Benchmarking Failure Rates – The Race to Mediocre

Measuring your “lack of injury rates” is a sure fire way to fool yourself into believing that your company is good enough!

“Safety-related investment costs fall into two categories:

Proactive: Costs incurred in an attempt to influence leading indicators (via prevention and/or problem detection/remediation prior to any incident)

Reactive: Costs incurred in dealing with trailing indicators (accident costs, legal costs, loss of customer goodwill and/or revenue)

Ideally, a company will increase proactive spending until it exactly matches the resulting reduction in reactive spending. Until now, it’s generally been assumed that this trade-off point occurs at a fairly mediocre level of safety performance. In other words, it’s been assumed that, in terms of Return on Investment (ROI), only a fairly low level of investment in safety is justifiable.

In his study of very safe companies, Managing for World Class Safety, J.M. Stewart questions this idea. He believes that when you invest in safety, improved worker morale creates a number of less-tangible benefits that shift the balance between the two curves, and justify a much higher level of proactive spending. Stewart did not find any companies who believed they had reached the cost-effectiveness boundary of spending on safety. All these companies are profitability leaders in their industries.”

The Emperor Has No Hard Hat – Achieving REAL Workplace Safety Results – Alan D. Quilley CRSP

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