Workplace injuries and the bottom line: indirect incident costs are staggering

This week the Intelex Blog introduces its newest contributor, Robert Smith. Head of Injury Management Solutions, Robert has tons of experience in Human Resource and Disability management, including a long stint with WSIB. Robert will blog on a biweekly basis on issues related to compensation, claims management, case management, and much more. This week Robert tackles the real costs of workplace injuries.

I have been directly involved in workers’ compensation issues for well over 20 years and, like many of you, I have heard the stories of the costs of a workplace injury and how important it is to implement health and safety programs and to manage claims. Yet time after time I have conversations with employers who still do not grasp the big picture. 

So what is the big picture? Most companies are aware of how their workers’ compensation premiums are calculated and that poor performance results in surcharges. Most are aware there are claim cost limits to seemingly protect them financially. But – and this is a big but – there are aspects that many do not calculate into their strategies. These are the “indirect” costs of the claim and can add from three to ten times to the direct claim costs. 

To put this into perspective let’s look at the claim cost for an Ontario NEER employer:

In 2013 the Claim Cost Limit is $416,000.00. If you take just the minimum indirect cost factor of three, the actual cost is $1,248,000.00. Considering the worst case scenario at ten times the actual cost is a staggering $4,160,000.00

These indirect costs include:

  • Damage to equipment, machinery, materials, facility, etc. 
  • Production downtime. 
  • Lower employee morale. 
  • Loss of products or services. 
  • Delays in shipment or filling orders. 
  • Additional overtime. 
  • Managers’ lost time resulting from the accident. Also includes inspections, investigations, meetings, and administration. 
  • Employees assisting with the accident. Includes administering first aid, and witness interviews. 
  • Hiring and training replacement workers. 
  • Wages of replacement workers. 
  • Other non-productive time incurred by the injured employee. Includes all medical related appointments. 
  • Potential MOL, OSHA penalties. 
  • Legal fees.
Although this list is quite long it still doesn’t encompass every indirect cost. Understand that for each injury that occurs in your workplace, the increase in your workers’ compensation premiums is dwarfed by all of the indirect costs associated with that injury. Now is the time to take the necessary steps to limit, or better yet, eliminate all injuries to ensure your company’s maximum productivity and profitability.
Questions or comments? Post below or contact Robert.

Get back to the meaning of Quality with 9001: A Quality Odyssey

Think quality is boring? That can only be attributable to human error. 

Sure: bolt sizes, calibrations, documents, procedures, work instructions…yeah, there’s nothing particularly compelling about all that, on the surface, anyway. Dig a little deeper, however, and you’ll be surprised what you find. 

If you missed our exclusive webinar, 9001: A Quality Odyssey, check it out whenever you like by heading over to our on-demand webinar library. This decidedly un-boring special presentation will open the pod bay doors of your mind by getting back to the meaning of quality management and turning to the very roots of standardization.

Far from a boring history lesson, A Quality Odyssey will link the quality standards of today to the very need for standardization and measurement in the first place, and look at the evolution of quality systems throughout the ages and what they mean for businesses today. 

Sign up today to learn how to put your quality system to its fullest possible use…which is all I think that any conscious entity can ever hope to do.

Intelex discusses Oil and Gas safety management in ISHN

As in other high-risk sectors, workplace safety is of utmost importance in the Oil and Gas industry, where the smallest of near-misses and at-risk behaviours can result in devastating consequences for frontline workers, not to mention catastrophic environmental impacts. In light of this, it’s hard to believe some oil and gas companies still rely on archaic, paper-based systems for EHS management. Yet in spite of the adoption of state-of-the-art EHS management systems by some industry leaders, paper- and spreadsheet-based systems are still in widespread use.

That said, the trend is changing and businesses are increasingly beginning to see how streamlined EHS management systems are ultimately investments with great returns that help companies navigate increasingly complex regulatory waters. Learn more about this dynamic by checking out my article “Goodbye to paper and spreadsheets” in the most recent issue of ISHN (Industrial Safety and Hygiene News). You’ll have to register to view the issue, but it’s free and ISHN is a great publication with a wealth of EHS news.

The organizational costs of incompetence

Yesterday we talked about how being trained doesn’t necessarily equate with competence. Today we’ll take a brief look at how that discrepancy can impact organizational performance.

To start, take a look at the picture to the right. Now, by no means are we casting aspersions on the capabilities of these two able-bodied young men by implying that they are incompetent, as the title above alludes. However, given the tremendous level of accuracy, acuity and precision required every day in their individual roles within their manufacturing setting, it’s a good entry point for this discussion to consider how one hole in their training could, at any point, on any day, engender compromised competence, thereby resulting in a possible environmental, health or safety-related disaster or impact product quality.

Training touches every part of your business

The benefits of a training program that cultivates actual competence are multifaceted and impact all aspects of corporate performance. Of course, on a day-to-day basis, competence reduces the probability of errors in all job functions, thereby boosting productivity and profitability. But above and beyond that, from a corporate perspective every organization has a moral, business and legal obligation to their employees in terms of education, and a good training strategy will address each facet in a comprehensive way.

For example, a business has a moral obligation to ensure employees are sufficiently trained in their job function so as not to suffer injuries or encounter preventable illnesses on the job. In business terms, should an employee get injured or become sick at work there is the potential of a variety of costs that may impact the organization’s bottom line, including claims, lost time, and fines associated with regulatory infractions. From a legal perspective, if an employee is injured in, let’s say a manufacturing setting, they could initiate a lawsuit against the organization and claim that they were insufficiently trained. In such a situation, if the business could not produce documented evidence to clearly prove the employee was provided with required training, it would be on the hook for substantial damages and other consequences, not to the always mention unavoidable legal fees.

Competence boosts retention

Beyond the business-critical advantages to a comprehensive training strategy outlined above, a powerful byproduct of such an approach is, quite simply, that a competent employee is a happy employee. By ensuring employees are fully prepared to appropriately fulfill all of their job requirements, they suffer less stress over the tactical elements of their job, and enjoy greater confidence and increased motivation to do their job better.

Further, organizations that take a holistic, continual approach to training and skill-building will ultimately cultivate the sentiment among its workforce that the employer genuinely cares for the employee. While this all leads a higher level of morale among staff and an enhanced focus on quality, the most notable benefit is that retention rates will be greatly improved, and attrition rates will fall. Happy, competent employees who feel they are adequately equipped to excel in their duties are less inclined to leave their organization and more inclined to contribute to their employer’s success.

So how do you do it? Well, you start with a training strategy, the subject of tomorrow’s post.

Intelex contributes to Oil and Gas Product News

Check out the recent Intelex article, When Paper Kills: The Perils of Reactive Management, in the latest issue of Oil and Gas Product News. Sure, the title sounds a bit dramatic, but when it comes to occupational health and safety, you can’t be too serious.

The story hones in on the sometimes archaic paper and spreadsheet-based systems that some Oil and Gas companies (not to mention businesses across all sectors) use to manage environmental, health and saefty (EHS) management data, particularly on oil rigs, drills, platforms and other worksites. 

The article, through a couple of hypothetical case studies, explores the difference between reactive, paper-based EHS management systems and the proactive, streamlined alternative, and discuss how the impacts on workplace health and safety, environmental impacts, time and eficiency, and bottom line/ROI significantly vary between the two systems.

So take a look, and let us or Oil and Gas Product News know what you think. Just a final note that you’ll need to sign up for free registration to view the electronic issue, if you aren’t registered already.

Alarming news on global coal consumption, a mysterious update on OSHA’s I2P2 program, EPA’s soot regulations and more on EHS This Week

What? More whistleblower news? You guessed it. Kind of a trend recently on EHS This Week, the only weekly podcast to round up the top stories in EHS news around the world. 

This week we’ve got a ton of great (and not so great) news. We discuss the emerging OSHA whistleblower committee, strange news on OSHA’s upcoming (or is it?) injury and illness prevention program, and new EPA regulations on soot. 

Take a listen and don’t forget to send your comments and suggestions to paul@ehsthisweek.com.

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More whistleblower news, signs of EPA and Texas climate progress, deaths in fertilizer blasts and more on EHS This Week

This week Kristy and I discuss another whistleblower case, EPA’s work with Texas on a clean air plan, blasts at a Mississippi fertilizer plant, Mexico’s climate legislation and more.

Got an idea for an EHS story? Care to come on our program? Just write us at paul@ehsthisweek.com and we’ll make it happen.

Enjoy the show!

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U.S. hospitals realizing it pays to measure quality of care

Ahead of a value-based purchasing initiative to begin for Medicare in 2014 under the federal government’s Affordable Care Act, hospitals across the U.S. should be taking a long, hard look at their quality processes and how they measure their success. Value-based purchasing under the U.S. healthcare reform means Medicare will start paying institutions more for scoring high on a series of measures that indicate patient care, and will pay less to those who do not meet the quality benchmarks.

While quality of health care is important if only to ensure patients receive satisfactory care, a few hospitals in the U.S. who earnestly measure their quality processes are starting to notice an additional benefit to ensuring the utmost care is delivered. One successful case is Detroit’s Henry Ford Health Systems, which launched a quality improvement program in 2008 called the “No Harm Campaign”. The program sought to improve patient care and reduce the amount of patient “harm events” that occurred. In doing so, over a four-year period and across its five hospitals, Henry Ford recently announced it saw $10 million in cost savings by reducing infections, improving procedures and preventing patient and employee injuries.

Tracking ROI of quality programs is relatively new to the healthcare industry. Henry Ford’s chief quality officer, William Conway M.D., admits in Quality News Today  that “in most industries, improving quality reduces costs, but was not recognized in healthcare until only recently because insurers and Medicare used to pay hospitals for higher utilization generated by mistakes, errors or bad outcomes.”

Now that the new healthcare law signed under the Obama administration will begin zeroing in on quality of care metrics and directly linking compensation to achievement in this area, it’s expected that the industry will see an increase in the investment hospitals are making towards tracking, measuring and continuously improving the quality of their care.

Common pitfalls of the business proposal

Trying to justify the purchase of a software purchase you know will help you do your job better? As we all know, getting approval from those that hold the purse strings can be a tough proposition, regardless of how great the proposed solution is.

Building your case, what you need to know is that your business proposal can make or break you chances of landing that coveted solution.

Since EHS and quality personnel are typically preoccupied with different day-to-day concerns than your average director, CEO or CFO, it is important to maintain a strong sense of the bottom line as the business proposal is created. Here’s a few critical tips and pitfalls often encountered in the composition and presentation of a business proposal:

  • A focus on software over ROI: While the particular advantages of the software solution under consideration are worth mentioning in the business proposal, it is fundamentally important software details do not distract from the most significant aspect of the proposal: the ROI. This is the bottom line a decision-maker will want to see in clear terms.
  • Length of Proposal: It is important to know the people who will be reading the business proposal to determine the length of the proposal. If the audience will appreciate longer, more detailed information, then make it longer. If the readers are visually oriented, use graphs and charts to illustrate your points.
  • Presenting the Quote Form: Work with your sales representative to generate a complete quote form with a clear ROI breakdown, an implementation plan timeline and resource allocation details.

For more on how to build the business case for any software solution, from any vendor, take a look at our Pocket Guide, Getting Approval for Your Software Solution

To integrate, or not to integrate… Part 2

A consideration of the relative advantages and disadvantages of an IMS is a sound starting point to evaluate whether the time has come to integrate management platforms, or whether integration would generate no immediate or long-term payoff.

  • Cost efficiency: The aforementioned standards share several common requirements, including document control, auditing and training. An obvious cost-reduction arises when a business addresses each of these areas with shared software and processes. Also, registrars tend to provide discounts when they are able to audit two or more management systems together, as opposed to one at a time.
  • Time efficiency: While the logistics of implementing an IMS may be complicated at the onset, the relative simplicity of managing EHSQ systems together on an ongoing basis will ultimately save time and frustration.
  • Corporate Brand: Most Businesses understand that a negative EHSQ ‘event’ (for example, a spill, a product recall or an employee injury) can have a significant impact on corporate brand—and share price. Applying the same standards to each area by way of an IMS significantly curbs the risk of any such event.
  • Collaboration: An IMS reduces the silos of information that typically haunt most organizations. Key data can be selectively shared across an organization thereby reducing risk (e.g., associated with the use of hazardous materials), while better capitalizing on opportunities.

While the likely benefits of EHS and quality management integration are substantial, an IMS is not for every business. In Monday’s post, we’ll look at some of the complications that can arise from IMS implementation, as well as the business benefits that arise from implementing the right IMS.