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  • Looking to Improve ROI – Check Your Safety and Wellness Programs

    Published on Thursday, April 5, 2012

    A few years ago Michael Behm, an associate professor at East Carolina University involved in the study of occupational health and safety contacted me about an idea he had for a research study. He wanted to look at the health and safety records of 100 Best Companies and see how they compared with generally available data on the occupational health and safety practices found in comparable companies not known as great workplaces. His study resulted in a paper that documents the positive link between employee morale, a firm’s active and visible support for safety programs, and improved return on investment.

    Another article that recently came to my attention comes at the same topic from a different angle by simply extrapolating and documenting the extraordinary high cost of occupational illness and injury in the United States. This study, presented by J. Paul Leigh, a professor of Health Economics at the Center for Healthcare Policy and Research at the UCDavis Department of Public Health Services quantifies the financial burden faced by companies and the US healthcare system for occupational injuries and fatalities. Leigh’s research doesn’t look at ways to prevent or minimize occupational illnesses and injuries – he simply makes us all aware, with significant documentation, of the negative effects of lax workplace safety programs and poor or non-existent efforts to promote employee wellness.

    His conclusion is dramatic yet also plain spoke and direct: “The medical and indirect costs of occupational injuries and illnesses are sizable, at least as large as the cost of cancer. Workers’ compensation covers less than 25 percent of these costs, so all members of society share the burden. The contributions of job-related injuries and illnesses to the overall cost of medical care and ill health are greater than generally assumed.” Most of us have seen news stories about the ‘cost burden’ society carries because of the explosive rise of cancer cases and treatment. Now we know that a comparable ‘cost burden’ comes from occupational injuries and illnesses.

    Compare and Contrast

    To bring the findings of these two studies down to ground level, we can consider the findings of an investigative report prepared by the New York Times, Frontline and the Canadian Broadcasting Corporation released in 2003. This report compared the consequences of health and safety practices at AMERICAN Cast Iron and Pipe company, (formerly known as ACIPCO) and McWane Inc. These companies are both over 100 years old, both located in Birmingham, Alabama and both make, among other things, cast-iron water and sewer pipes. The similarities end there.

    McWane industries has had one of the worst health and safety records in its industry for years, with the high cost of their poor practices felt most keenly by workers – and perhaps also the city of Birmingham and state of Alabama where much of the ‘cost burden’ of their poor practices was absorbed by individuals, families and communities.

    AMERICAN on the other hand has long been known as an exemplary employer with state of the art health and safety practices that have benefited employees, the company, community and state. At the time of the 2003 report there really could not have been two more divergent approaches to health and safety found anywhere.

    The consequences of that investigative report didn’t change anything at AMERICAN – they’ve continued to promote health and safety with as much zeal and success as always. Things have been changing at McWane though, with new management, new programs and a vocal commitment to health and safety. Some improvements have been noted with a number of plants admitted into OSHA’s Voluntary Protection Program in recognition of their strong health and safety programs. There continues to be much improvement needed.

    While both AMERICAN and McWane are financially successful companies the cost burden born by McWane because of their weaker health and safety record is tremendous – as is the cost burden taken on by the communities in which it’s plants operates. This is a much harder financial figure to comprehend as the Leigh study cited above affirms – it is very difficult to get accurate data on the high costs associated with poor occupational health and safety programs. How much more successful would McWane be if they had an improved health and safety record – one matching that of AMERICAN? Hard to know. And how much ‘healthier’ would the communities be in which they operate? Again, hard to know.

    Benefits from Safety

    Yet if we go back to the Behm study, we can see some the possible benefits that can come to organizations that actively promote occupational health and safety programs. A 2002 OSHA study indicating that workplaces with active, visible safety leadership have fewer injuries, are often rated as better places to work, and have more satisfied, more productive employees who are less likely to change jobs is what originally prompted Behm to seek out 100 Best Companies data.

    Behm wanted to see if he could present a more rigorous argument for the benefits that come to organizations with strong health and safety programs. His findings did not disappoint him.   “Occupational safety and health performance and management is a significant component of employee morale [and] this [supports] the previous anecdotal claims. Organizations with high levels of employee morale have fewer OSHA inspections due to accidents or complaints, serious, willful or repeat violations, and lower monetary penalties.”

    How can you put some of the findings of Behms’ study into practice so that your own organization will benefit from strong wellness and safety programs? And also gain some of the benefits found at AMERICAN Cast Iron and Pipe Company, while reducing the significant costs documented in Leigh’s study of the burden of occupational illness and injury on the US economy?

    A Positive Approach to Wellness

    One place to look is Lincoln Industries, a Lincoln, Nebraska metal finishing business that has received frequent recognition for the quality of its workplace (including as a Best Small and Medium Workplace) as well as recognition for the positive impact of their safety, health and wellness programs.

    Lincoln’s worksite wellness program, added in 1989, has produced notable returns on investment for many years.  Every company newsletter includes a wellness tip and an environmental tip, with both often including a safety focus to their topics. The company Wellness program - called go!Platinum - promotes the health and well-being of all people at Lincoln Industries. In June 2011 the company announced that they would be opening an on-site workplace health center to provide medical services at no cost to employees, their spouses and children over 12 who are enrolled in the company’s medical insurance plan.  Services will include both the treatment of minor illnesses and injuries as well as health coaching to promote healthy lifestyle choices. Health, wellness and safety are taken seriously at this company.

    In 2004 Lincoln’s Wellness program is credited with helping to lower the number of people who smoke tobacco from 42% to 15%.  In 2005 Lincoln’s program provided a 5 to 1 return on investment and saved the company 21 million dollars while reducing lifestyle associated medical claims, workers compensation claims and health insurance costs.  The company’s annual health-care costs have averaged 30% less than those of other Midwestern employers in the same industry and of the same size.

    All of this is significant and points the way towards efforts your own company can make to improve its overall return on investment, avoid the negatives of occupational injury and illness, promote people’s health and well being, and improve employee morale. What are you waiting for?

    Amy Lyman is co-founder of Great Place to Work® Institute and author of The Trustworthy Leader (©2012 Jossey-Bass)

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