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The Business Case for Safety and Health

Posted on by Steve Wurzelbacher, PhD, CPE, Ginny Frings, PhD, Mei-Li Lin, PhD

people with papers sitting around a tableThose working in the occupational and environmental health and safety (OEHS) field understand the basic importance and value of their efforts for workers, employers, and overall society. Many partners of the National Institute for Occupational Safety and Health (NIOSH) cite real-world examples of cost savings and business advantages realized by companies with strong OEHS programs. How then do we get the rest of the business community to better appreciate the return on investment in OEHS? One way NIOSH is attempting to make the business case for OEHS is through a new course developed with the National Safety Council (NSC) and the Williams College of Business at Xavier University in Cincinnati, Ohio, for MBA students entitled “Business Value of Safety and Health.”

The course aims to teach the next generation of executives that workers are a critical asset for a company in today’s competitive marketplace and, therefore, investing in their safety and health is more than the right thing to do, it is also the smart thing to do. The course addresses how companies can evaluate OEHS interventions and programs in order to choose and implement the most cost-effective ones that will both improve occupational safety and health for workers and support the business objectives of the company. This type of approach can guide decision making and point to appropriate actions such as initiatives for long-term planning and operations management, among others.

The first course was held this past spring (January to May, 2009) as a business administration elective in the MBA program at Xavier. The course was well received by the students, who noted the value of such an applied and holistic approach to managing a company:

Of all of the (MBA) courses taken at Xavier, this course offered me the most benefit. It took components of many of the courses I took—from HR courses, to finance courses, to statistic courses, etc., and applied many elements of these courses in a practical, real environment. This hands-on applicability was very beneficial to me.
—K.B., XU MBA Graduate

The course includes real-world cases from multiple industries that have capitalized on the incorporation of OEHS into their respective business models with outstanding results. Many of the cases come from the National Safety Council’s Robert W. Campbell Award for Safety/Health and Environment Business Case Studies. For example:

  • DynMcDermott is a private New Orleans-based firm that manages the U.S. Strategic Petroleum Reserve. According to DynMcDermott, top performance and returns were achieved “because of, not in spite of, our focus on the worker, the public and the environment.” Through its focus on OEHS, the company experienced an 88% reduction in recordable injuries/illnesses from 34 in 1994 to 4 in 2005. Since 2000, OEHS performance has met or exceeded 100% of the performance targets enabling the company to receive 100% of the OEHS performance award fee set by the government. Reductions in waste generation and spill incidents have accounted for $3,878,000 in cost avoidances and savings since 2000, when the ISO 14001 Environmental Management System and EPA Performance Track programs were put in place. Similar cost avoidances have been experienced from the reduction in recordable injuries/illnesses.

Long term aims for the NIOSH, NSC, and Xavier partnership include:

  • Encourage the development of sound, effective, and collaborative research by safety and health professionals, businesses, and economic scholars to:
    • assess the magnitude of the burden imposed on industries, sectors, and national productivity by occupational injury and illness, and
    • investigate the relationship between effective programs to promote workplace safety and health and the associated costs and benefits to society at large, to employers, and to workers.
  • Promote the transfer and workplace implementation of research findings on effective occupational injury and illness prevention strategies and technologies.

As part of this vision, and based on the success of the first course on the business value of safety and health, Xavier recently created a new Center for Excellence in the Business of Health and Safety within an existing Center for Entrepreneurship and Innovation and has named Professor Ginny Frings as coordinator. Xavier is now planning to expand the focus on the business value of OEHS into a concentration of MBA classes that will align with core business concepts of risk management, operations, finance, economics, marketing, and communication. As part of this process, Xavier and NIOSH will be co-sponsoring a conference entitled “Economics of Sustainability – Health, Safety, and the Environment Conference: October 27–29, 2010.” A call for papers will be released shortly.

NIOSH hopes to partner with additional colleges and universities to teach these important concepts to the next generation of business leaders. NIOSH is also hoping to partner with institutions that train others who affect the holistic approach to safety and health, such as engineers, architects, environmental scientists, as well as safety and health professionals.

NIOSH is always seeking additional case studies that exemplify the value of investing in occupational safety and health. Any input to share or improve the class would be appreciated such as suggestions for topics to be covered in current or future classes.

This project is just one example of NIOSH work in the area of economics. More information can be found on the NIOSH Economics Program Portfolio page that is currently being updated.

Dr. Wurzelbacher is a Research Industrial Hygienist in the NIOSH Division of Surveillance, Hazard Evaluations, and Field Studies.

Dr. Frings is the Coordinator of the Center for Entrepreneurship and Innovation at Xavier University.

Dr. Lin is the Director of the Robert W. Campbell Award and Senior Director of the National Safety Council Research & Statistical Services and Editor of the Journal of Safety Research.

Posted on by Steve Wurzelbacher, PhD, CPE, Ginny Frings, PhD, Mei-Li Lin, PhD

15 comments on “The Business Case for Safety and Health”

Comments listed below are posted by individuals not associated with CDC, unless otherwise stated. These comments do not represent the official views of CDC, and CDC does not guarantee that any information posted by individuals on this site is correct, and disclaims any liability for any loss or damage resulting from reliance on any such information. Read more about our comment policy ».

    In India there is no one following the safety pro cations occupational and environmental.the companies are dropping wastes in rivers and lakes. they don’t bother to clean their waste and recycle.

    Dr. Wurzelbacher,
    I have been teaching business case for safety for two years now. It is 50% of our Statistical Analysis for Risk Management course. It is very well accepted by the students. Recently, we talked to our Business School to include EHS case studies in the business courses.

    How can we participate in the NIOSH initiative?

    Sincerely: Georgi
    University of Central Missouri

    Thank you for your comment. We are certainly interested in working with other universities and organizations. I will contact you directly to discuss further collaboration.

    I believe it is extremely important and commendable that the National Institute for Occupational Safety and Health (NIOSH) is encouraging businesses to implement or rethink their occupational and environment health and safety programs. However, NIOSH should not only focus on the “business case” of making profits and possible cost savings, but it is critical they place more attention on the moral case of preventing workplace injuries and deaths. Each year, nearly 6,000 U.S. workers are killed on the job, 50,000 die from occupational illness, and more than 6 million workers are injured or become sick on the job. How many of these deaths, illnesses, and injuries could have been prevented if occupational and environmental health and safety programs were required at every business? The passage of the Occupational Safety and Health Act created a guarantee for every American that he or she would have a safe and healthy work environment. Although over 250,000 worker’s lives have been saved because of regulations in place from this act, workplace safety and health standards have become increasingly relaxed over time. Congress needs to address this problem and provide OSHA with more funding and resources to enforce stronger regulations and guidelines. To get the rest of the business community to better appreciate the return on investment in OEHS, a stronger moral case must be made. It is employers’ responsibility to eliminate workplace hazards all together instead of shifting this task to workers. Until the moral case will be effective, NIOSH’s courses on OEHS programs in businesses and their importance are a great step forward in increasing workplace safety and health.

    I believe, that the only reason and for facts I know it, is that all employees suffering diseases, injuries and even deaths on the job, is for lack of training. OSHA complained that Spanish workers are in number one rank in this situations, but the true is no safety person knows Spanish and in second instance, the companies not hiring a safety person, (bilingual) because they think is too expensive!

    As outreach trainer, is very difficult to find a job in Florida. I understand the jobs are very scarce in this time, but to trained all workers that still on the job and suffer the accidents in various states, is because those companies did not have it a safety person or could be a careless person.

    Sorry to be too specific to problems encounter in the field.

    I find interesting that NIOSH wants to partner with a school MBA program to teach future Managers about the importance of reducing losses do to accidents. I think business students already receive in their training the tools to measure and control accident losses as well as the importance of the human resources of companies. The initial intent for creating NIOSH was to be the technical arm to OSHA. Therefore, getting involved in business management is outside their mandate. The taxpayer’s money can be better utilized in research and development that lead to elimination of hazards and better engineering controls. NIOSH should not be involved in business management.

    Thanks for your comment. We believe that business school (and engineering and architecture schools) students, as future leaders of the private sector, do need training on the importance of occupational safety and health. NIOSH’s mandate under the OSH Act includes the mandate to “conduct research into the motivational and behavioral factors relating to the field of occupational safety and health.” [OSH Act Sec 20(a)(4)] Combined with the training duties assigned to both NIOSH and OSHA [OSH Act Sec 21] to provide “an adequate supply of qualified personnel to carry out the purposes of this Act,” we believe that promoting such training in partnership with business schools is within the scope of the Act and the Institute’s mission.

    In short, our view is that safety and health is truly part of an effective management process, and that there are long-term benefits to imbuing future engineers and managers with an appropriate sense of safety culture and ethics. Providing students with the tools they need to incorporate good safety and health principles into the future workplaces they will design and manage is a pro-active “prevention by design” effort on our part.

    As a consultant we provide safety and health support to businesses (what this article is about) as well as public sector organizations such as state government. The challenge with developing and implementing effective safety and health programs in the public sector in non-OSHA states is that there is little if any fiscal responsibility, which ties in directly with commitment to the program. This is especially true in election years. One of our state clients spent $88,000,000 in workers compensation cost in 2009. When you discuss potential savings, the response is it is only a line item on the budget and it can be increased – WOW! So if anyone has ideas on how to instill fiscal responsibility and commitment in to state government as it relates to safety and health – please let all of us know.

    Good article. Looks like it would be a great course. I think it is really important to implement occupational and environment health and safety programs.

    We are developing a cost benefit analysis for a long term care facility, but, don’t have access to the average cost of their worker’s comp injury claims. What would the accepted average cost be for a worker’s comp injury in a healthcare institution?

    thanks for your assistance,
    esther

    Your workers compensation insurance provider may be able to provide some benchmarking information. Also, if your facility belongs to a professional association, they may have programs to pool data for analysis. Beyond that, there are some cost analyses that are published in research publications- see for example http://www.lni.wa.gov/Safety/Research/Files/2007WmsdRpt.pdf. Using the data in Table 6, it is possible to calculate average costs and cost rates for different industries, including healthcare. Note this data is limited to musculoskeletal disorders (MSDs) and costs were adjusted to 2005 dollars.

    For Example for Health Care and Social Assistance (MSDS for neck, back and upper extremity)

    Total number of WC cases = 36,365
    Total WC cost = $340,823,541
    Total Hours = 2,386,347,099
    Average cost per case = $340,823,541 / 36,365 cases = $9,372
    Average cost per 1 full time employee per year = (340,823,541*2000)/2,386,347,099 = $286

    NIOSH is also currently working to make such workers compensation information publicly available. For example, NIOSH has a research collaboration with the Ohio Bureau of Workers Compensation, and one of the key deliverables is to produce workers compensation cost rates by each industry sector.

    Also, NIOSH is developing a new voluntary and secure electronic occupational safety and health surveillance system specific for the healthcare industry, see http://www.cdc.gov/niosh/topics/ohsn/. Again one of the key goals here is to provide benchmarking information to drive prevention efforts.

    Please let me know if you need any more information. Good luck with your analyses!

    I am safety consultant and we believe that effective safety service focused on effective, efficient and relevant work health and safety solutions for small to medium businesses by developing Work health and safety management system

    I believe, that the only reason and for facts I know it, is that all employees suffering diseases, injuries and even deaths on the job, is for lack of training. OSHA complained that Spanish workers are in number one rank in this situations, but the true is no safety person knows Spanish and in second instance, the companies not hiring a safety person, (bilingual) because they think is too expensive!

    As outreach trainer, is very difficult to find a job in Florida. I understand the jobs are very scarce in this time, but to trained all workers that still on the job and suffer the accidents in various states, is because those companies did not have it a safety person or could be a careless person.

    Sorry to be too specific to problems encounter in the field.

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