It might seem like a hardened, senior management business view, but there is evidence that moving from measuring incident rates to the cost of safety in dollar terms, can actually improve safety.
In his article, Mind Shifting into Safety Excellence, Dr Larry L. Hansen from L2H, talks about the need for companies to change how they measure safety performance.
As Dr Hansen succinctly puts it, “What does your CEO and CFO value most…reduction in rates? Or reduction in costs?” Obviously, nearly everyone would choose costs. Yet, so many companies emphasize incident rates as the driving metric of safety performance.
In a Safety & Health magazine readership poll a resounding 86.3% percent of respondents believed that occupational injuries in the US are under-reported.
While at a more local level, Dr Yossi Berger from the Australian Worker’s Union (AWU) has stated in a recent NSCA interview that reductions in injuries do not provide the correct information about the quality of health and safety standards nor about daily risks experienced by workers at their tasks.
Dan Zahlis, Founder of the Active Agenda project used to be the Regional Risk Manager for The Häagen-Dazs Company.
His most immediate challenge was to reduce high Workers Compensation costs at the California facility. What he found was that head office imposed “incident rate measurements‟ which had frustrated supervisors (because they were accountable for something over which they had little control), had created employee cynicism, (because workers knew that numbers were suspect), and had driven real problems and near-miss events underground, (until they ultimately surfaced as costly injuries). Dan removed the incident rate measurement and implemented what he called the “ultimate safety metric‟ – “Average Loss Cost‟ -calculated by the following formula:
Average Loss Cost = Total COST of all INCIDENTS/Total NUMBER of all INCIDENTS
(And by INCIDENTS, Dan meant ALL – Near Misses, First Aid, Medical Only, Restricted Duty, and Disabling)
Dan’s goal was to build trust and remove cynicism by removing the negative consequences associated with reporting, which in turn would expose real problems and allow real safety progress to occur.
The genius of this metric is that the only two ways it can be improved is by increasing the number of incidents reported (exposing hidden problems), or by reducing total costs (forcing better management of employee claims).
At the end of the first year, the plant reported 33% more claims, BUT produced a 30% reduction in claim costs. And, of course he lost his job for bucking corporate policy. He then went on to a Dole Foods Division where he applied the same approach and reduced loss costs from $385,000 to $30,000 in the first year.
So what do you think? Leave a comment below about your company incident rates and your experiences.
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