Selling Safety In Hard Economic Times
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This presentation was first delivered by noted safety expert Phil La Duke (www.safety-impact.com) at the Michigan Safety Conference in Grand Rapids (April 2009) and updated version is scheduled to be presented at the National Safety Council's National Conference in Expo in Orlando, (October 2009) For more information on this topic contact Phil La Duke (Pladuke@oe.com) or visit www.safety-impact.com
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Selling Safety In Hard Economic Times
- 1. Selling Safety in Hard Economic Times Phil La Duke O/E Learning Presents…
- 3. Barriers to Selling Safety •No budget •Perceived as discretionary spending •Viewed as an overhead cost •Often seen as important but not urgent •“We might get lucky” attitude
- 4. Keys to Selling Safety • Get Operations’ buy-in. • Run Safety like a business. • Integrate Safety into Operations’ activities. • Demonstrate the value of Safety. • Demonstrate the urgency of Safety. • Avoid fads or complex initiatives.
- 5. Get Operations Buy-In • Speak the language of your business. • Use Safety to support the goals of Operations. • Provide information not data—to― Operations. • Don’t use scare tactics. • Advertise the real costs of injuries.
- 6. Run Safety Like a Business • Use zero-sum budgeting to develop a budget. • Calculate realistic Return on Investment (ROI) for all your initiatives. • Distinguish discretionary spending from non- discretionary spending. • Look for—and present other, lower cost options.― • Apply for training grants or safety grants to offset the costs of regulatory training. • Look for ways to improve your efficiency and lower your costs.
- 7. Integrate Safety Into Operations’ Activities • Understand the Operations business model and ensure your business model supports it. • Train Supervisors to conduct regular Safety inspections. • Train Supervisors to conduct incident investigations on workers hurt in their area. • Expand Safety in QOS Reviews/Scorecarding to include trailing and leading indicators. • Assist Operations’ leadership in developing a safety strategy.
- 8. Demonstrate the Value of Safety • Calculate the real costs of your injuries. • Use hard numbers and avoid the soft/fuzzy costs. • Tie Safety to other Operations’ measurables.
- 9. Demonstrate the Urgency of Safety • Calculate your risk of injuries. • Calculate the cost of those injuries. • Express that projected cost in terms of profits lost or additional production necessary to replace the money spent on injuries. • Avoid “blood on the floor” tactics. • Don’t lay a guilt trip on Operations.
- 10. Avoid Fads or Complex Initiatives • KISS. • Recognize that lasting cultural change can come out of economic stress. • Make “simple, practical, fast” your mantra. • Choose your battles. • Implement organizational development that will produce an ROI within a year or less. • Avoid rigid, complex, or otherwise confusing Safety initiatives.
- 11. Don’t Cop Out Don’t blame the economy for: • The lack of Operations’ buy-in. • Your lack of a viable Safety business model. • Operations lack of interest in cost avoidance instead of cost reductions.
- 12. Conclusion • Selling Safety in hard economic times is not all that different than selling Safety in good economic times. • The secret to getting Operations to value Safety is to make Safety valuable. • You can never sell anything unless you understand your customers, speak their language, and demonstrate the value of your products and services in relationship to what’s truly important to them. • Questions?
- 13. Thank You! This presentation is available at www.safety-impact.com.
Editor's Notes
- This presentation was first presented at the 2009 Michigan Safety Conference. The intended audience is internal safety professionals who run safety departments and are looking for ways to increase Operations’ buy-in for Safety.
- Do: Welcome the participants. Identify the emergency exits and procedures. Make any announcements that are required of the conference.
- Say: Is it fair to say that we face a tough time selling safety when the company is losing money or even struggling to stay afloat? Of course. And, unfortunately, I don’t have anything in my bag of tricks that will change that. But, in real terms, don’t we ALWAYS struggle to sell Operations on the importance of safety? And why is that? No budget. The number one reason Operations will give for not endorsing a safety initiative is that they don’t have the budget to do what we want. This may be true in some cases, while in others it’s a convenient excuse. The key to knowing the difference is to understand Operations’ business model. Perceived as discretionary spending. Oftentimes, Safety Initiatives can wait until there is more money available; while just as often, any delay in implementing a safety countermeasure could put the organization at an unreasonable risk. You have to avoid “crying wolf;” if you’ve shown Operations that you are an alarmist, then you have to expect some skepticism when you try to convince them that your latest request truly is imperative. Viewed as an overhead cost. Operations tend to view any activity that does not directly increase the intrinsic worth of the product or service produced as “non-value-added” and try to spend as little on these activities as possible. Another way that is used to describe these activities is “overhead”—costs that will always be a part of your operating costs no matter what business you are in. Safety need not be a non-value-added activity; but to convince Operations of the value of safety, one must be zealous in the reduction of injury costs, elimination of waste, and integrated into the achievement of Operations’ goals and strategies. Viewed as important but not urgent. Stephen Covey, author of Seven Habits of Highly Effective People, held that the most effective people spend most of their time doing things that are Important (they will result in things that have a lasting value), but “Not Urgent” things that are done proactively and are not tied to a fixed deadline. While most people would agree that Safety is Important, many argue that since Safety is Not Urgent, an organization can wait to complete safety tasks. The mistake these people make, is that “Not Urgent” is less about the timing of the tasks and more about whether or not the activity is completed proactively instead of reactively. So, if safety professionals are to correct this misconception, they must first adopt a proactive approach to safety in their day-to-day routine. “We might get lucky” attitude. As remarkable as it may seem, there are still Operations executives who believe that it is appropriate to not implement safety initiatives because they “might get lucky” and no one will get seriously hurt. Professional gamblers are quick to dismiss the idea that their game of choice is largely luck. Why? Because they work relentlessly to mitigate risk. If, as a safety professional, you see yourself as a policeman, you reinforce the idea that the key to safety is not getting caught. However, if you see yourself as a professional for assessing and mitigating risk, you position yourself as an indispensable partner in times where every dollar counts.
- Say: As I’ve said, selling Safety―not just in an economic sense, but truly getting Operations to completely buy in—is not all that different in boom times than in bust. There are some basic things you can do to increase the likelihood that Operations will support your efforts: Get Operations’ buy-in. In the macro sense, that is what I’m talking about in this entire session, but here I’m talking about getting Operations to buy in to your specific goals and initiatives. Run Safety like a business. By conducting your function as if it is a separate business within a business, Operations will come to value your advice and recommendations. Integrate Safety into Operations’ activities. The more Safety is seen as a seamless part of how Operations works, the more likely it is to be supported as critical to the success of the organization. Demonstrate the value of Safety. When Operations can quantify what they get out of your proposals in real, measurable dollars and cents values, there is the prospect that they will not only passively support your initiatives, but will fiercely defend them. Avoid fads or complex initiatives. The quickest way to lose face with Operations is to sign on to the latest and greatest Safety fads.
- Say: Getting Operations buy-in for your proposals requires more than getting them to agree that what you are planning is worthwhile. To be completely successful, you must also get Operations to champion your plan in the often brutal fights for funds in the budget process. There are some simple steps you can take to maximize the odds that Operations will champion your ideas: Speak the language of your business. Every company has a rich lexicon of terms and jargon that is unintelligible to outsiders, but there is more to speaking the language of your business than spouting jargon, and nodding knowingly at meetings. To truly speak the language of your business, you have to completely understand the driving force behind their basic decision making processes. Once you understand Operations hot buttons, you can better position your initiatives as “mission critical” and thus immune from budget cuts. Use Safety to support the goals of Operations. Most Operations departments live and die by the progress (or lack thereof) toward their goals. In most organizations, the compensation for Operations’ leadership is deeply impacted by their performance against goals. A smart safety professional can use this dynamic to get Operations’ buy-in for Safety. For example, if Operations has a goal of increasing operating efficiency by 10%, the safety professional should always express safety numbers in terms of lost productivity. Provide information―not data―to Operations. In virtually every speech I make, I recommend that Safety professionals provide information to Operations instead of the data that they typically present. Operations expects the various business functions to come to the party with suggestions based on three elements: 1) the data, 2) analysis of the data (what does the data mean?) and 3) options for acting on the findings of the analysis. Far too often, Safety professionals try to hide behind rates and trends or are irritatingly reluctant to put forth even the most rudimentary suggestions or countermeasures. Don’t use scare tactics. Too many Safety professionals try to scare Operations into supporting an initiative. They use the threat of fines—or worse―to try to bully Operations’ leadership into adopting a suggested course of action. The problem with this approach is that Operations often pushes back and may work harder to reduce their own liability at the expense of the project. Operations’ personnel who are bullied into action are often more concerned about CYA than making the project successful. Advertise the real cost of injuries. Injuries cost a LOT of money; I’ve never heard an Operations executive say, “I’d love to hurt more workers, but I JUST can’t afford it.” Beyond the cost of treating an injury, there are wages paid to workers who are out on medical leave, lost productivity during the response to the injury, wages paid to people conducting incident investigations, and more. You don’t need to include the indirect costs of injuries to get a very large number, very rapidly.
- Say: If you want Operations to see your function as a credible and important part of how it does business, you need to run Safety like it is an autonomous enterprise within the larger business. To do this: Use zero-sum budgeting to develop a budget. Even if your company isn’t using zero-sum budgeting to develop budgets, you should. Building a zero-sum budget is easy: you start with nothing and load the projects that you intend to complete in a year and assign each a cost (including staffing, materials, external services, etc.). Using a zero-sum budget is very liberating because if the accountants tell you to cut your budget you simply ask them which projects they want to kill—there is no such thing as a budget reduction without a reduction in services. Calculate a realistic Return on Investment (ROI) for all your initiatives. ROI refers to the sum of real money that one makes less the amount of money one spent to realize that sum of money. Since many Safety initiatives are mandated by compliance with regulations, many believe that there can be no ROI. “What kind of ROI can you get from the purchase of PPE?,” they argue. While not all expenditures will see an ROI, Safety professionals should look very carefully before spending money on things that are unlikely to get an ROI―and, in most cases, get that ROI in less than a year. For many organizations, comparing the cost of NOT spending the money to the cost of spending the money is enough to create a compelling business case. Distinguish discretionary spending from non-discretionary spending. Much as we are loathe to admit it, a lot of what Safety spends its money on truly is discretionary. The problem is, Safety professionals have so much of their budgets sucked up by government-regulated expenditures that there is often very little money for anything else. When you prepare your budget, be sure to accurately delineate the “nice-to-have” versus the “need-to-have.” Look for—and present―other lower cost options. There are many ways to accomplish your goals, and while it may bruise your ego to have to present options that you don’t want to pursue, you must allow Operations the opportunity to flexibly look at other ways to accomplish your goals. A key to remember is that there is always a trade-off between cost, quality, and timing. If you seek to improve cost, you typically will see a deterioration in timing and/or quality of the solution. Apply for training or safety grants to offset the costs of regulatory training. Every day there are more and more funds available for worker training and safety improvements. When I was Director of Training, I typically was able to increase my budget by up to 50% by applying for and receiving government grants. One of the nicest things about grants is that they are typically awarded AFTER budgets are final, so you can divert money that you would have spent on regulatory training to fund strategic initiatives. Look for ways to improve your efficiency and lower costs. Your organization is far more likely to approve funding for your projects if they see that you are actively working to cut your costs. I have had my budgets spared the axe simply because I was widely known as a person who was always looking for the lowest cost solutions for achieving my goals. In several cases, my budget was increased while others in the organization were forced to cut their budgets by as much as 40%.
- Say: Perhaps the most important thing you can do to improve your chances of getting Operations’ buy-in is to integrate what you do with what they do. To accomplish this, you must: Understand the Operations business model and ensure your business model supports it. Unless you understand how your company makes money, you will have a difficult time helping the company to ultimately meet their goals. Far too many safety professionals see themselves as somehow removed from the business end of the organization. As long as your business model is out of sync with that of the rest of your organization, you will always have a conflict between your ideologies and those of the company. Train Supervisors to conduct regular safety inspections. First-line supervision is uniquely suited to make the workplace safer—they are close enough to the work being produced to spot dangers and have the authority to get hazards corrected. When hazards are identified and corrected at this level of the organization―instead of by Safety—the workplace gets safer at a much more rapid rate. Expand Safety in QOS Reviews/Scorecarding to include trailing and leading indicators. Instead of having two charts on the QOS board or scorecard, you should expand the discussion of Safety to include not only trailing indicators (what happened) with leading indicators (what the evidence tells us is likely to happen). Watch closely as the Quality, Delivery, and Cost sections are discussed and emulate those discussions. Remember, don’t just present the data, provide your interpretation of that data as well.
- Say: Everyone knows the value of Safety―or do they? When I talk about the value of Safety, I talk about cost savings, reduction in downtime, loss of productivity, and cost avoidance. I don’t talk about risk abatement, morale boost, turnover, negative PR, or other costs that we know are impacted by injuries, but we all know that these costs are real, albeit difficult to quantify. Calculate the real costs of your injuries. I am surprised and alarmed at how many organizations have no idea what injuries are costing them in real dollars and cents. A good incident investigation can include things like the cost of the injury BEFORE even knowing the cost to treat the injury. It gets to the point where it sounds like a VISA commercial, but it can be done by asking: How much time was lost because of this accident? How long did work stop because of this injury? How much time was spent investigating the injury? How much time was spent cleaning up the injury? How much time was spent implementing a corrective action? Use hard numbers and avoid the soft/fuzzy costs. The cost of morale, public relations, etc.—while a real cost―are impossible to cleanly calculate, and using them may make it seem like you are padding your numbers and you will lose credibility. Tie Safety to other Operations’ measurables. It’s important to link Safety to other Operations’ measurables. I mentioned downtime a moment ago—provide the St Thomas example.)
- Say: When times get tough, every expenditure comes under closer scrutiny as executives ask, “Can this wait?”. Before you take this response as a “no:” Calculate your risk of injuries. The sad fact is that the past is not a good indicator of future performance. Use linear progression analysis to identify a five-year injury trend to identify the likely risk. Calculate the cost of those injuries. The OSHA Web site has an excellent cost calculator called “The Safety & Health Management eTool” (at: http://www.osha.gov/SLTC/etools/safetyhealth/mod1_estimating_costs.html). And, while it’s not perfect, it’s generally credible enough to make your point to Operations. Express that projected cost in terms of profits lost or additional production necessary to replace the money spent on injuries. If you make trucks, talk about how many trucks you have to build to replace what is likely to be wasted. If you produce energy, talk about how many more kilowatts of power you have to replace the lost money. In other words, express the amount of money likely to be spent on injuries in terms of additional profits, goods and services, or additional revenue. The OSHA cost calculator is a good source for calculating those costs too. Avoid “blood on the floor” tactics. There is an old sales tactic that old-time insurance salespeople refer to as the “blood on the floor” technique. In this tactic, the salesperson gets the prospect so worried about a catastrophic outcome that they buy in a panic. Sadly, Safety professionals have relied on this technique for years—trying to use threats of lawsuits, and even criminal prosecution, to pressure Operations into doing something. Usually this doesn’t work; and, in fact, it makes the Safety professional seem like Chicken Little. Instead of trying to scare Operations into doing the right thing, you must talk dollars and cents. Don’t lay a guilt trip on Operations. When we tell Operations that safety is the right thing to do, by inference we are insulting them by saying that they don’t care enough to do everything possible to protect their workers. What tends to happen is you get aggressive pushback from Operations who don’t like you implying that they don’t care about people.
- Say: One of the quickest ways to turn off Operations is to advocate a organizational change that requires too much work or that does not intuitively make sense to them. So: KISS. KISS is an old sales mnemonic that stands for Keep It Simple … Safety Professionals. (I don’t really think anyone here is stupid.) The essence of sales is understanding your customer, your product or service, and the need―and communicating these things to a prospect in clear and concise terms. Recognize that lasting cultural change can come out of economic stress. A colleague once told me that lasting change only happens when “the pain of not changing exceeds the pain of changing.” Economic upheaval provides that kind of motivating pain. Make “simple, practical, fast” your mantra. There’s no surer way to shut down change than by making it so great, so sweeping, so profound, so time consuming, and so expensive that no one in his or her right mind would ever support it. It’s better to focus on changes that are incremental, easy to implement, and relatively non-complex. Choose your battles. Often the organization may not be ready for sweeping change, so it’s important that you work for meaningful change that will produce real, tangible results. Implement organizational development that will produce an ROI within a year or less. Increasingly, executives are shying away from long-term investments in favor of faster returns. Remember, you are competing against other departments for resources, and many execs are reluctant to tie up precious resources for longer than a year. Avoid rigid, complex, or otherwise confusing Safety initiatives. It seems like at every conference there is another company selling yet another complex, highly prescriptive, or just plan confusing new way to do our jobs. Stick to proven methods with key results. If you propose something that is too difficult for Operations to visualize, or that is too different from the way they do business, they will reject it. Unfortunately, many Safety professionals adopt a take it or leave it approach to their proposals and Operations chooses to do nothing. By the way, Operations seldom tells you, “No.” Instead, we hear “maybe next year” or “I don’t think the organization is ready” or “We’ve got too much change going on right now; we can’t focus on anything else.”
- Say: If we are going to be successful selling safety in hard economic times, then it’s important that we don’t cop out by blaming the economy for: The lack of Operations’ buy-in. Operations has specific goals that it must meet to be successful, and if you can show how you can directly support the realization of those goals, you will get Operations’ buy-in irrespective of the economy. Your lack of a viable Safety business model. You should use the economic hardship to reevaluate your business model and to integrate Safety into Operations’ business model. Operations lack of interest in cost avoidance instead of cost reductions. Safety initiatives that not only prevent costs but reduce costs are the only initiatives that are attractive to Operations, so—whatever you propose―you should be able to demonstrate a quick and attractive ROI.
- What I would like you to do now is go back to your organization and take a look at your information.