Safety is a hidden competitive opportunity that directly impacts operational and financial performance. When implemented strategically through a focus on behaviors rather than just tasks, safety initiatives can drive cost reductions, improve culture, and boost employee productivity and morale. Data from manufacturers and retailers shows that for every $1 spent on injuries, $3 is spent indirectly. Progressive companies make safety an "operational pivot" that touches all human behaviors and roles. Using systems control charting to measure the impact of safety programs indicates whether changes are sustainable or just temporary. A 100 basis point change in injury frequency can equate to a $15 million impact on EBITDA or sales. Workplace safety therefore generates a multiplier effect on economic growth and performance.

1. Safety Productivity Multiplier: How to Turn Workplace Safety into a Competitive Opportunity
By Dave Brickell, Sue Antonoplos
For the past 20 years, academic and popular business journals have been piecing together the
core components that some believe will constitute a winning business strategy. Beginning with
Michael Porter’s trailblazing 1998 volume Competitive Strategy, to Peter Drucker’s treasure trove
of insightful studies of management effectiveness (1973), Marsh’s organizational insights (1988)
followed by Daniel Kahneman's recent behavioral approach in Thinking Fast & Slow (2014) to
an examination of improbable risk events in Nasim Taleb’s provocative Black Swan: 2nd
Edition
(2010), the literature is full of ways to look at operational data to find a clear path to competitive
strategy, operational efficiency and ultimately, economic success.(1)
The search for success has created a ‘global strategy industrial complex’ supported by very
successful consulting firms like Bain, McKinsey and PWC. Senior business executives are
constantly bombarded by news articles or podcasts on business economics illustrate ways to
achieve competitive advantage through cost reduction, driving profitable sales, or by changing
the human capital mix to optimize customer engagement. The hope is these new strategies and
business model modifications, aided by finely tuned analytics, will achieve sustainable earnings
and market share growth. However, what if one of the greatest potential competitive opportunities
has largely gone unnoticed and unappreciated? The hidden-in-plain-sight opportunity is in
recognizing workplace safety performance as a leading indicator of economic and
operational performance. In effect, as safety goes, so does the rest of your organization.
Moreover, workplace safety, when combined with proactive workplace health initiatives, creates
a productivity multiplier effect that serves to support all other corporate key performance
indicators.

2. Paying attention to workplace safety is inexpensive, clearly measurable and, when
correctly applied, moves the strategy-impact needle like no other key metric.
Most of you reading this white paper are probably saying right about now…Wait…what? Safety?
Really?
Absolutely. Embracing safety as a strategic process may not be the first thing that comes to mind.
Indeed, recently published business surveys show today’s management knows how to plan and
allocate costs for potential future strategic risks such as reputational, cyber attack, and business
interruption. The problem is all that planning tends to ignore real losses due to employee injuries
and customer liability and to recognize these losses constitute a immediate and ongoing financial
drain on the organization. Unfortunately, Safety has focused on the tasks that resemble
compliance but have overlooked the human behaviors that contribute to loss. Here is the point
to remember: Safety is about behaviors, not tasks!
New research and operational testing in the manufacturing and retail industries has revealed that
safety impacts an organization to drive cost reduction, establishes and fosters a culture of risk
understanding/mitigation, and directly affects employee morale and productivity, all of which
translate to enhanced operational and financial performance. Today, new concepts of
behavioral safety may be to sustainable profits as Six Sigma has been to operational
efficiency and lean economics. The early performance results are very encouraging.
Why is this the case? Haven’t we figured this out already? Well, not really. Typically in most
companies, discussions on safety are relegated to regulatory compliance. Traditional risk/safety
teams are seen as audit-based, regulatory-focused inspectors saddled with the responsibility for
safety. Should an Occupational Health & Safety or other agency regulator come knocking, there
is plenty of employee signed documentation to prove the company is doing what it should.
Problem solved, right?

3. Most of you are also saying to yourselves: Ok, all of this looks good from a tactical perspective;
so what is the strategy problem? Answer: An exclusively regulatory focus rarely prevents
workplace injuries. The approach just keeps the regulatory agencies out of your yard. Think about
it: What do you have to sell to make up for a $30,000 back claim? Moreover, what opportunities
to execute strategy have you forfeited by not having your workforce healthy, productive and at
work? The evidence shows us that for every $1.00 spent on an injury, no matter if it is time off or
medical recovery, you spend an additional $3.00 in indirect expenses. These indirect costs can
include: recruiting and training a replacement; the loss of sales or customer engagement as
individuals approach their profitability yield; and the cost of overtime. Moreover, let’s not forget
the potential risk to your organization by temporarily overworking your remaining workforce.
For progressive companies, the responsibility for safety is embedded in operations; economic
incentives have been carefully developed to reward the behaviors that promote workplace safety,
and; the responsibility and accountability for safety behavior implementation belongs to
operations. Safety is an “operational pivot”, where it touches and impacts every part of the
organization where human behaviors exist. Thinking in this fashion, prevention is quickly
becoming a high value strategic KPI. Understanding the economic value of prevention as it
relates to EBITDA, ROI, EPS and shareholder confidence in management is quickly becoming
the new standard. Big data, better-focused analytics and use of systems control techniques can
now show us where the improvements are and how they “move the perforance needle.” Today’s
new risk and safety personnel are shedding their auditor roles and becoming partners with
operations - the correct owners of safety - to drive risk-informed decisions. Research and
experience is showing us that better performing companies are identifying the behaviors that lead
to accidents or damages. They then support operations to recognize and reduce both the direct
and indirect costs of risk issues. For example, one large nationally based grocery retailer
implemented a focused behavioral safety and risk management approach and installed the tools
to drive a culture change. This company embraced the notion that everything a human worker
touches generates both good and bad operating behaviors. They posted transparent information

4. and standardized the analytics on safety performance by division, district and down to the store
level; employee safety education was transformed from regulatorally-focused to behaviors and
called out the behaviors that contributed to loss. By doing this, the company not only brought
down their workers’ compensation frequency rate to the lowest in its industry, (resulting in $100M+
in hard savings) but multiplied the savings via increased sales, reduced shrink and significantly
improved its customer and employee engagement. The key tool used to answer the question,
“How do you know if you are making an impact?”, was Systems Control Charting.
Systems Control charting is a statistical tool that views whatever you measure as a system, where
identified inputs produce specific outputs in a controlled environment. In this case, the output we
are looking at is workers’ compensation claims. The chart shows upper control limits, the mean
value per period and lower control limits. The upper and lower control limits are the statistically
designated space that employee injuries will “normally” operate without undue external

5. stimulation. The mean value represents the average claims value for a particular period. Systems
control charts are an objective way to see if your safety team’s (in truth, your operations team’s)
efforts to control frequency had an impact or created a sustainable change. In this case, you can
see positive and negative systems changes where claims performance was fundamentally altered
as a result of some stimulus.
The important thing about using systems control charting is it tells you whether your safety
programs (or other risk management programs for that matter) are “effective” enough to impact a
systems change. Question: How does a 100BP change in frequency impact EBITDA or Sales?
In this example, while the calculations are not shown, a 100BP change, either way, in frequency
rate equated to $15M in cost. More importantly, we now know workplace safety generates a
multiplier effect that can either accelerate economic growth and performance, or signal short
term profits reduction and operational failures.
As the CEO of your organization, how will you know the difference?
(1) Michael E. Porter, Competitive Strategy, Tecnniques for Analyzing Industries and
Competitors: New York: Free Press, 1980.
Peter F. Drucker, Management, Tasks, Responsiblities, Practices, New York: Harper & Row,
1973.
Daniel Kahneman, Thinking, Fast and Slow: New York: Farrar, Strauss and Giroux, 2011.
James Marsh, Decisions and Organizations: Oxford: Basil Blackwell, Ltd., 1988.
Nassim Nicholas Taleb, The Black Swan: Second Edition: The Impact of the Highly Improbable:
With a new section: "On Robustness and Fragility" (Incerto) Paperback, New York: Random
House, 2010