Cost effectiveness of new safety programs

¶ … Safety Programs

Cost Effectiveness of new Safety Program

Fall Protection and a "Culture of Safety"

This proposal will serve as an introduction to a safety program to prevent falls in a manufacture plant. The program includes a safety review by a safety engineer, subsequent safety related changes to equipment, increase in training and awareness regarding to fall protection and spill containment packs and procedural training. The work will first discuss the reasoning and implementation of a safety program, then discuss cost comparisons between injuries and fatalities and the implementation of the safety program and finally it will propose to test in a longitudinal study the effectiveness of the safety program after implementation. The hypothesis of this work is: Fall related injuries will be reduced in a statistically significant way over a period of 1 year, post-safety program implementation and an increased culture of safety will be reported by all employees.

Statement of the Problem

Safety in the workplace is an enduring issue associated with all types of business. Work related injuries constitute a significant aspect of cost in manufacture, with regard to both claims and loss of productivity. It is also assumed, and rightfully so by industry and employee alike that part of the silent code of business is to, as much as possible reduce the possibility of workplace injury and death. Assumed protection and safety at ones work is paramount to the ethics of doing business and has been for many, many years. (Block, Roberts & Clarke, 2003, p. 1) Workplace safety is also a logical trend of corporate social responsibility and will likely increase in importance in the foreseeable future. (Karoly & Panis, 2004, p. xxxv) Occupational falls, that involve injuries and even deaths occur regularly in the U.S. And accounted for 806 fatalities in 2006, a significant increase from years past. (DOL, 2008, NP)

Occupational fatalities caused by falls remain a serious public health problem. The U.S. Department of Labor (DOL) lists falls as one of the leading causes of traumatic occupational death, accounting for eight percent of all occupational fatalities from trauma. Any time a worker is at a height of four feet or more, the worker is at risk and needs to be protected. Fall protection must be provided at four feet in general industry, five feet in maritime and six feet in construction. However, regardless of the fall distance, fall protection must be provided when working over dangerous equipment and machinery. (DOL, 2008, NP)

Reducing falls and mitigating the severity of injury when they do occur is a top priority of management, especially given the current economic climate and the need to reduce expenditures paid out to claims as well as utilize to the full potential of all employees. A reduction in sales and operating capital has precipitated a 17% layoff in the past two years. It is therefore exceedingly important that those individuals who remain be protected from unnecessary injury so they may continue to work productively and safely for the company. Though manufacturing, in general constitutes a relatively low injury death rate (from any incidents that are work related) at only 4 in 100,000 annually, this risk is still to great, given the costs associated with such events, and this is not even taking into consideration the non-monetary results of such events. (Leigh, 1995, p. 16)

Research Questions

1. Why is safety in the workplace important?

2. Comparative cost of implementation vs. workplace injury.

3. Problems associated with implementing safety.

Aims and Objectives of the Study

The aims and objectives of this study are to first answer the above research questions through a directed case study approach and then to compare the pre-program safety data with post-implementation data in a longitudinal study. The goal of the company is to eliminate fall related injuries and increase safety overall in the manufacture plan. This work will serve to respond to that goal by addressing all of these aspects and finding out if cost savings is really possible with the implementation of fall safety and other safety awareness programs.

Review of Literature/Case Specific

Why is Safety in the Workplace Important?

The manufacture floor is often the source of fall obstructions and spill related falls. It is a rare occasion that any staff ascends to heights greater than 4 feet on ladders or other lift tools, though lifts are utilized in the warehouse that can contribute to secured heights of greater than four feet. Additionally, the moving workings of machinery, including but not limited to conveyor belts and other potentially dangerous machinery are of significant concern as equipment can increase the odds of injury, when individuals fall. Most of the production equipment has been retrofitted with safety mechanisms that provide the worker some protection but there are cutting surfaces as well as moving gears and links that cannot be covered as it would interfere with the production process. Additionally, there are many hard surfaces on edges and corners that could increase the odds of injury, and especially head injuries if and when a fall occurs. The company itself has experienced a minimal rise in the number of falls reported, over the last ten years. One fatality has occurred in that time period and precipitated a stricter set of fall protection and spill protection policies on the manufacture floor and in the warehouse, where the fatal injury occurred. The manufacture process at this plant is a dry process as most of the work surrounds assembly of dry materials. This however does not exclude the possibility of spills from hydraulic equipment (hydraulic fluid) or other lubricants that can occur when machinery malfunctions or is serviced incorrectly. In addition to this cleaning procedures utilize liquids, though liquids for personal consumption are strictly controlled on the manufacture floor. Spills associated with cleaning of equipment and machinery failure therefore constitute the highest risk associated with the manufacture floor. One additional concern is obstructions, anti-fatigue mats line the work space and walkways of the floor and these occasionally present fall risk, as does the unauthorized stacking of materials and equipment on this surface. To assess the cost effectiveness of instituting a more stringent fall protection program specific to the manufacture floor, support functions and the warehouse the company first sought out and retained an industry safety expert on fall and spill protection. This review resulted in a report that indicated known and previously unknown risk categories and standards. The fall protection standards of the U.S. department of Labor were instituted in 1991, but have not proven to eliminate fall risk or fall injuries. (DOL, 2008, NP) as recommended by trade literature but specifically, Scherer, Petrick & Quinn what is referred to as a safety audit was performed. (1996, p. 11) the audit report indicated three specific areas of reform for the manufacture and warehouse areas of the company; 1. Spill resolution, 2. Obstruction removal and avoidance & 3. Harness equipment for the warehouse and machine engineers who work on the production floor repairing equipment. (Scherer, Petrick & Quinn, 1996, p. 11)

Comparative Cost of Implementing Safety

Several other safety resolutions were instituted with regard to machinery and production equipment and an overall safety reduction plan was performed, resulting in a one time cost of $10,000. Further equipment and packages were obtained by the company and spill kits as well as training material regarding fall protection have been installed within easy reach of each production line team leader. Overall training of team leaders, as a precursor to ongoing training of all employees also cost the company an additional $15,000 (including the cost of retaining the safety engineer for the initial review, changes and repairs to safety equipment in the plant and finally 10 spill kits and 5 harnesses. Ongoing training will be mitigated and will cost the company roughly $1,200 per month, as employees will rotate through the training on an ongoing basis after the initial training of team leaders is completed and mass trainings will not be done, as reduced production and stop time would be to expensive. An average of $14,400 per year will be expended for this purpose, on an ongoing basis. All of the 827 employees will rotate through the safety training by the end of the fiscal year and costs may be reduced at this time, as spill and fall protection will then only require in company certification every five years for retained employees and as an initial training for new employees, again to be renewed every five years. Ongoing training, such as training materials, posters, spill kits and other materials will have a nominal cost to the company, requiring output only for additional spill kit materials, when they are used. Employees will also be expected to file incident reports for every incident that occurs, including non-injury spills and injury falls, the cost of this is minimal but will aide the cause greatly on an ongoing basis. All other costs associated with this equipment have already been incurred and expressed in the previous section. The total initial cost of these new safety measures is about $30,000 including the annual expenditures for the current fiscal year.

Given that the single fatality, that occurred in 1990 cost the company an increase of 7% in workers compensation insurance premiums which over the long run has been a substantial cost and individual falls have since cost the company significant time and production loss as well as other increased in premiums, related to injuries and simply as increases have occurred. Finally, the initial fatal fall cost the company a 4 million dollar benefits claim to the family of the employee and $1.7 in litigation and attorneys fees. Additionally, the settlement was mitigated by the attorneys, who managed to reduce the claim for pain and suffering significantly and calculated the remainder based on the lifetime earning potential of the individual at his current salary. It is unlikely that such mitigation would occur in every case, and the cost of a trial would be exponential if a reasonable settlement had not been made. The mitigating legal reason for the high cost of this settlement is related directly to the fact that the company, at the time of the injury had not yet instituted a formal fall protection plan and therefore showed negligence in the situation. (Leigh, 1995, p. 6) Though part of the settlement demanded that this be done, the company, at the time, chose to meet the bear minimum standards requirements, which were much less stringent then than they are today. Finally, accidents related to falls occur on average of one a month on the manufacture floor and once every two to three months in the warehouse. Though these injuries are usually relatively minor, often only resulting in a few days of absenteeism and a few medical bills, paid by workers compensation insurance, the potential for greater injury is always there and any fall can be dangerous. If bad luck and ignorance combine any fall can be fatal and any accident can impact an individual far more than a simple few days off work and a single trip to the ER. This is the proverbial "crap shoot" that this company is no longer willing to risk. (Williams & Cooper, 1999, p. 135)

The company briefly discussed reducing compensatory damages by increasing the pay of some workers, utilizing a plan that would take into consideration the compensatory needs of employees who face some risk of injury, but this plan was almost immediately scrapped, partly because the management considered it unethical, in comparison to making the workplace safer an because the job is not indicative of high risk pay and such plans are arguably not compensatory enough for a situation such as a fatality. (Roberts, Burton, & Bodah, 2005, p. 3) Finally, with regard to cost savings associated with increased safety and implemented safety programs there is some indication the workers compensation and other insurance premiums will be reduced by 0.4%-1% annually as a result of both the implemented program and the realization of a reduced accident claim rate. (Roberts, Burton, & Bodah, 2005, p. 4)