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September 30, 2015

How Companies with Safety Programs Out-Perform Competitors

 

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Safety has not always been a top priority for all companies – many of us have heard stories that describe some pretty awful things employees have endured due to their employers’ negligence or incompetence. In the past, taking safety precautions to protect employees was often seen as a hindrance to productivity, rather than a facilitation of it. This mindset has led companies to ignore regulations or abide by them at the bare minimum to meet compliance.

 

Today, more than ever, companies are realizing the idea of safety inhibiting productivity is untrue and are instead focusing on improving their safety programs as a means to enhance operational excellence.

 

Workplace safety can have a positive impact on a company’s overall operations. A 2014 research report by the Aberdeen Group examined the connection between a company’s level of safety and its operational excellence. Aberdeen defines operational excellence as “a philosophy that promotes collaboration between parts of an organization to drive continuous improvement for the overall organization, as well as the individual groups within the organization.” The companies that are considered “Best-In-Class,” based on four factors defined in the report, are able to achieve high levels of safety operations while also maintaining high levels of operational excellence.

 

The report examines several indicators of a relationship between safety and operational excellence. One such indicator is the motivational factors behind safety operations. Although there are some factors that are high on all companies’ lists of motivators, Best-In-Class companies maintain a greater emphasis on factors related to the success of operational excellence than their lower-performing counterparts. Both categories of companies focus on factors related to compliance and cost avoidance, but the Best-In-Class also focus on other operational excellence factors such as improving manufacturing efficiency and Return on Assets – at rates of up to two or three times the rates of lower-performing companies. The success in safety operations achieved by these Best-In-Class companies demonstrates the correlation between their focus on operational excellence and their level of safety performance.

 

According to a 2013 report from the Bureau of Labor Statistics (the most recent data available at the time of this post), non-fatal workplace injuries and illnesses reported by private industry employers have decreased by statistically significant numbers for the past 11 years, with exception of 2012. In fact, from 1970, when the Operational Safety and Health Act (OSHA) was enacted, to 2011, worker injuries/illnesses dropped from 10.9 incidents to 3.4 incidents per 100 workers. Many companies have realized how employee injuries can cost them a lot of money in healthcare costs, litigation, violation fines, etc. This has led to a growing trend towards a preventive, rather than prescriptive, approach towards health and safety – another indicator of a Best-In-Class company. Not only is this approach better for the health and well-being of workers, it has become very apparent that this approach is also more efficient and less costly for employers.

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