Workplace Communicator Blog

How to sell Safety Benefits to Senior Management

When it comes to safety, no company wants to see staff hurt or property damaged.

Yet, the majority of senior management see spending money on safety as a "grudge buy" that results in little or no return on investment.  In fact, the opposite is true.

This can be frustrating for safety professionals who know that they need more budget to improve safety, but have difficulties getting the board or senior management to approve a highly needed budget increase.

If this is the case in your company, then it's your duty as a safety professional or business professional to turn this viewpoint around.  After all, your employees and their families are depending on you to keep their loved ones safe at your workplace.

What safety professionals must learn to do is to sell safety to senior management, in terms that they can understand.  Rather than say you will save money on insurance and accident costs, the best method is to explain to management how you can actually increase profits.

Imagine what the Chief Financial Officer (CFO) would say at your company if he or she was told that you could improve annual profit by more than 10% by improving loss prevention efforts?  What do you think they will say?  Excusing the expletives, they will want to know how you can do this.  You're now talking in a language they can understand.

Doing the Math

According to the Cost of Risk Survey

1. Net insurance premiums, commissions and fees,
2. Non-reimbursed losses (self-insured, self retained),
3. Risk control and loss prevention expenses, and
4. Administrative costs

Over the years, cost of risk has averaged around 0.50% of gross revenues. This cost of risk is the same in Australia and the United States (and pretty much around the world for that matter).

Cost of Risk Example

Let's play around with the model described in the book Values-Driven Safety by Donald J Eckenfelder.

Using the example of a company with $1 billion in sales, with an average cost of risk of 0.5%, they would need to pay $5 million in insurance/accident costs each year.

But for companies that are performing poorly on safety, the cost of risk might be at least double, meaning that the insurance will double (1% = $10 million).

However, you're best to use conservative figures when talking to senior management.  Conservatively, companies that perform well on safety have a risk factor of 0.25% or $2.5 million, while poorly performing companies have a risk of 0.75% or $7.5 million (or higher).

But this excludes all the hidden costs such as low employee morale (from staff being injured, seeing their friends being injured or killed) and poor productivity (from equipment breakdowns, work not being delivered on time) and poor company reputation (due to customers receiving deliveries late, suppliers having their supply stopped due to equipment breakdown, product recalls and staff telling bad stories).

Now that we've worked out the cost of safety, let's take a look at company profits.

Company Profits - The Language of Business

On average, Australian and US companies make around 5-15% profit (again, very conservative).

So based on our $1 billion company, making a conservative 5% in profit each year, this is equal to $50 million which they then use to distribute to shareholders, buy back shares or re-invest into the company.

Given that the average tax rate is 35% company tax, the company would have $32.5 million profit after tax to re-distribute.

Using conservative figures, average company profits are impacted between 5-10% based on whether they are poor or good at safety.  If a company that is poor at safety becomes good at safety their cost of risk would reduce from $7.5 million down to $2.5 million.

This means that $5 million would add an extra 10% to the company's pre-tax profits.

In other words, loss prevention is an easy way to enhance profits.  The other option would be to sell more or to purchase another company, but this is a lot more work.

With this example in mind, you can now use your own company figures to provide this information to you CFO.  Remember, only use conservative figures and include a plan as to how you can improve safety (with the associated costs).  By working out, how much you believe you can reduce your safety risk costs, you can then work out how much extra profit can be channeled back to the company.  This is the figure to use with the CFO (rather than the amount of expenses you can save).

How to make New Workplace Behaviours Contagious

Imagine that you've launched a new company initiative, but the transition has been quite bumpy.  You calculate that 60% of staff are doing the new behaviour correctly, but you want 100% compliance.

Rather than getting despondent or even angry at your fellow workers, it's now time to get out all the tools hidden away in your persuasion toolbox and get everyone on the right path.

Let's step through what to do based on the Switch framework for change.

Using your Persuasion Toolbox

1. Follow the bright spots - The most important first step is to investigate what is working.  Who is doing it right and why?  Shadow those who have migrated across to the new behaviour to discover what it is they are doing well.  Have they streamlined the process?  Are they motivated by fear?  Work out what they are doing and clone it.  Remember, by focusing on the positives, you will get more positive results, than if you were to focus on the negatives (which coincidentally, gives you more negative results).
2. Change the environment - What often looks like a people problem can actually be a situation problem.  By following superstars, you might discover that people aren't submitting their reports on time because they are not sure how to collect some of the information (and superstars have an easier method).  Rather than make the process hard, what can you re-engineer so that staff can access the information easily?  Can you have a page on your intranet that centralises data that people can include for their reports?
3. Script the critical moves - Once you have discovered your superstar workers who have transitioned to the new behaviour, write clear instructions on how they are achieving success.  Let everyone know in as few steps as possible what they need to do.  Make it easy and try to build it into a habit.
4. Communicate your successes - Humans look to others to see what behaviour is the right one.  Build on this, by publishing who is getting the right results or doing the right thing.  Paint them as a hero.  Write a case study in your newsletter about how Sue from accounts manages to submit her weekly report each week without fail.  End it with clear instructions on the steps she takes for success.  Another option is handing out awards to your super stars in public.
5. Communicate the Collective Goal - Assuming that you goal wasn't clear enough, re-word it.  Try and give it a nickname.  For example:  Say you goal is to submit "50 reports in 50 days" you could make it catchy by saying "50 to 50".  Organise as many visuals of the goal as you can.  Get creative (use screen savers, posters, have visual reminders of how close you are getting to reach the goal, organise printed pocket sized cards etc).  Get everyone on-board by appealing to their group identity.  Make everyone feel part of a team.  For example: rally the troops in a speech using inclusive language.  "Come on, guys, we're production people we're good at doing things fast!' or "Come on every-one, we're XYZers the best company in our industry, as a leader in our field we can do better than this!"
6. Using the Power of Small Wins - Ever used a loyalty card where, for example, if you buy 10 coffees you get one free?  Research has found that people are more likely to use a loyalty card if one coffee has already been stamped, so you only have nine to go.  However, if people are given a loyalty card with no stamps, they are less likely to use it.  One way to motivate people is to make them feel that they are closer to the finish line than they thought.  In what ways can you let the team know that they are already on their way?  How can you pre-stamp their coffee card, so to speak?
7. Do a regular public review - Depending on how quickly you get results, do a weekly or monthly review meeting where you publish the results you are getting.  Make it clear to everyone that most of the group is doing the right thing.  By publicizing the group norm, you are saying "This is what every-one else is doing.  By submitting the reports late, you are letting the team down".

By following these seven steps, you'll find launching a new initiative a piece of cake.

Why your good safety record actually sucks

In "Why Leaders Don't Learn From Success" by Franceso Gino and Gary R. Pisano in Harvard Business Review April 2011, it was argued that success can breed failure.  We all know that learning from failure is important, but how many companies learn from their success?

When we do well, we're likely to believe that our staff, our safety equipment and our safety procedures are the reason why our staff have a good safety record.   Psychologists call this fundamental attribution errors.

But another quality that can lead to our downfall is the overconfidence bias.  This is when we believe that everything is so good that we don't need to change anything.

However, the most interesting aspect that Gino and Pisano attribute to downfall is the failure to ask why syndrome.  This is the tendency by humans to not investigate the causes of good performance.  Senior teams no longer ask the tough questions which enable understanding of why safety is going well (and therefore, what they should keep doing).

Companies too often believe that their safety record is due to their excellent managerial skills, yet, it could through be through sheer good luck.  Success makes us believe that we are better decision makers than we actually are.

Mind the Oil

Let's think about the BP oil spill crisis.  Before that time, BP believed that they were doing an excellent job of managing safety.  Now, in retrospect, many flaws were found in their safety system.  They cut a lot of corners in their risk assessment process.

Margaret Heffernan author of the book Wilful Blindness found that the BP Oil disaster was at some level caused by senior leaders who were cut off from how the business operates.  Their assumed power gave them a distorted view of their own skills which made them rely on snap judgements and received wisdom.  Heffernan says “It’s power.  Not your power.  It makes you intrinsically more optimistic and detached from the reality of the world.  You become psychologically cut off” (you can read more about this in "How to get Senior Leaders more Involved in Communication").

We're so good because we just are

With success, there is no evidence that you need to change strategy.  Even Toyota with its highly applauded production process that is built around uncovering problems and continuous learning failed to measure why it was being successful.  The result being thousands of car recalls, which senior leadership believing that being successful led them to pursue higher sales which had blinded them to the fact that operations had comprised quality to achieve growth.

Why getting an "A" needs as much review as an "F"

As Marcus Buckingham wrote in the great book "Go Put Your Strengths to Work", when a child comes home with a report card that has one A, four B's and one F, it's the rare parent that would say  "Well done, you've got an A.  What did you do in that class to get an A"?  Most parents would fret on the F and focus on how to get their child to improve in that area.  Parents spring into action when their child is doing badly, but don't think much about it when their child is doing well.  Humans have a tendency to have a problem focus, rather than a solutions focus.

In the book, Switch by Dan and Chip Heath, they mention that companies need to look at "bright spots".  The areas in which people are making something work really well, whether that be a good safety record or higher sales.  Staff that are performing exceptionally well are then studied for what they are doing differently.  Then, they are used to train other staff on how to improve.

The next time your company produces some great safety results - celebrate, but find out why.  Build up your strengths, rather than focus on your weaknesses.  Investigate why you got such a good result with as much detail as you would an accident.  After all, there is much to learn from our successes as with our failures.

For Safety Professionals: An interview with Communications Specialist Kris Cole

Kris Cole is the author of Crystal Clear Communication a fabulous book that gives you the skills for understanding and being understood.  She is a corporate trainer, international speaker, industrial psychologist, manufacturing technologist and a certified trainer.

Recently, I interviewed Kris to find out what communication tips she has for workplace managers and safety professionals.

1. In your book, Crystal Clear Communication, you mention the need to use positive language when communicating as “negative words encourage us to act negatively and positive words to act positively”.  What advice would you give any safety professional who is looking to communicate to his/her team about a new safety initiative?

Kris: You want to present the new safety initiative in a positive light and in a way that shows the organisation cares for its employees, hence the reason for the new initiative.  And let them know the WIIFM - what's in it for them.

For instance, it may make their lives easier or help them do their jobs more efficiently or give them a bit more peace of mind.

If it's a welfare or wellness initiative, you might offer:

Who is involved?

Why are you asking your team to take these actions?

How should your team do it?

They might not all be relevant but it's worth thinking those prompts through, so you cover everything you need to.

You may also want to post the initiative on the team's notice board and draw their attention to where they can find it in the organisation's manuals or intranet.

And of course, remember to follow through at the next few team meetings.

Reiterate your messages, find out whether anyone has any questions or has found any difficulties with the initiative.  Few initiatives are so perfect at roll-out that they can't stand a bit of fine-tuning.

2. You also mention the importance of show and tell.  And that to provide memorable communication you need to support words with visual aids.  When would you recommend that safety professionals use show and tell in their communication?

Well, we know people take in information more with their eyes than ears.  Let's face it - most of us are pretty poor listeners.  That's where the proverbial "a picture is worth a thousand words" comes in.  My tips are:

• So rather than just telling people what to do  - show them.

• Demonstrate it and even exaggerate your demonstration to make it memorable.

• Tell a little story to back up what you're telling them, so they can build a picture in their minds.

• Put up a poster or draw a silly drawing to drive your point home.

And when do you use this technique?  Anytime something is important!  For instance, use it when you're explaining how to do something - don't just tell someone - show them.

Run them through it and then ask the to do it while you watch.  Just watching is seldom sufficient and that's a big mistake a lot of busy people make - showing someone something and then walking away, expecting that they'll remember it.

3. In terms of getting safety messages across to workers, what would you say is the most important communication technique?  Any others?

You might want to vary how you say it, so you don't get bored, but when something is important, you can't stress it enough.

And do "show and tell", too.  The power of your own behaviour, of walking your talk and practising what you preach.  None of this "Don't do as I do, do as I say stuff".  People always take their cues from you - from what you do more than what you say.  So you have to support your words with your actions.

4. Workplaces can often be hotbeds of frustration and anger.  For managers who are having difficulty getting workers to listen to them, what communication techniques would you recommend?

Kris: Ah, well!  If it's a work team that's a hotbed of frustration of anger, I'd be looking at some serious team building and looking at the way people work together, communicate and relate to each other.  You need to make sure everyone knows what the team as a whole is aiming at and how each individual contributes to achieving it.

If it's the whole organisation or an entire worksite that's a hotbed of frustration and anger, you've got yourself an even bigger problem.  A fish rots from the head, so I'd start working with the leadership team and getting them to communicate more - and more genuinely with employees.  And not just about safety, but about all sorts of other things.  And not just talking, but the other half of talking - listening.  You know, even leaders have two ears and only one mouth and even leaders should use them in those proportions.

Well, I don't know about you, but I feel that Kris has given us all some common sense information to help make communicating in the workplace a more enjoyable and effective experience.  Thanks, Kris.

CEO's safety behaviour at odds with OHS and HR Personnel

Senior leadership plays an integral leadership role in establishing the safety culture of an organisation.

According to Dan Brown, "The culture of a company is the behaviour of its leaders.  Leaders get the behaviour they exhibit tolerate".

Staff look to senior leaders to know that they are safe.  They want to see tangible evidence that safety is a priority.  This means they want to see action, so while senior leaders might like to talk about the importance of safety, their staff judge the truthfulness of such statements with follow up action.

So it is quite disappointing to find in a recent Australian study that senior leadership might believe that they are 'walking the talk' when it comes to safety, but their staff don't feel the same way.

The 2011 Business of Safety survey conducted by the Australian Institute of Management VT and the Safety Institute of Australia has revealed that only 47% of OHS personnel and 55% of HR personnel agreed with the 88% of CEOs/board members and 70% of senior manager that top level management 'walked the talk' when it came to safety.

These results are similar to Safety in Action 2009 study which  found that 71% of CEOs say OHS is ‘a very high priority’, yet only 44% of OHS personnel agree with this.

Hopefully, next year with the new Work Heath and Safety Act that places direct responsibility to senior management and directors for failing to provide a safe working environment, these figures will start to improve.

The Real Cost of Workplace Injuries

Since the early 1990's, most companies have got their act together and decreased their workplace injuries (see chart).  After all, it's a no-brainer that workplace safety accidents cost businesses lots of money each year.  And from a human perspective, it's always a good idea to look after people.

Yet, many companies around the globe often forget about the real costs of an accident preferring to cut spending on safety training and equipment.

Let's take a look at some different viewpoints on the real cost of workplace safety to an organisation:

1. The Liberty Mutual Workplace Safety Index report states that improving workplace safety is a key strategy for reducing direct costs resulting from workplace injuries. The direct costs that are stripping businesses of their profits include medical expenses, workers’ compensation payments and costs for legal services.   Direct costs are just the beginning of the ‘price’ of an unsafe working environment. Workplace accidents trigger a range of indirect costs including repairs to damaged equipment and property, hiring and training of replacement personnel, as well as costs associated with lower employee morale and absenteeism that is common in a work site that is considered unsafe.
2. While across the Pacific Ocean, Ian Woods, a senior business analyst at AMP Capital Investors was quoted as at a Safe Work Australia event that “From an investors’ perspective, we actively consider OH&S performance in our investment decisions, as we believe it is a good measure of management quality in many high-risk industries".  Woods argues that investors now cannot ignore the cost of workplace injury as it is passed on to Australian employers. The average workplace injury costs 6 percent of profit. In the construction industry, the total workplace injury costs borne by workers, employers and the community is equivalent to a staggering 98 percent of the industry’s operating profit.
3. While Professor Patrick Hudson, based at Delft University of Technology in the Netherlands was also quoted as saying “I have an estimate that a company may be losing up to 10 per cent of its turnover as a result of poor OHS and E (occupational health, safety and environment) performance...when you have a shutdown, you lose production, and you just add it up,” Prof. Hudson said

Gary Gregg, executive vice president of Liberty Mutual's Commercial Markets sums it all up by remarking "There is a clear link between workplace safety and a company's performance".

But who is really responsible for workplace safety?

Research undertaken by Missouri Employers Mutual Insurance revealed that 95. 7% of those interviewed stated that the responsibility for creating a safe work environment belongs to management.

The bottom line is that companies need to assess their risk situation and to educate employees about how to keep themselves safe.

For organisations with a profit and humanitarian focus, education and safety training video packages are a wise investment in reducing business risk since they protect the most important business asset of all. . . human capital.

Are you safe at work and home?

A funny thing happened yesterday.

My husband was driving carefully down our local shopping strip.  It was raining quite heavily (and it was a Sunday).  However, the 4WD behind him wasn't happy.  The driver overtook him and subsequently sped through the pedestrian crossing.  Thankfully, there were no pedestrians, but there could have been.  The driver wouldn't have been able to see them if they were crossing from the left.

But why was this funny?  The driver had a customised numberplate that was about safety.  I can't tell you what it was because it will name the safety consultancy company.

Now, I'm not about to condemn the driver for being all aggressive and for being rude to a cautious driver.  But...isn't there something hypocritical about a safety consultant that goes into workplaces and talks about the importance of safety, yet is unsafe in their personal life?

Surely, running down pedestrians on a suburban street is just about as atrocious as a company that knowingly lets their staff use dangerous machines without the right safety equipment?

A true leader knows that it's not their words that tell their staff that they believe safety is important.  It's their actions.  And a safety consultant that cares little about pedestrians during their days off, really can't care that much about workers.

So for all the safety professionals out there - where in your life are you acting in a way that isn't safe?  Are any of your actions letting you down when it comes to communicating about safety?

How to Create the Best Workplace Training Materials

Companies often tell us that they are frustrated by how hard it is to engage staff with training.

After a bit of digging, we usually find out that training consists of:

1. A trainer talking a lot,
2. Some trainer made PowerPoint slides (learn how to improve your training presentations here) that generally consists of lots of words, or
3. A black and white manual that staff are expected to read.

What research has found is that is that passive/low engagement training is ineffective compared to active/high engagement training.   Passive training is when you get a trainer or lecturer telling lots of information or when lots of reading is involved.

The most engaging methods of safetytraining are, on average, approximately three times more effectivethan the least engaging methods in promoting knowledge and skillacquisition, as well as reducing accidents,illnesses, and injuries.

So any training that is designed around a trainer reading through slides is not enough to create engagement.  Nor is producing a training manual and expecting workers to read it.

The Most Effective Training Materials

Educational researchers have found that 83% of human learning occurs visually.  The right brain prefers visuals and can process pictures hundreds of times faster than words.

When it comes to producing training materials, it's a good idea to use as many visuals as you can.  And to really increase engagement, try and get trainees to touch, see and hear (obviously, taste and smell aren't suitable to all industries, but they work especially well in food).  Use as many of the senses as you can during training.

And while having a trainer talking at students is passive training including lots of "Show and Tell" or demonstrations takes the training to a new level.  This is where the trainer demonstrates a process and gets the trainee to have a go.  This is integral to an active learning style.  Coaching is then given to improve.  Which brings us to assessment, which is also really important with learning.  It is important that trainees get face to face feedback on how to improve rather than information from a computer.

A Checklist for Creating Effective Training Materials

To make use of this powerful memory booster, training materials need to be centred around a visually appealing training video.  By getting learners to see, listen and read important information you start getting higher levels of recall than just reading alone.  After all,  we remember 10% of what we read, 20% of what we hear and 30% of what we see, so by addressing these three areas, recall is increased to 60% v 10% for reading alone.

But just having a training video is not enough.  Another important addition to your training kit is the Trainer's Manual.  This guide needs to help the trainer know the best method to teach the material.  It needs to include a trainer's session schedule that has advice on what segments of the training video to play, what questions to discuss, when to do a demonstration, when to get trainees to have a go, when to pass around relevant items and the questions and answers for the quiz (and how to test respondents and discuss the answers).

In addition, to really keep trainees engaged and to help them believe that the training is important, each trainee needs to receive their own copy of an Employee Handbook.  This is the document that they go through in class, it needs to have information on how to undertake tasks, as well as photos that will remind them of the training video that they have seen.  The booklet needs to also contain their quiz with space for them to write in their answers  (also gives them ownership rights).

By using these three main training materials, you end up with a self-contained training package that gives trainers the resources and support that they need to create an interactive and high engagement training session.  It will also ensure that training is taught consistently across numerous locations.

How a great induction process makes a great company

Getting the right people into your company and training them properly is crucial for the success of any company.

There are so many reasons why inducting is so important.  Reasons include:

• 25% of new starters make the decision to stay in a company in their first week
• 47% of employee turnover occurs within the first 90 days of employment (with 60% of respondents citing induction as a priority area of improvement within the company, Recruitment Solutions 2007).
• The quicker that new hires are trained the quicker the return to your bottom line (let's not forget the expense of hiring a newbie, training them and waiting for them to get productive).  Companies that do this right get a 60% reduction to their "time to productivity rates".

So what's a great induction process?

1. Be friendly and welcoming.
2. Have training materials that treat the new starter like a valuable friend.  Use lots and lots of visuals to train people better.
3. Have senior management explaining the values of the company, what the company goals are, what the safety goals are, and how the new starter fits into the scheme of things.  Tell stories to make your values memorable.
4. Have face to face training, but also use training videos to further explain processes that will convey much more information than just words and pictures alone.
5. Test the newcomer on their knowledge.
6. Be friendly and welcoming and do include a meet and greet early in the process (I know I've mentioned this twice, but it is really important).
7. Make it fun!

By improving your induction process, you will not only reduce your recruitment and training costs, but improve the duration people will stay at your company.  Oh, and they will also want to work at your company and tell all their friends how wonderful you are.

Inducting people from a training perspective

When it comes to inducting people from a training perspective into any organisation, as important as this process is, unfortunately far too often not enough thought or preparation goes into it.

Organisations can become obsessed with running induction/orientation programs (with these terms often misinterpreted as being one and the same) on a new employee’s first day. Now I am certainly not saying that being given an OH&S overview or understanding the organisation’s mission statement isn’t important. But what about a true induction – and I am not referring to systems or database training, being allocated a new e-mail account, shown where the biscuits are, or being added to the kitchen roster.

These days it is not uncommon for people to move not only from one job to another, but also from one industry to another. And these people need to experience an in-depth induction, which can often go for an entire week.  But for someone new to both the organisation and the industry, when is the best time for them to be inducted?

From my own experience as a manager and having often hired people from outside my sector, I am a firm believer in having them sit within the business for at least 3 – 4 weeks observing the other staff, shadowing the experts, and getting an insight into the true goings on of the business.

After about a month, I think this is then the best time for them to be formally inducted (either by a facilitator from the within the business or an external expert). However the key word here is formally. Not just sitting at a desk, but being in a classroom environment – experiencing industry-specific training as well as performance support, role-plays and true simulations.

By waiting the month, new staff will have become more familiar with industry lingo, they will have watched their more experienced colleagues in action, and that way what is covered in the formal induction will actually make far more sense and be less likely to result in information overload.

Paul Slezak is our guest author this week who is the Director and Head of Learning and Development for Recruitment Academy – www.recruitmentacademy.com.au, one of Australia’s leading providers of induction, training, and consulting solutions to the recruitment industry.