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Industrial safety: Who is responsible and who benefits?
Industrial Safety: Who Is Responsible and Who Benefits? Myron I. Peskin and Francis J. McGrath
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f you are careful, you won't have an accident and you won't get hurt." We constantly hear both management and labor uttering this statement in industry, with the belief that the statement is true. But is it? Generally, accidents do not happen randomly; they are caused. The Occupational Safety and Health Administration (OSHA) has identified ten major causal factors that result in industrial accidents: Poor Worker T r a i n i n g . Who is responsible for poor or inadequate employee training? On July 19, 1990, the United States Senate Ad Hoc Labor Task Force presented to Congress a study entitled Workforce 2000.. Is Corporate America Prepared? This study revealed that more than two-thirds of all American manufacturing firms spend less than $2,000 annually on training new employees, and many domestic organizations spend nothing at all. Only five percent of American manufacturing companies reported that they spend more than $5,000 annually on classroom or on-the-job training for new employees. Does this study indicate that management believes the worker should be knowledgeable about job hazards before employment? Or does it tell us that management does not want to take the time, exert the effort, or cover the cost of acquainting the worker with the perils of a new job? I n a b i l i t y t o D o t h e J o b . The situation in which employees are trainable but do not perform tasks safely and prudently would appear to be caused by poor worker training in job procedures and company policies. Or perhaps it might be caused by sanctioning unsafe practices for the sake of productivity. If trainable workers were
Management and ,tabor are both responsible for ensuring workers" safety,
66
I
properly trained and companies truly enforced "good manufacturing practices," jobs would in all probability be performed safely and prudently, thus avoiding accidents. But what if new employees are unable, with proper and adequate training, to safely perform the work required? Who, then, is responsible for allowing workers to continue performing that work? Is the burden of responsibility on workers or management? Should workers be allowed to continue, or should they be directed to cease performing any work that is b e y o n d their capabilities? Those w h o believe that workers should bear this responsibility (and the Senate study found that there are many) should answer this following question: "Would you allow an individual to perform surgery if that person were incapable of completing the specific surgical procedure safely and prudently?" Lack o f Understanding o f the Job. This, too, directly results from improper training. If employees are capable of satisfactory performance but do not completely understand job procedures or requirements, they should not be allowed to continue---or even start--working until supervisors are firmly convinced that these workers fully understand h o w to perform their jobs safely. The Gallup Organization, in a recently completed survey conducted for Philip Crosby Associates of Winter Haven, Florida, reported that top corporate executives in the U.S. firmly believe that inadequate skills and a lack of commitment among workers represent the two foremost impediments to American manufacturing excellence. But who is responsible for providing the necessary training to bring workers' skills up to required levels? And w h o is responsible for assuring that employees incapable of achieving the required skill levels are never placed in positions demanding that level of skill? Business Horizons/ May-June 1992
Further, w h o is responsible for developing the necessary high level of worker commitment? Does the current industrial atmosphere of downsizing, restructuring, and mergers help to develop employee commitment? I m p r o p e r Tools and Equipment. Are tools and equipment the responsibility of the worker? Some employers still say "Yes!" and require employees to provide their own tools and equipment for the job. This opinion, however, is rapidly changing as employers are being reprimanded, held accountable, and fined by OSHA for allowing employees to use unsafe tools and equipment. One such employer, Ford Motor Company, agreed in July 1990 to pay the largest OSHA fine assessed to date for condoning the use of unsafe equipment. This $1.2 million penalty for violations, which occurred at its Electronics and Refrigeration facility in Lansdale, Pennsylvania, was witnessed by OSHA representatives during a routine 1989 plant safety inspection. Most employers have acknowledged that the use of proper, safe tools and equipment is their obligation and their responsibility, and many are n o w specifying various safety features in the tools and equipment they purchase. These "enlightened" employers are n o w issuing "safe" tools to their workers. For example, at General Electric's Lynn, Massachusetts facility, a special committee composed of engineering and safety personnel conduct a thorough review of the safety issues involved before management approves expenditures for any new piece of equipment or project. This results in the development of specifications describing GE's safety goals. Unfortunately, this case represents the except i o n - i n d u s t r y still has a long way to go to make this an accepted and widespread practice. Safety guards and shields around tools and equipment, and safety clothing for workers, are today becoming c o m m o n in industry. Almost all states have adopted restrictive safety laws regulating the design, type, and operation of industrial equipment. Organized labor has also entered the field of industrial safety and has demanded better protection for its members while on the job. These actions have all had an effect on reducing the frequency and severity of industrial accidents and injuries and on improving industrial safety. Poor Quality Materials. Specifications for proper materials are rightfully the sole responsibility of employers. Empioyers can reduce the cost of their products by using inferior and less expensive materials. But as a result, employees w h o must use these inferior materials are placed in harm's way. Skilled craftsmen might expect certain materials to handle a certain way; but an inferior material might handle differently and eventually cause an accident. Industrial Safety:Who is Responsible and Who Benefits?
It is the employer's responsibility to ensure that all materials received and used in production meet the specifications established for that material. If a material is out of "spec," the receiving employee should not be allowed to accept it "as is," but should refuse acceptance and return the shipment to the vendor for credit. Purchase orders and contracts should be written to assure that vendors will accept responsibility for all monetary losses incurred by customers resulting from defective materials. These monetary losses might include the cost of accidents and injuries plus idle worker time. idle machinery time, and lost profits. Poor E q u i p m e n t Maintenance. Americans offer "lip service" to preventive maintenance. When asked if an organization has a preventive maintenance program in effect, the answer invariably is a resounding "Yes!" But u p o n further investigation, one finds that generally very little maintenance is performed. Naturally, with limited resources, remedial maintenance always takes priority over prevention, and there generally is an overabundance of remedial maintenance to be undertaken. As a result, preventive maintenance m a n p o w e r and funds are often spent "fire fighting" and performing remedial maintenance. What happens w h e n preventive maintenance is not performed and machinery and equipment are not properly maintained? Defective products are manufactured, operators are placed at risk, and accidents occur. Is equipment maintenance the responsibility of operators? Do operators possess the authority to shut down equipment during a production run to maintain it, or are instructions given to keep the equipment running and to use it "as is"? Are operators, in fact, trained to properly maintain equipment? In most instances the answers to these questions is " N o - operators are not trained or permitted to maintain their equipment, and they do not have the authority to shut clown their equipment." Whose responsibility, then, is equipment maintenance? Poor Working E n v i r o n m e n t . How long can people work safely in a dark, or glaring, or cold, or hot, or humid, or crowded, o1" noisy, or dirty worMng environment? These worldng conditions can actually spawn accidents. Employees generally have little or no control over their working environment and must accept whatever environment employers offer. OSHA is currently attempting to define and establish criteria for "acceptable working environments," but so far has been unable to obtain internal agreement on what should be considered a universally acceptable working environment. The design of a safe plant layout is also beyond the responsibility of individual employees, but it nevertheless is essential for good manufacturing practices and safe working conditions. 67
Narrow aisles, blind intersections, insufficient overhead space, and limited access for equipment repair and maintenance all are detrimental to a safe operating environment. Housekeeping can also reduce and eventually eliminate accident causes. The National Safety Council reports that falls due to improper housekeeping "Managers should use result in between 200,000 and 300,000 standards to ensure a disabling industrial fair day's p a y for a fair accidents each year. Management must day's work, but they take the initiative to should not use them as properly train employees in the essena whip to achieve tials of good housemaximum productivity keeping and in the necessity of maintainthrough coercion. " ing a hazard-free workplace. I n c o r r e c t S h o p Routing. Proper routing instructions in a job shop manufacturing environment are crucial for ensuring both product quality and employee safety. An improperly routed item can result in unexpected operating problems for workers. When an unforeseen incident occurs, "Murphy's Law" takes hold and accidents can result. It should not be the operator's responsibility, as it unfortunately is in many shops, to determine the proper routing of work in process. To make this type of decision an operator's responsibility unfairly shifts what is truly management's responsibility directly to the operator. T i g h t W o r k S t a n d a r d s . Establishing "fair" work standards through work measurement or some similar technique is, without question, a prerogative and a right of management. Establishing and enforcing "tight" work standards has resulted and will continue to result in operators taking dangerous short cuts while completing tasks. These short cuts often result in industrial accidents and injuries. Meatpacker John Morrell & Co. agreed in 1989 to pay the largest OSHA fine assessed to date, a $4.3 million penalty for allowing poor ergonomic practices to exist corporate-wide as a result of tight work standards. Managers should use standards to ensure a fair day's pay for a fair day's work, but they should not use them as a whip to achieve maximum productivity through coercion. O v e r l y Tight S c h e d u l i n g . Pressure placed on employees to meet tight production schedules results in the same type of problems as with tight work standards. Reasonable schedules based on reasonable capacity determinations and work standards eliminate the pressure and work-related 68
stress placed on employees to overproduce because of unsafe short cuts. The National Safety Council has estimated that work-related accidents in the private sector in 1988 cost industry an average of $15,100 per disabling injury. Based on this figure and the U.S. Bureau of Labor Statistics--which reported that in 1988 private U.S. industry, employing 90 million workers, had 6.2 million job-related injuries--the total cost to industry for work-related accidents and injuries in 1988 was in excess of $93 billion. Approximately half of this total ($46 billion) was for such visible costs as medical and hospital insurance and expenses, workmen's disability compensation, survivor benefits, and lost wages. The remaining half was spent for such related but undocumented costs as damaged equipment and materials, production delays, time losses of other workers not involved in the accidents, and accident reporting. Workmen's compensation benefits, a major component of the cost of industrial accidents, are legislated benefits paid directly to workers injured on the job and funded through payroll taxes and premiums paid by employers. Between 1983 and 1988, workmen's compensation premiums and payroll taxes doubled. Enlightened employers will therefore attempt to control and reduce the accident rate under their jurisdiction because compensation premiums and taxes principally are based u p o n total payroll, injury severity, and accident rate in each individual facility. Employers with high accident rates pay higher payroll compensation rates than employers with low accident rates. Compensation rates for employers with high accident rates can and often do exceed six percent of total payroll, with some rates soaring as high as ten percent of payroll in the more hazardous industries. In addition, some states have mandated that employers pay the first $500 of benefits to each employee receiving compensation. A safe working environment always results in cost savings for employers, which directly relates to the bottom line. In addition to costs paid by employers, injured workers also suffer financially because injury disability compensation never equals earnings, except in those few companies that have full pay benefit plans. For example, New York, which pays the nation's highest compensation benefits to injured workers, recently raised its maximum benefit for partially disabled workers from $150 per week to $280 per week, and for totally disabled workers from $300 per week to $340 per week, effective for all injuries occurring after July 1, 1990. Workers w h o became disabled prior to July 1, 1990 will continue to receive the previous payments. Many manufacturers have implemented safety programs to reduce both the frequency Business Horizons / May-June 1992
and severity" of accidents, thereby controlling the costs related to those accidents. For example, Du Pont has reported that its corporate-wide safety program has significantly reduced the number of reportable industrial injuries experienced by their employees. This program is saving the company in excess of $34 million annually (3.6 percent of Du Pont's net profit), based u p o n the $15300 average cost per disabling injury. A smaller company, Charles D. Burnes Co.. Inc. of Forestdale, Rhode Island, manufactures picture frames and photo albums. Through a program of accident prevention, the Burnes Company has dramatically reduced both the number of lost days due to injury from 1,850 in 1987 to just 130 in 1989, and the number of accidents per 100 full-time employees from three to one per month. This improvement was accomplished because management recognized that accident prevention and safety is their responsibility. As a result, operational improvements resulted in the removal of the ten major causes of accidents indicated by OSHA. Burnes initially hired the right people for the job, making certain each new employee could handle the physical and mental demands of the job. Each new worker was then provided with proper training, starting with an overall employee orientation to the company's policies and procedures. A safety committee with equal representation by both management and labor was established and has been meeting regularly. All Burnes employees are encouraged and offered incentives to submit safety suggestions to the Committee. When an accident occurs at Burnes, the accident is promptly investigated by the safety comm i t t e e - a n d management is required to answer the following questions concerning the accident: 1. Was the employee properly trained for the job? 2. Was the employee required to perform extra work for which (s)he was not properly trained? 3. Was the employee working with different materials, or were the materials out of "spec"? 4. Was the employee working a lot of overtime, causing fatigue? 5. Was any of the equipment in the wrong place? 6. Was the product properly routed? 7. Did the workplace environment contribute to the accident? If so, how? Burnes additionally offers both monetary and non-monetary incentives and awards to employees if they work a certain period of time without a reportable accident or injury. Larger companies have generally become aware of the high costs associated with accidents. In many cases they have implemented programs to reduce both the frequency and severity of Industrial Safety.Who is Responsible and Who Benefits>
industrial accidents. As a result, the United States Department of Labor reports that the accident rates and injury costs per thousand workers in larger companies are substantially lower than in medium-sized and smaller companies. The National Safety Council has recomm e n d e d that all organizations, regardless of size, implement a consolidated six-step program for developing a safe industrial working environment. This program, which is very similar to the program in effect at Burnes, focuses the attention of both management and the employee on the importance of safety. The National Safety Council's recommended program contains the following features: There must be a sincere management c o m m i t m e n t to and a proactive p r o m o t i o n for safety. The attitude of management regarding safety in company operations will always set the climate for the organization and will be reflected down through supervision to every employee. Management participation must be visibly active, not merely passive, and "The attitude of manageit must be so eviment regarding safety in dent as to leave no doubt in the minds company operations will of subordinates always set the climate for about management's attitude and intenthe organization and will tion. Lip service, be reflected down which is nothing more than a false through supervision to commitment, is every employee. " readily detected within organizat i o n s - a n d workers will then follow the lead of management and be indifferent to safety. Recognizing that industrial safety is truly the responsibility of management, an honest management commitment to safety is the first step in the development of a safe working environment. There must be accountability for safety. Managers and supervisors must be made accountable and responsible for the safety of their employees and for the workplace of each employee. As managers and supervisors become proactive rather than reactive toward safety, individual employees will receive the intended message and will also become proactive toward the safety of the entire group. An organized safety program must be i m p l e m e n t e d a n d m a i n t a i n e d . This safety program should be considered a part of the production process and therefore should be the ultimate responsibility of production management. An ongoing employee safety training program educates workers to both the dangers they face 69
within their workplace and the benefits they realize with a safe working environment. The safety program can be used by both management and labor to define all safety aspects of the job and thus enhance safety awareness throughout the organization.
Employee involvement in safety must be encouraged. Experienced workers know their job and the job's hazards. Workers must be motivated through involvement to practice safety and to avoid performing any unsafe acts. Safety awards and management recognition should be given for the continuous adherence to safety rules and regulations, and for the continuous performance o f safe acts. This recognition should be awarded to both individuals and groups, and can be monetary (cash, prizes) or non-monetary (certificates, plaques, recognition in house newsletters). Even though safety awards need not be expensive, the National Safety Council has found that they do motivate employees. Safety committees should be organized t o promote safety throughout the organization. Safety committees should be composed of representatives from both management and labor and should work to develop, enhance, improve, and maintain a safe working environment. Management's active participation in this committee demonstrates its commitment to operate and maintain a safe working environment and encourages the employee participation necessary to provide the motivation for worker safety. W
e, management and labor, pay a very high cost--in human, social, and ecoomic terms--for unsafe work habits and unsafe workplaces. The bottom-line results of improved industrial safety to the organization and to the worker are obvious. Lower production and personal costs are gained not only through reductions in injury, compensation, and medical costs, but also through improved efficiency and greater productivity that comes from improving the morale of workers in plants that have a reputation for being a safe place to work. O
70
References Accident Prevention Manual for Industrial Operations, Vols. 1-2 (Chicago: National Safety Council, 1987). Associated Press, "OSHA Fines Ford $1.2M," July 24, 1990. Associated Press, "New York State Ups Compensation Benefits," July 31, 1990. Jack Boley, A Guide to Effective Industrial Safety (Houston: Gulf Publishing Company, 1987). Nancy Connors, "Staying in Control of Workers Compensation Claims," CFO, August 1990, pp. 47-48. Tom Feare, "Safety at the Workplace," Modern Materials Handling, August 1990, pp. 47-64. Gallup Organization, Manufacturing Excellence Survey of Top Corporate Executives (Winter Haven, Fla.: Philip Crosby Associates, 1990). J. Grimaldi, Safety Management (Homewood, Ill.: Richard D. Irwin Publishers, 1989). Dan Peterson, Safety Supervision (New York: American Management Association, 1986). Leon Schenkelbach, The Safety Management Primer (Homewood, Ill.: Richard D. Irwin Publishers, 1985). United States Senate Ad Hoc Labor Task Force, Workforce 2000.. Is Corporate America Prepared? (Washington: U.S. Government Printing Office, 1990).
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Myron I. Peskin is an associate professor of production management, and Francis J. McGrath is a professor of economics, both at the Hagan School of Business, Iona College, New Rochelle, New York.
Business Horizons / May-June 1992
~~ r
f you are careful, you won't have an accident and you won't get hurt." We constantly hear both management and labor uttering this statement in industry, with the belief that the statement is true. But is it? Generally, accidents do not happen randomly; they are caused. The Occupational Safety and Health Administration (OSHA) has identified ten major causal factors that result in industrial accidents: Poor Worker T r a i n i n g . Who is responsible for poor or inadequate employee training? On July 19, 1990, the United States Senate Ad Hoc Labor Task Force presented to Congress a study entitled Workforce 2000.. Is Corporate America Prepared? This study revealed that more than two-thirds of all American manufacturing firms spend less than $2,000 annually on training new employees, and many domestic organizations spend nothing at all. Only five percent of American manufacturing companies reported that they spend more than $5,000 annually on classroom or on-the-job training for new employees. Does this study indicate that management believes the worker should be knowledgeable about job hazards before employment? Or does it tell us that management does not want to take the time, exert the effort, or cover the cost of acquainting the worker with the perils of a new job? I n a b i l i t y t o D o t h e J o b . The situation in which employees are trainable but do not perform tasks safely and prudently would appear to be caused by poor worker training in job procedures and company policies. Or perhaps it might be caused by sanctioning unsafe practices for the sake of productivity. If trainable workers were
Management and ,tabor are both responsible for ensuring workers" safety,
66
I
properly trained and companies truly enforced "good manufacturing practices," jobs would in all probability be performed safely and prudently, thus avoiding accidents. But what if new employees are unable, with proper and adequate training, to safely perform the work required? Who, then, is responsible for allowing workers to continue performing that work? Is the burden of responsibility on workers or management? Should workers be allowed to continue, or should they be directed to cease performing any work that is b e y o n d their capabilities? Those w h o believe that workers should bear this responsibility (and the Senate study found that there are many) should answer this following question: "Would you allow an individual to perform surgery if that person were incapable of completing the specific surgical procedure safely and prudently?" Lack o f Understanding o f the Job. This, too, directly results from improper training. If employees are capable of satisfactory performance but do not completely understand job procedures or requirements, they should not be allowed to continue---or even start--working until supervisors are firmly convinced that these workers fully understand h o w to perform their jobs safely. The Gallup Organization, in a recently completed survey conducted for Philip Crosby Associates of Winter Haven, Florida, reported that top corporate executives in the U.S. firmly believe that inadequate skills and a lack of commitment among workers represent the two foremost impediments to American manufacturing excellence. But who is responsible for providing the necessary training to bring workers' skills up to required levels? And w h o is responsible for assuring that employees incapable of achieving the required skill levels are never placed in positions demanding that level of skill? Business Horizons/ May-June 1992
Further, w h o is responsible for developing the necessary high level of worker commitment? Does the current industrial atmosphere of downsizing, restructuring, and mergers help to develop employee commitment? I m p r o p e r Tools and Equipment. Are tools and equipment the responsibility of the worker? Some employers still say "Yes!" and require employees to provide their own tools and equipment for the job. This opinion, however, is rapidly changing as employers are being reprimanded, held accountable, and fined by OSHA for allowing employees to use unsafe tools and equipment. One such employer, Ford Motor Company, agreed in July 1990 to pay the largest OSHA fine assessed to date for condoning the use of unsafe equipment. This $1.2 million penalty for violations, which occurred at its Electronics and Refrigeration facility in Lansdale, Pennsylvania, was witnessed by OSHA representatives during a routine 1989 plant safety inspection. Most employers have acknowledged that the use of proper, safe tools and equipment is their obligation and their responsibility, and many are n o w specifying various safety features in the tools and equipment they purchase. These "enlightened" employers are n o w issuing "safe" tools to their workers. For example, at General Electric's Lynn, Massachusetts facility, a special committee composed of engineering and safety personnel conduct a thorough review of the safety issues involved before management approves expenditures for any new piece of equipment or project. This results in the development of specifications describing GE's safety goals. Unfortunately, this case represents the except i o n - i n d u s t r y still has a long way to go to make this an accepted and widespread practice. Safety guards and shields around tools and equipment, and safety clothing for workers, are today becoming c o m m o n in industry. Almost all states have adopted restrictive safety laws regulating the design, type, and operation of industrial equipment. Organized labor has also entered the field of industrial safety and has demanded better protection for its members while on the job. These actions have all had an effect on reducing the frequency and severity of industrial accidents and injuries and on improving industrial safety. Poor Quality Materials. Specifications for proper materials are rightfully the sole responsibility of employers. Empioyers can reduce the cost of their products by using inferior and less expensive materials. But as a result, employees w h o must use these inferior materials are placed in harm's way. Skilled craftsmen might expect certain materials to handle a certain way; but an inferior material might handle differently and eventually cause an accident. Industrial Safety:Who is Responsible and Who Benefits?
It is the employer's responsibility to ensure that all materials received and used in production meet the specifications established for that material. If a material is out of "spec," the receiving employee should not be allowed to accept it "as is," but should refuse acceptance and return the shipment to the vendor for credit. Purchase orders and contracts should be written to assure that vendors will accept responsibility for all monetary losses incurred by customers resulting from defective materials. These monetary losses might include the cost of accidents and injuries plus idle worker time. idle machinery time, and lost profits. Poor E q u i p m e n t Maintenance. Americans offer "lip service" to preventive maintenance. When asked if an organization has a preventive maintenance program in effect, the answer invariably is a resounding "Yes!" But u p o n further investigation, one finds that generally very little maintenance is performed. Naturally, with limited resources, remedial maintenance always takes priority over prevention, and there generally is an overabundance of remedial maintenance to be undertaken. As a result, preventive maintenance m a n p o w e r and funds are often spent "fire fighting" and performing remedial maintenance. What happens w h e n preventive maintenance is not performed and machinery and equipment are not properly maintained? Defective products are manufactured, operators are placed at risk, and accidents occur. Is equipment maintenance the responsibility of operators? Do operators possess the authority to shut down equipment during a production run to maintain it, or are instructions given to keep the equipment running and to use it "as is"? Are operators, in fact, trained to properly maintain equipment? In most instances the answers to these questions is " N o - operators are not trained or permitted to maintain their equipment, and they do not have the authority to shut clown their equipment." Whose responsibility, then, is equipment maintenance? Poor Working E n v i r o n m e n t . How long can people work safely in a dark, or glaring, or cold, or hot, or humid, or crowded, o1" noisy, or dirty worMng environment? These worldng conditions can actually spawn accidents. Employees generally have little or no control over their working environment and must accept whatever environment employers offer. OSHA is currently attempting to define and establish criteria for "acceptable working environments," but so far has been unable to obtain internal agreement on what should be considered a universally acceptable working environment. The design of a safe plant layout is also beyond the responsibility of individual employees, but it nevertheless is essential for good manufacturing practices and safe working conditions. 67
Narrow aisles, blind intersections, insufficient overhead space, and limited access for equipment repair and maintenance all are detrimental to a safe operating environment. Housekeeping can also reduce and eventually eliminate accident causes. The National Safety Council reports that falls due to improper housekeeping "Managers should use result in between 200,000 and 300,000 standards to ensure a disabling industrial fair day's p a y for a fair accidents each year. Management must day's work, but they take the initiative to should not use them as properly train employees in the essena whip to achieve tials of good housemaximum productivity keeping and in the necessity of maintainthrough coercion. " ing a hazard-free workplace. I n c o r r e c t S h o p Routing. Proper routing instructions in a job shop manufacturing environment are crucial for ensuring both product quality and employee safety. An improperly routed item can result in unexpected operating problems for workers. When an unforeseen incident occurs, "Murphy's Law" takes hold and accidents can result. It should not be the operator's responsibility, as it unfortunately is in many shops, to determine the proper routing of work in process. To make this type of decision an operator's responsibility unfairly shifts what is truly management's responsibility directly to the operator. T i g h t W o r k S t a n d a r d s . Establishing "fair" work standards through work measurement or some similar technique is, without question, a prerogative and a right of management. Establishing and enforcing "tight" work standards has resulted and will continue to result in operators taking dangerous short cuts while completing tasks. These short cuts often result in industrial accidents and injuries. Meatpacker John Morrell & Co. agreed in 1989 to pay the largest OSHA fine assessed to date, a $4.3 million penalty for allowing poor ergonomic practices to exist corporate-wide as a result of tight work standards. Managers should use standards to ensure a fair day's pay for a fair day's work, but they should not use them as a whip to achieve maximum productivity through coercion. O v e r l y Tight S c h e d u l i n g . Pressure placed on employees to meet tight production schedules results in the same type of problems as with tight work standards. Reasonable schedules based on reasonable capacity determinations and work standards eliminate the pressure and work-related 68
stress placed on employees to overproduce because of unsafe short cuts. The National Safety Council has estimated that work-related accidents in the private sector in 1988 cost industry an average of $15,100 per disabling injury. Based on this figure and the U.S. Bureau of Labor Statistics--which reported that in 1988 private U.S. industry, employing 90 million workers, had 6.2 million job-related injuries--the total cost to industry for work-related accidents and injuries in 1988 was in excess of $93 billion. Approximately half of this total ($46 billion) was for such visible costs as medical and hospital insurance and expenses, workmen's disability compensation, survivor benefits, and lost wages. The remaining half was spent for such related but undocumented costs as damaged equipment and materials, production delays, time losses of other workers not involved in the accidents, and accident reporting. Workmen's compensation benefits, a major component of the cost of industrial accidents, are legislated benefits paid directly to workers injured on the job and funded through payroll taxes and premiums paid by employers. Between 1983 and 1988, workmen's compensation premiums and payroll taxes doubled. Enlightened employers will therefore attempt to control and reduce the accident rate under their jurisdiction because compensation premiums and taxes principally are based u p o n total payroll, injury severity, and accident rate in each individual facility. Employers with high accident rates pay higher payroll compensation rates than employers with low accident rates. Compensation rates for employers with high accident rates can and often do exceed six percent of total payroll, with some rates soaring as high as ten percent of payroll in the more hazardous industries. In addition, some states have mandated that employers pay the first $500 of benefits to each employee receiving compensation. A safe working environment always results in cost savings for employers, which directly relates to the bottom line. In addition to costs paid by employers, injured workers also suffer financially because injury disability compensation never equals earnings, except in those few companies that have full pay benefit plans. For example, New York, which pays the nation's highest compensation benefits to injured workers, recently raised its maximum benefit for partially disabled workers from $150 per week to $280 per week, and for totally disabled workers from $300 per week to $340 per week, effective for all injuries occurring after July 1, 1990. Workers w h o became disabled prior to July 1, 1990 will continue to receive the previous payments. Many manufacturers have implemented safety programs to reduce both the frequency Business Horizons / May-June 1992
and severity" of accidents, thereby controlling the costs related to those accidents. For example, Du Pont has reported that its corporate-wide safety program has significantly reduced the number of reportable industrial injuries experienced by their employees. This program is saving the company in excess of $34 million annually (3.6 percent of Du Pont's net profit), based u p o n the $15300 average cost per disabling injury. A smaller company, Charles D. Burnes Co.. Inc. of Forestdale, Rhode Island, manufactures picture frames and photo albums. Through a program of accident prevention, the Burnes Company has dramatically reduced both the number of lost days due to injury from 1,850 in 1987 to just 130 in 1989, and the number of accidents per 100 full-time employees from three to one per month. This improvement was accomplished because management recognized that accident prevention and safety is their responsibility. As a result, operational improvements resulted in the removal of the ten major causes of accidents indicated by OSHA. Burnes initially hired the right people for the job, making certain each new employee could handle the physical and mental demands of the job. Each new worker was then provided with proper training, starting with an overall employee orientation to the company's policies and procedures. A safety committee with equal representation by both management and labor was established and has been meeting regularly. All Burnes employees are encouraged and offered incentives to submit safety suggestions to the Committee. When an accident occurs at Burnes, the accident is promptly investigated by the safety comm i t t e e - a n d management is required to answer the following questions concerning the accident: 1. Was the employee properly trained for the job? 2. Was the employee required to perform extra work for which (s)he was not properly trained? 3. Was the employee working with different materials, or were the materials out of "spec"? 4. Was the employee working a lot of overtime, causing fatigue? 5. Was any of the equipment in the wrong place? 6. Was the product properly routed? 7. Did the workplace environment contribute to the accident? If so, how? Burnes additionally offers both monetary and non-monetary incentives and awards to employees if they work a certain period of time without a reportable accident or injury. Larger companies have generally become aware of the high costs associated with accidents. In many cases they have implemented programs to reduce both the frequency and severity of Industrial Safety.Who is Responsible and Who Benefits>
industrial accidents. As a result, the United States Department of Labor reports that the accident rates and injury costs per thousand workers in larger companies are substantially lower than in medium-sized and smaller companies. The National Safety Council has recomm e n d e d that all organizations, regardless of size, implement a consolidated six-step program for developing a safe industrial working environment. This program, which is very similar to the program in effect at Burnes, focuses the attention of both management and the employee on the importance of safety. The National Safety Council's recommended program contains the following features: There must be a sincere management c o m m i t m e n t to and a proactive p r o m o t i o n for safety. The attitude of management regarding safety in company operations will always set the climate for the organization and will be reflected down through supervision to every employee. Management participation must be visibly active, not merely passive, and "The attitude of manageit must be so eviment regarding safety in dent as to leave no doubt in the minds company operations will of subordinates always set the climate for about management's attitude and intenthe organization and will tion. Lip service, be reflected down which is nothing more than a false through supervision to commitment, is every employee. " readily detected within organizat i o n s - a n d workers will then follow the lead of management and be indifferent to safety. Recognizing that industrial safety is truly the responsibility of management, an honest management commitment to safety is the first step in the development of a safe working environment. There must be accountability for safety. Managers and supervisors must be made accountable and responsible for the safety of their employees and for the workplace of each employee. As managers and supervisors become proactive rather than reactive toward safety, individual employees will receive the intended message and will also become proactive toward the safety of the entire group. An organized safety program must be i m p l e m e n t e d a n d m a i n t a i n e d . This safety program should be considered a part of the production process and therefore should be the ultimate responsibility of production management. An ongoing employee safety training program educates workers to both the dangers they face 69
within their workplace and the benefits they realize with a safe working environment. The safety program can be used by both management and labor to define all safety aspects of the job and thus enhance safety awareness throughout the organization.
Employee involvement in safety must be encouraged. Experienced workers know their job and the job's hazards. Workers must be motivated through involvement to practice safety and to avoid performing any unsafe acts. Safety awards and management recognition should be given for the continuous adherence to safety rules and regulations, and for the continuous performance o f safe acts. This recognition should be awarded to both individuals and groups, and can be monetary (cash, prizes) or non-monetary (certificates, plaques, recognition in house newsletters). Even though safety awards need not be expensive, the National Safety Council has found that they do motivate employees. Safety committees should be organized t o promote safety throughout the organization. Safety committees should be composed of representatives from both management and labor and should work to develop, enhance, improve, and maintain a safe working environment. Management's active participation in this committee demonstrates its commitment to operate and maintain a safe working environment and encourages the employee participation necessary to provide the motivation for worker safety. W
e, management and labor, pay a very high cost--in human, social, and ecoomic terms--for unsafe work habits and unsafe workplaces. The bottom-line results of improved industrial safety to the organization and to the worker are obvious. Lower production and personal costs are gained not only through reductions in injury, compensation, and medical costs, but also through improved efficiency and greater productivity that comes from improving the morale of workers in plants that have a reputation for being a safe place to work. O
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References Accident Prevention Manual for Industrial Operations, Vols. 1-2 (Chicago: National Safety Council, 1987). Associated Press, "OSHA Fines Ford $1.2M," July 24, 1990. Associated Press, "New York State Ups Compensation Benefits," July 31, 1990. Jack Boley, A Guide to Effective Industrial Safety (Houston: Gulf Publishing Company, 1987). Nancy Connors, "Staying in Control of Workers Compensation Claims," CFO, August 1990, pp. 47-48. Tom Feare, "Safety at the Workplace," Modern Materials Handling, August 1990, pp. 47-64. Gallup Organization, Manufacturing Excellence Survey of Top Corporate Executives (Winter Haven, Fla.: Philip Crosby Associates, 1990). J. Grimaldi, Safety Management (Homewood, Ill.: Richard D. Irwin Publishers, 1989). Dan Peterson, Safety Supervision (New York: American Management Association, 1986). Leon Schenkelbach, The Safety Management Primer (Homewood, Ill.: Richard D. Irwin Publishers, 1985). United States Senate Ad Hoc Labor Task Force, Workforce 2000.. Is Corporate America Prepared? (Washington: U.S. Government Printing Office, 1990).
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Myron I. Peskin is an associate professor of production management, and Francis J. McGrath is a professor of economics, both at the Hagan School of Business, Iona College, New Rochelle, New York.
Business Horizons / May-June 1992