Putting safety to work the business case for psychology based safety training programs


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Putting safety to work the business case for psychology based safety training programs

  1. 1. PUTTING safety to work THE BUSINESS CASE FOR PSYCHOLOGY- BASED SAFETY TRAINING PROGRAMS Tristan Casey© Sentis Pty Ltd 2012. This document remains the intellectual property of Sentis Pty Ltd and is protected by copyright and registeredtrademarks. No material from this Guide is to be reproduced or used in any format without express written permission. sentis.net
  2. 2. Putting safety to work: The business case for psychology-based safety training programs Key Points P.2 • Safety continues to be a serious workplace issue - Worldwide: A worker dies from a workplace safety issue every 15 seconds3 - Australia: 500,000 safety incidents recorded during 20094 - USA: 3.1 million safety incidents recorded during 20095 • The costs of mismanaged safety borne by employers are typically divided into two camps — direct and indirect - Direct costs: Compensation payouts, legal fees, recruitment, investigation, etc. - Indirect costs: Moral, reputation, productivity, prevention initiatives, etc. • Mismanaged safety costs national economies billions of dollars annually - Australia: $60 billion per year 7 - USA: $249 billion per year 8 • Mismanaged safety costs employers thousands of dollars annually - Australia: $5,000 - $25,000 depending on industry and injury type7 - USA: $27,000 per incident in the construction industry2 - However, figures vary markedly between industries and employers9 • However, safety can do much more for the organisation’s bottom line than simply ‘pay for itself’ - Psychology-based safety training programs have been shown to produce returns of between 46% and 1277%11,12,13,14 - Survey data suggests that safety training has spill-over effects on organisational performance and revenue, via increased productivity and morale • Three particular psychology-based safety interventions represent the best ‘bang for your safety buck’ in terms of carry-over effects to cost reductions (via injury reduction) and productivity increases - Safety citizenship training programs: Encouraging employees to adopt safety tasks and duties that sit outside what is expected as minimum standard on the job - Safety leadership training: Equipping leaders with the soft skills required to motivate, inspire, and support employees to achieve strong safety performance - Safety coaching: Supporting employees and leaders to take ownership of safety across an organisation, and drive the changes necessary to achieve strong safety performance© Sentis Pty Ltd 2012 sentis.net
  3. 3. Putting safety to work: The business case for psychology-based safety training programs Putting safety to work: to dealing with the murkiness of attitude and behaviour change, and how these changes translate to a dollar P.3 The business case for value. For example, what is the value of a one-unit psychology-based increase in safety climate? Or, to what dollar figure does a ‘pass’ versus a ‘fail’ on a safety knowledge safety training test equate? Clearly, an approach that unites programs. financial accountability with the powerful positive change of psychology-based safety interventions is It’s time to revisit the view that safety is a cost. For far desperately needed. too long, safety and production have been considered by many as two extremes on the same continuum In this article, we build a convincing financial case — two incompatible objectives locked in a tug of for organisational investment in psychology-based war for the organisation’s resources. So, it is not safety interventions. First, a suite of safety statistics surprising that safety training is commonly perceived is presented to highlight the ongoing prevalence as a significant outlay that has little utility above the of workplace injury and illness. Next, these data prevention of costs associated with workplace injuries1. are evaluated in light of the exorbitant costs of The pervasiveness of this view has been compounded mismanaged safety, which we believe rationalises by a notable lack of research on the economic organisational expenditure on safety. We then argue utility of safety interventions: an oversight that has that organisations should instead view safety as an persisted for decades and has only started to be investment that if done right, pays off in dividends. addressed recently2. In closing, we summarise emerging research on safety training and present a list of the ‘Top Three Thinking about safety as a cost threatens to derail any Safety Payoffs’. attempt to achieve the holy grail of safety performance — Zero Harm. Safety should instead be considered Safety Refuses to Play Nicely an asset. Safety is something that, if done well, There is little disagreement that safety continues to be a protects the organisation and its employees from serious workplace issue. Despite decades of progress adverse events (both financial and personal) and may in the science and practice of safety management, even carry over into productivity and performance. many organisations continue to experience safety Mediocre safety interventions minimise the cost of incidents that result in serious consequences. To injuries, whereas good safety interventions touch each highlight the prevalence of the global safety problem, part of an organisation to achieve true and lasting consider these sombre statistics3: change, and produce tangible financial gains. • Every 15 seconds, Many safety initiatives, while deemed cost-effective, a worker dies from an incident are ultimately less effective over the long-term because or disease incurred at work. they do not deal with the core issue — the attitudes and behaviour of people. In this case, the intervention • Every 15 seconds, tends to focus on environment and practices-related 160 workers experience a work- issues, such as upgrading equipment, introducing new related incident. safety systems, or automating risky tasks. Although these initiatives can be clearly linked to financial These figures translate to 2.3 million work-related returns (such as increased volume or speed of work), deaths and 317 million incidents each year. Regional the underlying element of risk — the person — has not statistics, while improving for developed countries, are been considered and so remains within the system. still nowhere near the elusive Zero Harm target aspired to by industry. Another issue faced by financial decision makers is that many developers and providers of psychology-based In Australia, over half a million employees experienced safety interventions are simply not used to thinking a work-related incident or illness during 20094. The in economic terms. Therefore, it is difficult for them Accommodation and Food Services; Utilities; Arts to articulate the concrete financial returns achieved and Recreation Services; and Transport, Postal and through programs such as safety training. Likewise, Warehousing industries experienced the highest rates people with a largely fiscal outlook are unaccustomed of safety incidents (see Table 1). In the United States over the same period, roughly 3.1 million nonfatal© Sentis Pty Ltd 2012 sentis.net
  4. 4. Putting safety to work: The business case for psychology-based safety training programs workplace injuries and illnesses were reported. Also, Table 2. Direct and indirect costs to the employer 4,690 workers were killed while on the job — 13 associated with safety incidents. P.4 deaths per day5. Together, these figures show that DIRECT COSTS INDIRECT COSTS safety management has a significant way to go before Zero Harm is achieved. Worker’s compensation Morale payouts The Price of Mismanaged Safety From a social perspective, safety-related tragedies Legal fees Organisational have ongoing aftershocks that ripple outwards commitment from the family epicentre and impact colleagues, Recruitment Turnover friends and entire communities. Notwithstanding these terrible personal and social consequences, Retraining Productivity mismanaged safety carries a huge cost to business. Administrative/ Competitiveness Often these costs are hidden or, worse, purposefully supervision time concealed, which means that the true nature and Emergency Reputation impact of a safety event is often miscalculated. services The costs of mismanaged safety borne by employers Investigation Injury prevention/ are typically divided into two camps — direct and safety initiatives indirect6. Direct costs are those that are tangible, Insurance administration Overtime payments and for the most part, easily estimated. Examples of to other staff direct costs include worker’s compensation payouts, Property damage Over-hiring property repair or replacement, and fines/penalties from regulatory bodies. Indirect costs are less Payouts until insurance claim Insurance premiums visible and tangible, and can be difficult to articulate is processed in financial terms. Examples of indirect costs are Sick leave Compensating workers decreased morale and reputation. There are also for high risk jobs flow-on costs such as increased wages for high risk jobs and over-hiring of staff (see Table 2). Fines/penalties Return to work program Table 1. Top four Australian industries according to administration rate of safety incidents between 2009/10. Immediate production loss Rank INDUSTRY RATE OF INCIDENCE Intra-organisational communication ACCOMMODATION 84 per 1 AND FOOD 1,000 employees SERVICES These direct and indirect costs quickly accumulate. From a national perspective, safety incidents cost 79 per the Australian economy over $60 billion per year, or 2 UTILITIES 1,000 employees 4.8% of the gross domestic product for the 2009-10 financial year7. Workplace injuries and illnesses also ARTS AND 3 RECREATIONAL 77 per impact markedly on the US economy: a recent study 1,000 employees estimated these costs at over $249 billion, which SERVICES is equivalent to the national health costs of major TRANSPORT, 74 per diseases such as cancer8. 4 POSTAL AND 1,000 employees WAREHOUSING Moreover, the costs to employers per safety incident are rising. In the US, the average cost per safety incident in the construction industry was estimated at $27,000, which is roughly double the figure reported in 20022. Australian estimates are more conservative, yet still sizeable at $5,000-$25,000 per workplace safety incident (see Table 3) and increasing© Sentis Pty Ltd 2012 sentis.net
  5. 5. Putting safety to work: The business case for psychology-based safety training programs each year7. Researchers have shown that these Safety as a Cost estimates vary significantly by company, industry, According to some, safety programs are seen as P.5 and incident type — in one study, the cost per a way to minimise unnecessary costs9,10. From workplace incident ranged from $1,440 to $10,7409. In this perspective, expenditure on safety is justified Australia, the average total cost of injury and disease because it reduces wastage of resources and avoids is highest in the communication, mining, finance expenditure on people, equipment, and regulatory and insurance, and utilities industries (see Table 4). penalties in the aftermath. As long as the outlay on safety is less than the combined cost of injuries and Table 3. Estimated costs of workplace injuries and illnesses, the initiative is deemed to be a success. disease, borne by employers, per incident. However, this approach effectively stalls the INJURY DISEASE organisation’s progression along the safety maturity curve. Without investment in safety training and SHORT ABSENCE $630 $770 development, employees and leaders can, over time, develop unhelpful or hindering attitudes, beliefs, and LONG ABSENCE $7,950 $9,910 behaviours relating to safety. PARTIAL INCAPACITY $16,160 $12,170 Safety as an Investment FULL INCAPACITY $16,970 $14,800 Safety can do much more for the organisation’s bottom line than simply ‘pay for itself’. In fact, FATALITY $25,000 $63,350 organisations can put safety to work and generate returns over and above the cost of conducting AVERAGE $3,930 $9,670 the training. Note: These data represent all Australian industries, therefore the Although firm economic utility data on psychology- estimates will vary depending on average salary within the particular based safety training is lacking, a mounting body of industry and other contextual factors, such as fines/penalties and insurance premiums. research evidence shows that targeting underlying attitudes and behaviour in combination with traditional Table 4. Top five industries according to total combined investments in environment and practices produces costs of workplace injury and disease. the greatest effect on safety outcomes. Of the limited work done to date, studies have shown that the return TOTAL COMBINED on investment (ROI) of safety training interventions RANK INDUSTRY COST* PER CASE is positive, and in some cases, particularly lucrative COMMUNICATION (see Table 5). 1 $175,200 SERVICES 2 MINING $170,000 3 FINANCE AND INSURANCE $157,100 4 UTILITIES $147,400 AGRICULTURE, FORESTRY 5 $126,100 AND FISHING Note: Total combined cost includes the estimated costs borne by the worker, the community, and the employer. To avoid these significant financial, social, and personal costs, increased and ongoing investment in safety — particularly for interventions that target the less visible, indirect costs — is paramount.© Sentis Pty Ltd 2012 sentis.net
  6. 6. Putting safety to work: The business case for psychology-based safety training programs Table 5. ROI of selected safety management initiatives. RETURN ON $ Training Programs: Safety Citizenship P.6 SAFETY INITIATIVE Organisational citizenship refers to employee INVESTMENT behaviours that go ‘above and beyond’ Safety education about musculoskeletal disorders with a focus on injury 46% expected tasks and duties as detailed on the prevention11. job description18. Applied to safety, employees Training in the use of a health risk show citizenship behaviours when they help assessment tool to prevent back 179% others to complete tasks safely, keep up to injuries12. date on safety knowledge by attending non- Employee well-being program for mandatory training, and volunteer for safety 251% offshore petroleum workers13. committees19. Interventions that stimulate Training program aimed at increasing 1277% citizenship behaviours are particularly promising employees’ general safety behaviours14. (after two years) from a financial perspective. Not only can they reduce the prevalence of injuries, and hence, lost In addition, safety training and related interventions, time and production, citizenship behaviours also such as coaching, produce many spill-over effects increase the quality and quantity of production20. that are often hidden from employers. For example, a survey of 45 contractor organisations operating Therefore, safety interventions that promote in the US construction industry revealed that 79% citizenship behaviours (e.g., team-building, reported increased employee productivity and 83% safety communication skill development) not reported increased workplace morale following a only reduce the costs of workplace injuries, safety training event15. Further, 73% reported that but may also increase the productivity of safety training contributed greatly to increased profits entire groups of workers in one swoop. and work quality. Indeed, our own research on the efficacy of ZIP Safety for Teams showed that participation in $ Leadership Training: Safety the program enhanced employees’ general well- Leaders are a natural point for safety intervention. being, as evidenced by significant decreases in In particular, frontline leaders (e.g., supervisors, depression, stress, and anxiety, and significant team leaders) exert a powerful force over the increases in general life satisfaction. Although behaviours of workers, motivating increased performance outcomes were not captured in this productivity and driving the achievement of study, other researchers have shown that well-being organisational goals21. So, it makes financial translates to increased productivity16, and decreased sense to target leadership as the effects are stress-related compensation claims and use of likely to flow ‘down the chain’ to workers across uncertified sick leave17. Translated to economic the organisation. Initial results from studies of terms, these outcomes exert a direct effect on revenue safety leadership training are promising, as and profitability. the effects on workers seem to be marked and long-lasting. Of these training interventions, programs that equip leaders with advanced ‘soft ‘Bang for your Safety Buck’ skills’ seem to produce the greatest effect on Of the gamut of safety interventions available to employee performance. Example interventions organisations, we have identified the top three include safety-by-walking-around22, safety programs that we believe provide the largest ROI. conversations23, and direct training of safety These interventions show the most promise of going leadership skills that motivate, inspire, and beyond traditional safety initiatives by reducing costs generally establish higher quality relationships associated with workplace injury and contributing to between leaders and subordinates24. increased performance and revenue.© Sentis Pty Ltd 2012 sentis.net
  7. 7. Putting safety to work: The business case for psychology-based safety training programs $ Coaching: Safety Conclusions P.7 Coaching-based safety interventions equip Safety is an ongoing challenge across all industries. internal stakeholders with the skills and In fact, safety is actually costing organisations knowledge required to successfully ‘own’ and more as time goes on. At one level, the traditional ‘drive’ increased safety performance across view of safety as a cost rather than an investment an organisation. Coaching also consolidates is holding many businesses back from achieving and intensifies the effects of traditional training the next level of safety performance and a raft of interventions. Outside the safety domain, performance and financial benefits. At another the ROI of coaching has been established25, level, safety training providers and financial and in some cases, coaching has increased decision makers need to consider the issue from productivity by nearly 90%26. Emerging research new perspectives. An integration of worldviews on safety coaching has mirrored these results, here would do much to help psychologists and with outcomes such as decreased near-misses trainers to be more financially accountable, and and injuries, and enhanced organisational safety accountants and economists to better appreciate culture27 following implementation. Further, the complexity and power of psychology-based these effects seem to persist for years post- safety interventions. Although much work remains intervention. to be done to explicitly link safety interventions to tangible and measureable financial outcomes, Focussing on the person element represents a research shows that safety training works, and promising attitude for many organisations to more importantly, influences employee attitudes, ‘have their cake and eat it too’ when it comes beliefs and behaviours to produce positive safety to safety. As psychologists continue to work and financial outcomes. with organisations and become increasingly ‘business savvy’, evidence of the financial return of such programs should start to emerge from the academic literature and the work of consulting firms. Nevertheless, the evidence shows that these programs work, and partnerships between safety training providers and organisations will stimulate in-depth ROI research to demonstrate the economic value of these interventions.© Sentis Pty Ltd 2012 sentis.net
  8. 8. Putting safety to work: The business case for psychology-based safety training programs TRISTAN CASEY Currently completing a Doctoral degree in Organisational Psychology, Tristan is an experienced and skilled applied researcher. Tristan’s primary research interests include: safety climate, safety leadership, training transfer and evaluation, and online survey methods. Tristan is passionate about synthesising and translating empirical state-of-the-art for the purposes of practical application. P.8 is a global business dedicated to creating sustainable organizational change in the world around us. Our mission at Sentis is to assist individuals and organizations change their lives for the better and we do this through the application of psychology to safety, leadership and well-being in the workplace. Brisbane Office Perth Office Denver Office Building 2, Level 1 Level 2 6205 S. Main Street 747 Lytton Road 327 Cambridge Street Suite 260 Murarrie QLD 4172 Wembley WA 6014 Aurora, Colorado 80016 PO Box 303, Morningside QLD 4170 PO Box 82, Wembley 6913 Tel: +61 7 3363 5900 Tel: +61 8 9318 5100 Tel: +1 720 226 9550 Fax: +61 7 3363 5999 Fax:+61 8 9318 5155 Fax:+1 720 226 9589 REFERENCES 1 Linhard, J. (2005). Understanding the return on health, safety and Park: Australian National Training Authority. environmental investments. Journal of Safety Research, 36(3), 257 – 260. 15 Goldenhar, L., Moran, S. & Colligan, M. (2001). Health and safety training 2 Waehrer, G., Dong, X., Miller, T., Haile, E. & Men, Y. (2007). Costs of in a sample of open-shop construction companies. Journal of Safety occupational injuries in construction in the United States. Accident Analysis Research, 32(2), 237 – 252. & Prevention, 39(6), 1258 – 1266. 16 Wright, T. & Cropanzano, R. (2000). Psychological well-being and job 3 International Labour Organization. (2012). 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