How is Health and Safety a Strategic Investment?

strategic investment

Health and safety is a strategic investment. How you ask? Traditionally, work health and safety is measured by the impact on the business bottom line using lag indicators. Forward-thinking organisations are railing against this outdated view justifying increased investment on strategic grounds such as the impact of performance on reputation, the attraction of key staff and strong supply chain relationships.

This article summarises research conducted by Dr Sharron O’Neil for Macquarie University. It provides key arguments to support the need to ensure that CFOs, Accountants and Work Health and Safety Professionals work together to influence an organisation’s critical health and safety risks.

Move Away From a Cost-Benefit Approach

O’Neil argues that business accounting departments should move their focus from a cost-benefit approach for work health and safety towards justifying increased spending and focus on strategic grounds. Australian legal requirements support this notion because budgetary concerns are no excuse for failing to ensure workers are supported by a safe system of work and are competently trained within that system.

Numerous examples of large industrial accidents (thoroughly researched by Andrew Hopkins) illustrate the catastrophic consequences of cost-cutting – to lives lost, long term impact on the environment and lingering reputation concerns.

See our article Safety Strategies: What Can We Learn From the Safest Organisations?

Costs of Injury Outweigh the Costs of Prevention

There is substantial evidence that the costs associated with an injury or incident due to failures to ensure safety, far outweigh the costs of prevention.

Not only is the direct cost to rehabilitate an injured worker there are other costs that can be far-reaching. Additional costs connected to workplace injuries include negative publicity, reduced stakeholder sentiment and increased political pressure. These have knock-on effects that can lead to costly regulatory penalties, lost sales, increased cost of capital, diminished relationships with employees and suppliers.

Although cost-benefit analyses are likely to be useful for highlighting the most obvious and measurable work health and safety cost implications, they often fail due to their incompleteness in determining hidden costs, for example, long-term illness that doesn’t manifest until years after exposure.

The trade-off between production versus health and safety remains; rather than a focus on safe, healthy and productive work. In many cases, CFOs and accounting teams strongly influence organisational decisions. Because of this, they need to understand the impact that their financial limitations may have on work health and safety-critical risks.

The lack of shared information between those responsible for accounting and work health and safety functions often impedes this understanding. Also, departments working as ‘silos’ can make counter-productive decisions limiting work health and safety, beyond regulatory compliance tasks, to isolated health and safety interventions.

See our article, Key Work Health and Safety Messages.

Investment Over and Above Compliance

Forward-thinking businesses invest in work health and safety over and above the levels justified by quantified financial costs and benefits to the organisation. They incorporate strategic investment into the financial case to bring attention to a broader range of relevant economic costs and benefits.

Rather than looking backward; they are looking forward. These organisations focus beyond merely health and safety compliance to introduce interactive training (they don’t just stop at the safety induction), 360-degree feedback, use of technology, empowering staff to think creatively and to problem solve. As Erik Hollnagel suggests:

We can look at a process or work situation from a safety point of view, from a quality point of view or from a productivity point of view. But we should keep in mind that any individual point of view reveals only part of what is going on and that it is necessary to understand what is going on as a whole.

Today, CFOs and Accountants need to understand the critical interdependence that exists between financial and operational risk and place the strategic investment lens over the balance sheet when it comes to future health and safety spend requests.

See our courses, Health and Safety Fundamentals For Leaders and For Employees.

Innovative Safety Training

Tap into Safety provides training that moves well beyond compliance requirements because it offers interactive, gamified content that is delivered via smart devices and online. Our training has also been designed to support workers with low literacy or minimal English language capabilities.

We don’t use PowerPoint, we use real workplace photographic, panoramic examples that workers relate to because they show their worksites and animated microlearning.

The training is delivered in 10-30 minute courses and can be accessed by sub-contractors with their competencies verified before they step foot on site. Today, thousands of firms are actively using Tap into Safety with outstanding results of reduced injuries and increased hazard reporting activities. Try a free trial today to get a taste of what we offer.

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