Health and safety management.

Health and safety matters are important to many companies

which have both moral and ethical responsibilities to their

associates. In addition, health and safety programs and

activities contribute to the protection of assets necessary for

orderly and efficient production, insurance cost control,

operational cost reduction and regulatory compliance. Health and

safety management is also an important factor in the

protection of the bottom line. Every accident results in costs, both

in human and business terms, which can be classified as

either direct or indirect. Direct costs include medical expenses,

indemnity payments and insurance. Indirect costs, or

nonbillable costs, may include wage cost of injured workers,

wage cost of others, property or equipment damage,

administrative costs, production downtime, off-quality goods,

consultant fees, as well as legal fees.

The cost of an accident is much like an iceberg. Many

costs of an accident are not visible on the surface, but they

are there just the same. As with an iceberg, only 20% of the

ice is above the water and easy to see, while die majority of

the iceberg is below water level. This is a good example of

how indirect costs can escalate in an accident.

On the average, indirect costs exceed direct costs by a

ratio of about 4:1. This has been documented by the National

Safety Council and a number of other safety organizations in

the past few years. It has been reported that indirect costs can

be as high as 8:1 compared to direct costs. For example, if an

associate working on a high pressure steam line sustains a

burn, a hospital visit generally ensues with associated time

off from work, possible physical therapy, etc. Direct costs,

such as medical and workers compensation, may be as much

as $50,000. Indirect costs using the 4:1 ratio may add another

$200,000 to the overall expense. For the sake of argument,

let's use only two (2) as the multiplier. Indirect cost of the

$50,000 accident, using the 2:1 ratio, which is half of the

National Safety Council's average, would add another

$100,000 to this sum. The total cost of the accident, including

direct and indirect costs could be as much as $150,000.

Assuming a company has a profit margin of approximately

15%, a business would have to sell approximately

$1,000,000 more product to compensate for this occurrence.

In addition, this money would have to come out of new sales

not existing sales.

To use a real world example, assume the following is true:

Compounded or mixed rubber sells for an average of about

$1/lb. with a typical batch size of 600 lbs., valued at $600

and a profit margin of 15%. It will require the mixing of

1,667 batches to cover the cost of the accident. This

potentially could be at least one week's worth of production on a

mixer.

Other factors in health and safety management include the

consideration of dealing with workers compensation and the

insurance experience modification factor. This means if a

facility or company has a significantly high worker's

compensation cost, the experience modification factor may be

equally high. If the experience modification factor is above

one (1), which would be considered the national average,

then this facility or the company would be required to pay

more in workers compensation cost and insurance than the

average for that business.

There are also legal implications of dealing with poor

health and safety practices. The Occupational Safety and

Health Administration (OSHA) regulates health, safety and

some medical issues in industry. OSHA is able to visit any

facility without notice and issue a citation for not complying

with the multiple standards known as the General Industry

Standards (29CFR1910). OSHA can, however, go one step

further. If OSHA determines, after their investigation of an

accident, that a fatality or serious injury occurred by willful 

neglect, or by negligence per se, criminal referrals can be

made to the Department of Justice (DoJ) or the U.S.

Attorney's office. Figure 1 shows a fairly alarming trend in

this area.

[FIGURE 1, GRAPH OMITTED]

In the years 1970-1977, three referrals were made to the

Doj for criminal sanctions. In 1978-1982, some 23 referrals

were made. In the years 1989-1993, 48 referrals were made

to the DoJ or the U.S. Attorney. Projections for 1994-1998

are somewhere in the neighborhood of 100 referrals by

OSHA to the DoJ or the U.S. Attorney's office. This means

the management of a company is responsible for good health

and safety practices. There is also an element of personal

liability related to knowledge of inconsistencies with the OSHA

standard and if someone is seriously hurt or a fatality occurs.

Companies must develop approaches to health and safety

issues as they do all other management duties. There are

several different ways to handle health and safety management.

Most companies start out with a fire fighter approach -- no

structured program, response to accidents as they occur,

incremental improvement to health and safety. Another

approach is one that is classified by a staff manager. A

company hires a health and safety manager or coordinator who

has the responsibility for all health and safety at that facility

or within that company. The sole responsibility of this

individual is to health and safety policies and procedures. The

next level is referred to as the operations manager approach.

This pushes the health and safety responsibilities to line

management, supervisors and related staff. An interesting part of

this approach is that operations managers have fewer

professional health and safety individuals on staff because the

function has become an integral part of day-to-day business.

Everyone is involved in health and safety activities with

responsibility and accountability assigned at management,

supervisory and staff levels.

In order to start at the fire fighter approach and to

ultimately rise to the integrated manager level, it could take a

company committed to this improvement a minimum of 5-7

years. To move up along the four stages of safety

management programs, the core tenets are:

* Consistent values;

* mission;

* and a vision of the company's management philosophy.

This is a significant learning process. Techniques learned

at one stage are carried to the next and improved upon.

Cultural changes must be assimilated at each stage. The old

approach to health and safety management at the fire fighting 

level was based on reaction to an incident, instead of accident

prevention. Heinrich showed that for every serious accident,

29 minor injuries occur. If a company reacts to only major

injury accidents, approximately 99.7% of all accidents or

near misses will be ignored.

Health and safety represent the control of recognized

hazards to attain an acceptable degree of risk. We all understand

the concept of risk, because most of us have gotten into a car

and driven from point A to point B. We judge the risk, as we

drive to be acceptable because we know the probability is

very good that we are going to arrive at our destination and

that we have some degree of control over our safe arrival.

Safety resources must be designed to match the safety

management approach and culture of an organization. Staff

and operations manager organizations require extensive

resources. This includes detailed safety procedures and

standards, manuals, safety responsibilities written for each job

description, a detailed audit requirement, health and safety

professionals, as well as health and safety specialists.

High-end operations and integrated manager organizations

combine safety with other processes as an example of one way

business is done. A company would not make a product

without utilizing various health and safety procedures, in this

process, specialist knowledge must be passed to other staff

members. Health and safety is integrated into the business in

this way. All staff members are knowledgeable, and their has

been a cultural change not driven by fear of government

intervention, but by good proactive management where

health and safety are considered standard practice.

First, any health and safety program is doomed to failure

if management is not 100% in support of the program and

philosophy. This support has to be visible. It cannot be a

passive delegation of responsibilities by a CEO, president or

vice president. Top management must be visible, active and

involved. In addition, a company must have a mission

statement that includes not only quality and production, but also

appropriate health and safety language and direction. In order

for a company to go from a fire fighter to staff member

approach, it must develop safety procedures and plans, and

adopt these as standard operating procedures. These written

plans must include OSHA and administrative requirements,

with designated responsibilities, accountability and

procedures on how departments and facilities are rated,

improvements measured and achieved.

Once this has been done, accountability and responsibility

must go from the top to the bottom. Fundamental to this

approach is the premise that health and safety is a basic line

management responsibility. Management establishes and

maintains acceptable health and safety standards based on

corporate policy and guidelines. Supervisory health and

safety standards must be achieved in the same manner as

responsibility for production, costs, quality and human resources.

Management duties and responsibilities must be assigned not

only to the president, facility manager, department manager,

supervisors and other line management, but also to staff

members and others in management positions. Each of these

duties must be accountable and have a disciplined, integrated

approach. Without discipline, no program. Whether it is

health, safety, environmental or quality can succeed. In order

to develop a health and safety organization, the purpose and

policy of this organization, along with the structure, must be

clearly understood at all levels in a company

Some businesses are currently experimenting with a

central health and safety committee. This committee typically

has about eight action teams responsible for fire and

emergency, housekeeping, awards, accident investigations, health

and safety rules, and a number of other health and safety

related issues. A central safety committee which can include

facility managers, health and safety staff, environmental

coordinators, department managers, nurses, plant engineers,

training managers, human resource managers, industrial

engineers and others are responsible for providing overall

control of the program. The action teams report to the central

health and safety committee, which eventually runs the

overall program. These action teams have very basic team

fundamentals that should be written into the health and safety plan

in order to clearly state their responsibilities.

In general, each team has team fundamentals, critical

elements, suggested activities, requirements for membership

and basic objectives, Before beginning, employees may need

some basic management, health and safety training.

Unsafe acts account for approximately 80% of all

accidents. Unsafe conditions account for 20% of accidents. Other

causes may include lack of guarding, poor maintenance,

defective equipment or tools, improper material storage, slips

and falls. This type of incident accounts for approximately

20% of accidents. In order to recognize the accident cause(s),

there must be a distinction between symptoms and causes.

Symptoms can be carelessness: oil on the floor, climbing

improperly or inadequate personal protective equipment.

Causes may include inadequate personal protective

equipment, low motivation, lack of accountability or discipline,

lack of policies or procedures, insufficient training, poor

management support and many more.

Let's discuss an accident in general and then look at the

parameters involved in an accident. Generally it takes many

unsafe acts before a fatality occurs. Unsafe acts, near misses,

minor and severe injuries are all indicators of the level of

implementation of a safety program. If a company only looks

at injuries and fatalities, it is focusing on a small part of the

overall pyramid. Near misses and unsafe acts are by far the

largest part of the equation.

Training supervisors and associates is a critical element in

any health and safety program. The Cone of Learning diagram

in figure 2 indicates that passive learning, i.e., listening,

seeing, watching, but not actively participating, results in

employees learning less than 50% of the desired information.

Employees who are expected to maintain or understand 90%

or better of the material presented must be actively involved

in the training process. This includes participation, discussion

and hands-on training where employees are given the chance

to make mistakes and learn from them. An ancient proverb 

sums up this process: "Tell me and I will forget, show me

and I will remember, but involve me and I will understand."

Another critical element involves accident investigations,

with fact finding to determine the root cause of an accident.

The results of an accident investigation and knowledge

gained sometimes can be used to improve or prevent that

same type of accident from occurring in the future. This is

proactive thinking. Implementing corrective action is a

necessity.

[FIGURE 2, ILLUSTRATION OMITTED]

Creating a health and safety culture is the basic objective

to develop awareness, recognition, top management support,

accountability and discipline. Albert Einstein once said

"Concern for man himself and his fate must always form the

chief interest of all technical endeavors -- never forget this in

the midst of your diagrams and equations." If you develop a

good health and safety management program, your company

will be a more profitable business, you will have better work

morale and a better product, not to mention protecting

someone's father, mother, son or daughter from harm. That is a

real, and important, bottom line.

Dr. Ron Read, divisional manager, environmental health for

M.A. Hanna Rubber Compounding, has more than a

decade of experience in the occupational health, safety and

environmental disciplines. He is board certified in the

Comprehensive Practice of Industrial Hygiene.