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Healthy profits through safety planning.

Healthy Profits Through Safety Planning

Safety plays an important role in every stage of a company's development and throughout all its operations. It directly impacts a company's productivity, quality and marketability of products and profits. Managers and purchasing agents, in particular, can affect the level of safety in a company's operations.

According to Ted S. Ferry, author of the Safety Management Planning Manual, safety and health management is an avoidance-of-loss technique that can have significant impact on profits, and all safety and health problems are symptoms which can be traced to broader management failures. By understanding and applying these premises, senior managers have an effective means of tightening overall management and increasing profits.

In Mr. Ferry's view, to achieve a sound, effective, management-oriented safety program, it is necessary to dispel the long-held slogan "Safety First." He tells us to put that old slogan to rest by emphasizing what top management has always known: Safety is not and cannot be put first. It is profits, mission, product, service and the strength and growth potential of the business that come first. Safety, however, is important because it can either support or damage these things, and as a result, it should be fully integrated into an operation's plans."

"Safety and health considerations are concerned with all functions of the organization and should be fully integrated into those functions, not merely imposed as an afterthought," states Mr. Ferry. Nor should safety and health programs be instituted merely to comply with federal or state standards, which in many instances, specify only minimal requirements.

All executives want to achieve efficient levels of production and the highest possible profits as a result of their efforts. Efficient production requires proper facilities, equipment, materials and personnel and certain support services, such as engineering, purchasing, product inspection and maintenance. Incorporating safety and health considerations into support services allows these concerns to play at a vital role at a functional level. For example, take the function of personnel. Personnel selection, placement, training, employee relations and motivation involve safety and health considerations. These matters require built-in safety and health controls and continual auditing to assure that the controls are adequate.

Management Failure Symptoms

The modern business organization is made up of many subsystems, including finance, personnel, production and maintenance. Any accident, injury, workplace health problem, or unsafe act or condition indicates a failure in the system. Safety and health professionals should be looked to as systems evaluators, advising management on how parts of the system should operate in regard to safety and health. In this way, safety becomes a resource to get the job done effectively, and not just a regulatory burden that hampers the system.

There are always several causes of accidents. It is not surprising to find that management's action, or inaction, is always one of them.

Take the example of a ladder in a stockroom which breaks when a clerk climbs to a high storage bin. A review may find that the ladder had not been properly and regularly inspected, a lower management error. Looking further, it may find that a procedure for regular inspections of ladders had not been established, regulations regarding inspections were not known or an inspection system for other equipment was not in effect. These are all management failures. An investigation may also reveal that the ladder was of inferior quality or of incorrect dimensions for the work being done and should not have been purchased by staff. It might also be discovered that funds to purchase proper equipment were not made available by staff and management. Mr. Ferry advises that a closer review of the overall operation might show that these staff and management failures were also responsible for similar problems throughout the organization, including costly delays, production difficulties and worker concern over the use of unsafe equipment.

From a simple broken rung we can detect several cause factors and examples of questionable staff and management work. Once such conditions are recognized and corrected, the entire operation will improve. Thus, the safety function can help improve the entire system.

As with other functions, safety and health must be accorded management direction with realistic goals, careful planning and organization. Of equal importance is the establishment of management controls and systems of accountability for the program. While senior management may assign responsibility and authority for safety and health to line managers, and hold them accountable for the results, they must assume the overall accountability and responsibility.

Line managers can and should be held accountable for the safety and health functions they can control. For example, purchasing should not be held responsible for the stockroom clerk's action in climbing the defective ladder. Purchasing can be held responsible for buying an inferior and possibly unapproved product. The safety office may not be responsible for an accident in the stockroom, where it does not have direct control, but it can be held accountable if inadequate purchasing guidance exists, for failing to conduct equipment inspections and not advising management of the need for certain purchasing procedures. While the safety office cannot be held accountable for line functions, it certainly must be responsible for failing to advise and warn line staff.

Evaluating Safety Function

Mr. Ferry advises that a company's involvement in safety can be evaluated by asking a series of questions, including:

* Is there a company safety policy and who

on staff knows it?

* How is safety built into the organization?

* Where is the safety function located and

to whom does it report?

* What are the line and staff relationships

for safety and health?

* Where is the health function located and

to whom does it report?

* How are line safety and health

responsibilities defined?

* How does management hold line and

staff accountable for safety and health

and how are they graded?

* How is senior management held

accountable and rated in terms of safety and


* How is staff safety and health

performance measured?

* How are supervisors' safety and health

performance quantified?

* Does senior management relate safety

and health functions to profit and

production in a positive manner?

* Is senior management aware of the

safety, health and environmental

regulations that apply to their operation?

The last question deserves careful attention. In today's tough legal and regulatory climate, there appears to be a growing trend toward holding corporate executives accountable by levying stiff penalties, fines and even time in jail. And even if legal defenses help avoid monetary penalties, the harmful publicity and diversion of management time cuts into the profits.

Management consultant Peter Drucker has explained how safety impacts. "It is the first duty of business to survive," contends Mr. Drucker. The guiding principle is not the maximization of profits but the avoidance of loss."

After answering these questions, a company should look at its loss experience over the last several years. The number of accidents and injuries and lost workdays should be reviewed. What were the insurance and out-of-pocket costs for these incidents? How much spoilage and waste in raw materials and unacceptable finished products were there? Did customers complain or file products liability suits?

Each of these conditions have safety implications which, if properly applied, would probably have prevented the occurrences, or at least minimized their impact on hard earned sales and profits.

Case Studies

A case in point is that of a manufacturer of metal aircraft parts in Southern California who experienced a rash of costly back injury complaints by workers on an inspection and assembly line. Working with its insurer's loss control representative, an analysis of the claims reports shows the incidents were located at one point in the operation and occurring at approximately the same hour each morning. Personal observation of the operation at that hour uncovered the problem: The operators were placing finished parts into plastic tote boxes and filling them to capacity. Because the sides of the tote boxes were flexible and could give a litte, extra parts were placed in the tote boxes in an effort to speed production. Further investigation revealed a relatively high rate of parts rejected due to marring of the satin polished finish. Based upon the recommendation of the company's safety manager, these conditions were corrected by changing to a smaller, sturdier tote box and implementing work practices to limit parts per box.

In another case, a publisher used a standard size corrugated carton for paperback books. These cartons, when packed, weighed between 50 and 60 pounds. While this weight may not seem to be excessive, management was concerned about its stockroom personnel as well as its customers. By reducing the carton size to limit the weight to a maximum of 35 pounds, stocking and shipping operations were sped up and customer relations were improved.

Additionally, savings were achieved through lowering the potential for back injuries and the claims associated with them.

Mr. Ferry also cites two cases in which management cost saving efforts had been based on decisions that overlooked obvious safety problems, resulting in higher operating costs. The cases illustrate methods for seeking out failures in management systems. One case relates to costly waste without any accident occurring, while the other uncovers the underlying reasons for an accident.

One situation involves an improvised scaffold constructed of stepladders, planks and beams fastened with rope. Correcting the unsafe situation by purchasing a new scaffold would have been the simple solution, but an investigation yielded surprising results. It was found that a properly manufactured scaffold was not available for the crew because someone in a higher management position wanted to operate at the lowest possible cost, avoiding new equipment purchases. The investigation also found that the improvised scaffold had been assembled and disassembled at least once a week for relocation at different job sites throughout the previous year and probably for several years before.

Each time the scaffold was erected or removed, it required three to four men to work for an average of three hours, a total of up to 1,872 man-hours per year. Frequent inspection and tightening of fastening devices was required, adding man-hours. Moreover, the crews working on the makeshift scaffold were never at ease.

Compare these factors to the situation in which a new, approved scaffold had been obtained. A scaffold of the size needed for the operations involved could easily be erected or dismantled by two men in just one-half hour. At the time, an investment of about $1,000 for a new scaffold could have saved $10,000 to $15,000 in labor costs annually. Increased costs for scaffolds and labor today may make the savings even more dramatic. There are also other benefits that can result, such as improved safety, efficiency and work crew morale.

Mr. Ferry points out that this case dramatically brought to top management's attention how much its "penny wise and pound foolish" policy was costing. Reviewing and changing this penny-pinching policy throughout the organization brought about appreciable savings, while eliminating other potentially costly hazards.

In another case, an injury occurred during repair work on a large generator in a machine shop. Due to limited space, the mechanic doing the repair had to work in an awkward position. As he exerted pressure on a wrench, he bumped his head against a projection on the generator and suffered a severe laceration.

A corrective action would consist of the supervisor cautioning the employee to be more careful and to move materials and objects adjacent to the generator to give himself more working space. The "management involvement investigation" in this instance, however, went further and revealed that the generator was old and decrepit. It should have been overhauled or replaced years ago, but department managers had avoided or postponed such action. The investigation also revealed that the generator had to be repaired at least once a week during the previous year, with each repair averaging three hours.

The generator supplied power for five production machines. While the generator was down and undergoing repairs, so were the five machines. Their operators also had to wait or occupy themselves with other tasks. The repair time hours and the costs of idled operators and lost production easily added up to thousands of dollars over the course of a year. These losses are directly attributable to management's failure to replace the generator when its use became uneconomical.

While equipment replacement policies may not have a direct relationship to the safety function, the facts in these instances, in which safety factors were considered in after-the-fact investigations, led to discovery of management's failures and oversights. These organizations were able to institute corrective measures that should help ensure more profitable and efficient production in the future.

On matters relating to safety and health today, Mr. Ferry notes, is increasingly subject to pressures from government, society, the work force, organized labor and the marketplace, as well as co-managers and staff. Emerging new technologies and a better educated and trained work force poses a need for greater concern among managers to ensure safer work conditions. Finally, senior managers must realize that safety and health programs are their responsibilities and that such programs also can be profitable and viable management tools.

Harry Borowka is project manager of safety management planning and OSHA reference manuals for the Merritt Company of Santa Monica, CA.
COPYRIGHT 1989 Risk Management Society Publishing, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1989 Gale, Cengage Learning. All rights reserved.

Article Details
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Author:Borowka, Harry
Publication:Risk Management
Date:Apr 1, 1989
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