What is the value of safety? When discussing safety there is the intangible value that impacts everything from employee engagement to brand equity. But are there any tangible financial opportunities as well? What can an organization gain by becoming safer?
There are the obvious answers. Workers going home safe and having the confidence that they are part of an organization that cares that they do so has immeasurable value. Likewise, regulatory bodies like OSHA are quite transparent when it comes to the fines and penalties that companies can incur in cases where they fail to be safe. So the worst case scenarios of what happens when things go wrong are quite well documented.
Ongoing Positive Business Impact
How can a safety program and cultivating safe behavior be connected back to the other business operations that make an organization tick?
In my own journey to try to quantify the opportunity value of safety I came across some rather thought provoking research. The Journal of Occupational and Environmental Medicine tried to find a more quantitative measure to determine the value of safety. In the report, researchers investigated whether there was a correlation between safe companies and culture and stock market performance.
The basic methodology was to compare a hypothetical basket of “safe” companies who had been recognized for leadership in safety and comparing their stock performance as a group against the performance of the S&P 500 over a similar time period.
What the researchers found was actually quite staggering. Over a period of 13 years the “safe company index” returns were 333%. By contrast over that same period of time the S&P 500 returned 105%. That showed a significant out-performance by the safe companies, to the tune of nearly 3X.
As an even admittedly amateur investor, I realize that it would be naïve to say that safety was the most important factor in these companies’ successes. Many would argue correlation versus causation is a factor here.
That being said I’m sure even the biggest skeptics would concede that these companies that are outperforming the general market by such a margin are doing “something” right. In fact, you could probably go so far as to say they are doing “most things” right and that safety just happens to absolutely be one of those things. If we think in those terms then, it turns out that safety and operating a profitable company are not mutually exclusive. Running a well operating, and profitable, company should be synonymous with being a safe company as well. Having an ingrained and strong safety culture within your organization, is just as important, and potentially just as impactful as running your company with a strong culture of product quality, or a strong culture of innovation or a strong culture of community.
All of these elements of a great corporate culture are interdependent and none of them happen in a vacuum.
And that’s how these high performing organizations look at things. Not just safety, but all elements of their business. For any of us that has had to sit through a quarterly business review, or an operations update meeting, you know that organization are complicated and making change are complex issues. Companies that do this well are able to connect the dots on the various metrics being looked at to uncover the big picture story being told.
So that’s all well and good in theory, but changing and driving corporate culture is a tall order. So where can you start if your company isn’t fortunate enough to have a robust and mature safety culture?
What best run companies do is make data-driven decisions. The great thing about behavioral change is that the more you look like a best run company, the more you will become a best run company.
So what does this actually look like in practice? The great thing about data is that it’s inherently objective, data and metrics are an excellent and neutral point of reference for decisions across your organization.
To make the most of data though you need to first put in place a process to structure how, when and where you can use it.
I like to think of this in terms of the types of questions that data can be used to answer. These boiled down to 3 fundamental questions:
Question 1: I need to track my X
It’s old advice but its good advice. You cannot manage what you don’t measure. Any data discussion has to first begin with capture. From a health and safety standpoint this begins with capturing the incidents, observations, metrics and behaviors that need to be or should be recorded. Documenting all of this information is the first step towards your journey to data-driven decisions.
Question 2: People need to know about Y
Once you’ve documented and organized the data that you need to measure the effectiveness of your safety programs and organization, the next thing you want to do is make sure the right information is in the right hands. That’s where automated workflows can help to ensure that the people who need to know about what is happening are getting fed the right information at the right time. Re-enforcing safety is all about communication. Data transparency and distribution can be a huge step forward in driving accountability and understanding of safety.
Question 3: I don’t understand why Z is happening
The final set of questions is not only the last in the chain, but you can build a strong argument that they are the most important as well. Once your pool of safety data is deep enough, you can start to leverage analytics of various kinds. This data exploration can be done with tools native to your management system, or external purpose built big data business intelligence tools to slice, dice and carve the data you’ve been capturing to uncover meaningful trends and insights. These analyses help you to answer now only the who and what type questions associated with your health and safety but also informing you of the why behind the numbers that can ultimately help to drive the changes required that can lead that streamlined operations and increased profitability.
How far along this journey is your organization? Is safety data, central to your decision making? Does your safety program and safety policy impact the rest of your organization in a meaningful way? I’d love to hear your thoughts in the comments below.