higher.

In fact, a Comcare paper reveals an average return of $5.81 for every dollar invested by companies into workplace health programs. Another study analysed the stock market performance of companies recognised for their health and safety, and found an average annual return of 6.03% – well above the market average of 2.92%.

Productivity

Too many organisations still believe they have to choose between safety and productivity. That health and safety directives exist to stifle the productivity within an organisation. But safety and productivity are not competing ideals. You do not need to sacrifice one, in order to achieve the other. In fact, the research is overwhelming of the view that safety is productivity.

Part of this is the productivity loss associated with bad health and safety. Injured workers don’t produce anything. Similarly, workers on reduced duties, employee retraining, damaged machinery, and allocating resources to investigation, are all drains on efficiency.

But do good health and safety practices translate to actual boosts in productivity? A 2010 study of manufacturing companies found that companies in the top 20 percent for operational efficiency achieved an injury frequency rate of just 0.05 percent – 18 times lower than the industry average.

Lockheed Martin, one of the largest companies in the aerospace and defense industry, found that following safety procedures at their Paducah plant earned them a 24 percent increase in productivity, and a 20 percent reduction in factory costs.

An investment in health and safety is also a direct signal to your employees that you care about their wellbeing. This is the first step in creating a loyal and engaged workforce, and one that buys-in to their employer’s vision. This concept is backed up by a 2011 study by Aviva that found 61 percent of workers would work harder for an employer that invested in the health and safety.

These boosts to productivity and performance are also recognised by business leaders. In a 2005 survey, businesses were asked to quantify the benefits of their occupational safety and health investment. The top-ranked factor was increased employee motivation and satisfaction. In fact, almost 40 percent of CFOs cited productivity as the top benefit of an effective workplace safety program.

Culture

A lot has been written on organisational culture and its impact on worker behavior. From a health and safety perspective, we are most interested in a specific subset of organisational culture, often referred to as safety climate.

A safety climate is the shared set of perceptions and expectations that workers have regarding safety in their organisation at any given time. But how does this safety climate affect how workers approach their day-to-day work, and any health and safety concerns that may arise? The literature says the impact is significant.

A 2005 study found workers with a negative perception of safety climate were more likely to engage in unsafe acts, which in turn increased the likelihood of an accident. Employees may have all the training and equipment necessary to complete their job safely, however, over time, they will begin to cut corners and become complacent, without sufficient accountability.

Similarly, the same study found workers who perceived job insecurity, anxiety and stress within their organisation, experienced a drop in safety motivation and compliance, and recorded a higher accident rate.

Such a negative safety climate can quickly become toxic, and can greatly increase the risk of incidents. If workers don’t consider safety an organisational priority, then they are unlikely to treat it as such.

A recent survey of Australian workers found one in ten were afraid to report a safety breach over fears it would cost them their job, and one in five said they had made a safety complaint that was never acted on. Furthermore, an alarming 17 percent of respondents said a colleague had been fired after being hurt in the workplace.

But this sort of negative safety climate can be reversed when management implement a top-to-bottom safety focus. Once workers trust that safety is an organisational priority, they begin to take ownership for safety-related issues, and a culture of safety begins to form.

And the benefits that come from that are significant. The same 2005 study found workers with a positive perception of their workplace safety registered fewer accidents. This study also found that safe work behaviours were directly linked to whether an employee thought their employer was concerned about their wellbeing.

Workers’ Compensation Premiums

Workers compensation costs and insurance premiums are the business costs most directly linked to health and safety. Companies can see drastic reductions in these numbers if they can reduce their claim costs compared to other companies in the same industry, and with similar risk profiles.

Insurance carriers also offer substantial discounts to businesses that can demonstrate a strong safety record and commitment to helping injured workers return to work. According to the Occupational Health and Safety Administration, successful health and safety programs reduce injury and illness costs by between 20 and 40 percent.

Harley Davidson famously went from spending $6 million in workers compensation in 2013, to $600,000 in 2016, after a renewed safety focus. The Adecco Group saved millions in their workers compensation premiums after a successful health and safety software implementation saw them reduce their lost-time-injury frequency rate by 67 percent.

­­Reducing workers’ compensation premiums is particularly important in the current business climate, as the median compensation paid out for serious claims has risen 71 percent in Australia since the year 2000. It now sits at $8,900. And as these compensation payouts continue to rise, insurance providers will continue to raise their premiums.

Reputation

Today, information is spread at the touch of a button, and the modern public demand accountability and transparency. Rather than shy away from this, successful companies take advantage of it. Health and safety initiatives are used not only to avoid a bad reputation, but also to build a good one.

The companies at the forefront of this thinking treat their health and safety reputation as a business asset. They have built their success on a strong reputation for doing the right thing. And they like to report on it.

This speaks to the notion of Corporate Social Responsibility (CSR). CSR has become one of the standard business practices of our time, and is now a core strategy for any modern business, big or small. It is the process of building trust with consumers, partners, governments, suppliers, and employees.

And the research suggests that a high level of trust within a company drives business performance by attracting new customers and retaining existing ones. Testament to this, a 2016 study found 64 percent of CEOs were increasing their CSR investment.

Not only can your safety reputation enable you to maintain your supplier relationships and win business tenders, it also helps to attract and retain your most valuable asset – your employees. In a tight labor market, promoting a safe work environment is a valuable point of differentiation to your competitors.

In fact, a 2017 study found that the safety of the work environment is one of the top criteria employees consider when assessing a job offer or position. It found that potential employees rank safety ahead of other important considerations, such as such as the quality of potential coworkers, and opportunities for professional growth.

ISO 45001 and The Future of Health and Safety

ISO 45001, the long-awaited international standard for occupational safety and health, was published in March 2018 following a five-year development process. It gives organisations of any size a universally accepted framework for improving employee health and safety. It aims to reduce workplace risks, and creating healthier, safer, working conditions.

There are, however, some key differences between the new global standard and existing standards such as OHSAS 18001, and AS/NZS 4801.

ISO 45001 emphasis the need to incorporate safety throughout all levels of an organisation, from top to bottom. This requires upper management to on a stronger leadership role in respect to the OHS management system.

ISO 45001 is process based rather than procedure based, and focuses on identifying and controlling risks rather than hazards.

ISO 45001 requires organisations to take into account how suppliers and contractors are managing their risks.

Businesses should treat the implementation of ISO 45001 as a strategic move that will allow them to obtain many of the benefits outlined in this report. The standard represents a holistic approach to health and safety that will only strengthen the notion that OHS investments produce a positive return on investment.

Some of the main benefits include a clear outline of safety objectives and improved managerial oversight in health and safety to allow management to make better, more informed decisions. A proactive approach to risks should transform operations from detection mode to prevention mode while an improved safety culture should be built through increased worker participation.

Finally compliant firms should enjoy an improved company image and reputation with both customers and their industry.

Gone are the days when health and safety initiatives were considered burdensome and secondary to primary business objectives. The research is overwhelmingly of the view that improvements in key safety metrics directly impact the bottom line.

This is why the majority of businesses are now moving toward more robust health and safety systems that go beyond mere compliance. A health and safety focus is now considered a driver for improved performance, and a true business investment.

This article was published by myosh. Read the original article.