SAFETY: Safety Matters

More and more, equipment manufacturers and service businesses are treating workplace safety with the same reverence they ordinarily reserve for meeting sales targets and achieving production quality.

This attitude translates into rewarding employees — with company-hosted meals, for example — when accident and injury rates decline, or remain low. The costs for these celebrations are nominal compared to the savings on premiums for workers' compensation insurance.

Indeed, one truck builder hired a full-time safety officer three years ago and credits this safety officer with sharply reducing accident-related lost workdays.

“We've more than paid his salary with [lower] insurance premiums,” Paul Darley, president and chief operating officer at W.S. Darley & Co., Melrose Park, Ill., told The Wall Street Journal.

Higher healthcare costs have increased premiums for workers' compensation coverage, even at companies where safety records have not worsened. As a result, companies must give improved safety conditions a high priority to minimize expenses. Smaller companies that are not subject to inspection by the federal Occupational Safety and Health Administration (OSHA), Washington, D.C., tend to accumulate a relatively high number of injuries and deaths, according to Labor Department sources.

On the floor and in the field, truck and equipment manufacturers, construction companies and waste haulers face obvious safety concerns. These challenges also exist in the relatively benign office environment where predominantly ergonomic conditions can lead to workers' compensation claims.

Whether a business hires a safety manager, engages a workplace consultant or turns to its insurer for safety advice, the company probably can expect to save money. The foolish choice is to do nothing and hope for the best.

Can a safer workplace contribute to overall profitability and efficiency? Yes, says Liberty Mutual Group Vice President Jim Hatherley. Boston-based Liberty Mutual provides coverage to some 6,000 companies with fewer than 1,000 employees.

“The companies that have the better profit and loss statements are the ones that take everything more seriously, including safety,” Hatherley says.

Indeed, a midsize company with an improved safety record may realize a $50,000 savings in insurance premiums, according to Hatherley. Thus, if a company has a 5-percent profit margin, the savings would have the same effect as landing a million-dollar customer.

A company's safety commitments can be compromised during a poor business climate. A safety officer, who may be the most recently hired employee, might be among the first to be discharged as duties are redistributed and consolidated, particularly at smaller firms.

Even where a safety manager's job is relatively secure, the employee must have influence and credibility within the organization. Some companies are sufficiently serious (or scared) about safety to empower safety personnel to shut down a production line or change a method or system.

An engineering and construction company added a full-time safety manager in response to contract requirements for a job it sought and eventually won. The manager's responsibilities included drug testing, accident avoidance plans and a rigorous accident investigation procedure. The reduction in lost work days proved so dramatic that the company happily retained the manager after the job ended.