A Case Study on Shifting from Reactive Firefighting to Strategic Injury Prevention and Margin Control
If you feel like your organization is constantly chasing its tail when it comes to occupational safety and health (OSH), you are not alone. Across many businesses, managers and safety coordinators find themselves stuck in a frustrating, high-stress loop: seemingly stuck reacting to crises, chasing “mandatory” paperwork, and trying to manage injuries after they have already occurred.
If this sounds familiar, it may be the case that your organization is looking at safety through an old-fashioned framework of what workplace “safety” is and can be – it may be asking you to wear (or you may be unintentionally choosing to wear) the wrong set of… pun intended… safety glasses.
Act I: The Firefighter Loop
Consider the allegorical story of Jim, an operations manager at an expanding mid-sized industrial facility. Jim is hardworking, very much a common-sense person, and wants to treat employees fairly. But lately, he feels less and less able to work on what he loves - operations management, including addressing constraints and meeting customer needs - and instead, works more on what feels like firefighting.
Every time there’s a workplace incident, even a minor one—Jim's schedule is instantly derailed to some degree. And it feels harder to give the attention he also needs to give to “safety.” He must (sometimes) halt the production line, coordinate first aid management, complete extensive incident reports, round up witness statements, and at least give some input to the workers' compensation claims process. When an OSHA inspector (Compliance Safety and Health Officer) visits his facility following a serious event that his company told him needed to be reported to OSHA, stress levels on the team skyrocket.
Because Jim spends so much of his OSH-allocated time responding to incidents and putting out administrative fires or directing others to do so - he feels conflicted. He cares for his employees, but thinks, wow, “if they could just be a little bit more careful!” (Note: Yes, “safety” people know this is usually off-target thinking, but that viewpoint does exist for some.) He is pulled back and forth between production crises, with almost zero time left to actively identify hazards or prevent incidents from happening in the first place. He is trapped in a reactive loop, and safety feels like nothing but an operational thorn in the side, where unexpected problems create unexpected delays.
Act II: Shifting the Focus (and the Glasses)
A turning point came when Jim sat down with his CFO to review workers' compensation loss runs. Jim assumed that safety costs were completely under control because they had workers’ compensation insurance and thought – “that’s what that’s for.” And so far as he knew, the insurance premium was fixed. But the CFO brought out a different set of numbers—and a new pair of glasses.
The CFO pointed out that relying strictly on direct insurance claim costs (like medical bills and indemnity payments) as an indicator of avoidable injury-related costs is like looking at the tip of an iceberg. Beneath the surface sits a difficult to quantify but very real cascade of usually hidden, indirect operational expenses:
- Productivity Disruption: This factor may be intuitive but may be a bit granular when quickly reviewing short-term financials. The facility's ineffective safety system resulted in production halting periodically with unpredictable timing, cycle times being thrown off balance, and shipping schedules slipping.
- Compounding Labor Costs: The site had to pay overtime premiums to cover lost shifts and spend valuable resources training temporary and replacement staff.
- Asset Damage: Some of the incidents resulted in physical damage. (Funny how some damage also just "showed up" sometimes mysteriously.) Some things required immediate fixes, but some things were going to have to be fixed...well...later.
- Administrative Friction: Dozens of high-value management and supervisory hours had needed to be diverted to investigate incidents, complete compliance paperwork, coordinate with insurance carriers, and, unfortunately in one case, coordinate with legal staff regarding a mandatory notification of injury to OSHA.
- Escalation of Experience Modification Rate (EMR): Jim had not realized that the company's EMR, which influences insurance premiums and administrative fees, is based on loss experience and factors in prior years' performance on a rolling basis.
Historical industry data shows that these hidden, indirect costs can be four to ten times higher than direct claim bills. Jim realized that by waiting for injuries to happen before taking action, the business was bleeding cash and operational capacity.
Act III: From Firefighter to Bottom-Line Winner
Determined to break the reactive cycle, Jim threw away his old 'firefighter glasses' and adopted a systems-based, proactive OSH framework, with ideas through both the OSHA.gov web page, and some input from an expert safety consultant. He focused his initial efforts on three key areas:
- Proactive, Engaged Hazard Identification: Instead of investigating incidents after the fact, Jim engaged his senior operators and maintenance mechanics to proactively identify hazards through a few different means, including a review of prior incidents, industry searches, some safety references, and the development of Job Hazard Analyses (JHAs) on a prioritized basis. Together, they identified floor-level hazards and implemented controls before anyone could get hurt.
- Translating Safety into Margin Logic: Jim started using simple estimators like OSHA's 'Safety Pays' program to translate OSH risks into equivalent sales demands. He showed his leadership team that at their current profit margin and injuries they were experiencing, they needed to generate hundreds of thousands in additional sales revenue just to break even. That was an eye-opener for much of the team; they came to understand the strategic value of prevention better than before.
- Moving from Binders to Living Systems: Jim worked with his team to replace their dusty, off-the-shelf 'boilerplate' safety manual with a streamlined, customized safety management program tailored to their actual operating exposures and workflows. He worked with his team to make sure these processes were actively integrated into daily supervisor routines and employee onboarding.
Some performance improvement could be seen immediately because some changes were basically low-hanging fruit that had simply not been paid attention to. Some took longer to integrate because changes can take time to make happen when a few steps and increased buy-in were needed. But within twelve months, the results were undeniable. Incident rates dropped to below industry averages and were the best-ever at the site. Unscheduled machine downtime plummeted, and morale soared. Jim emerged as a strategic bottom-line winner who had successfully protected the company's operating margin, while also increasing talent retention and commercial viability.
The Takeaway: Stop managing safety by chance. Shifting from reactive firefighting to active, customized risk management is a critical margin-preservation strategy that helps keep employees safe, protects your operating capital, and can help you meet production goals and supply agreements.
Learn More & Take Action
To learn how to structure OSH programs that satisfy commercial vetting, streamline cost tracking, and leverage safety-related value factors, see Gregory G. Zigulis’s book, Health and Safety Programs in Small and Medium-sized Businesses: Setting Them Up and Making Them Work Effectively. Multiple chapters provide helpful information that can be used to transition your program from a living, high-value management system.
On Amazon, see: https://a.co/d/0gdjchrY
For customized site assessments, gap analyses, or expert assistance in designing a streamlined safety management system aligned with your company's strategic goals, contact Gregory G. Zigulis, MS, MBA, CIH, CSP, at Sixth Sense Safety Solutions.