The Value of Safety

Original article by Nick Warburton for IOSH Magazine

There’s more value in safety interventions than avoiding accidents, and measuring it is becoming ever more important – but it’s hard. We explore why.

Businesses that foster a good safety culture and invest to prevent injuries and fatalities are usually rewarded with a positive return on investment, reflected in the organisation’s avoidance of harm and costly prosecutions.

But there is greater value to be gained from OSH investments. A safe working environment contributes to better mental health and physical wellbeing, which can mean higher productivity due to fewer days lost to sickness or injury, lower staff turnover – and a better bottom line.

Decision-makers, however, don’t always make the connection between OSH and improved business performance because these greater ‘values’ can be difficult to measure and quantify.

A project funded by the Lloyd’s Register Foundation is exploring ways to determine the ‘Value of Safety’ – including its definition – with the aim of creating standardised measurements demonstrating value to employers and driving return on investment.

Researchers at Delft University of Technology in the Netherlands assessed ‘the status and effectiveness of current methods to value safety’ and explored opportunities for improvements. Their findings (Yang et al, 2022) have provided the foundation for part two of the project, which is being undertaken by the US National Safety Council (NSC). The end goal is a ‘modern model’ that ‘standardises safety terminology’ to encourage ‘better knowledge-sharing and integration’ (see New valuation of safety and health on page 34).

As John Dony, senior director of thought leadership at the NSC, wrote, the models of safety researchers have used in the past covered the economic value of avoiding incidents and quantifying the ‘unquantifiables’, such as productivity, culture, morale, community engagement and reputation (Dony, 2022).

While these models are important, he warns they have ‘major gaps’, which have been further exposed by recent, more ‘mature and nuanced approaches’ to OSH such as ‘Safety 2.0’ – an approach that seeks to examine all forms of outcome – and the growing prominence of environmental, social and governance (ESG).

‘What the NSC’s work will do is say: “This is how people should be looking at the value of safety in the future”,’ says Sarah Cumbers, evidence and insight director at Lloyd’s Register Foundation. ‘It will provide toolkits and guidance to reflect a more holistic understanding of it across their investments.’

FUTURE VIEW

New valuation of safety and health

The US National Safety Council (NSC) has been collaborating with others to develop a ‘modern model’ of OSH that reflects broader strands of safety value for part two of the Value of Safety project.

The NSC’s work aims to close significant gaps in the way practitioners, organisations, researchers and government bodies understand the value of safety and create more practical tools designed to increase the integration of OSH values into wider policies.

John Dony, senior director of thought leadership at the NSC, writes: ‘The initial results of this work will be validated with an expert group of safety and health leaders and will lead to a working model of the New Valuation of Safety and Health that will be tested in the field to evaluate its accuracy, efficacy and utility for assessing value and identifying areas of potential change and impact’ (Dony, 2022).

DEFINING VALUE

One of the challenges posed by the Value of Safety project is the concept’s abstract nature, explains Ming Yang, assistant professor of safety and security science at Delft University of Technology and one of the report authors. People have different opinions about how value is defined, and attach multiple values to safety.

‘Most industrial practitioners will only realise safety’s value when an accident happens,’ he says. ‘This is when they see the hypothetical benefits [of making safety investments].’

However, as Ming explains, organisations identify with different types of losses – for example, economic, environmental, and reputational – which are associated with values held by different stakeholders and decision-makers. These values can also vary between organisations, sectors and countries, and can change over time.

Sarah agrees that the value of safety can reflect people’s different fears, preferences, and risk perceptions. ‘OSH professionals know this already. They can’t take a one-size-fits-all approach to interventions, and therefore value won’t be one size either,’ she adds. ‘That’s why it is important that methods are developed to support safety valuations, because many organisations are just looking through that very focused lens of return on investment from a financial perspective.’

She also says organisations are underestimating the value that can be gained by focusing on this area. ‘If you take into account the more holistic view, and you are looking at the impact on total worker health rather than just the physical incidents and accidents, and you are looking at the impact on reputation as well, then you can get a lot more value out of your interventions. You may find you make a different decision.’

Sarah points to an analysis in the Safety Perceptions Index 2022 on the perceptions of mental health in Africa versus more advanced economies to explain how safety values can also change (Institute for Economics and Peace and Lloyd’s Register Foundation, 2022).

Mental health has become an important issue in high-income countries, she says. However, in Africa, although levels of experience are high, this is not matched by investment, and business awareness is likely to be relatively low.

‘It is likely that many businesses in Africa wouldn’t fully recognise the value of mental health,’ she says. ‘Yet, would we expect them to at the moment, or is that something we would expect to see a change in over the next few years as attitudes shift, as they have in Western countries over the past five years?’

As part of its research, the Delft team developed a hierarchy of values to reflect the importance of the different values identified – notably how physical health (rather than mental health) has gained the most traction in health values (the most recognised category), and how social values need to become part of the ‘discourse around safety and safety interventions’ (see The hierarchy of safety values diagram opposite).

THE PROBLEM IN THE PRIVATE SECTOR IS THAT ECONOMIC CAPITAL IS GIVEN TOO MUCH WEIGHT RELATIVE TO OTHERS

A focus on human capital forms part of social sustainability – which, as IOSH’s Catch the Wave campaign explains, is increasingly recognised as forming the backbone of an organisation’s resilience.

Susan Chilton, professor of economics at Newcastle University Business School (NUBS), was part of an academic team that developed a preference-based method to determine the monetary value of risk reductions from making safety improvements (NUBS, 2022). She refers to these ‘corporate social responsibility’ benefits as ‘externalities’ and agrees they can add to the value of safety.

‘They are safety benefits that currently aren’t being priced,’ she says. ‘If they were priced, it would fit very well [with sustainability criteria]. One of them is that environmental, human and social capital should be treated equally and given the same priority. The problem now in the private sector is that economic capital is given too much weight relative to others.’

HEALTHY WORKPLACES

A sound return on investment

The Healthy Workplaces Good Practice Awards from the European Agency for Safety and Health (EU-OSHA) illustrate how good OSH practices that value human capital can produce a positive return on investment. Verdonk Broccoli, a family-run vegetable-growing business in the Netherlands, was among the winners as part of the Healthy Workplaces Lighten the Load campaign in 2020-22 (EU-OSHA, 2022).

The company is a small operation that has taken a proactive OSH approach and demonstrated a return on investment through its work with GRASP, part of the Global Good Agricultural Practices certification.

Developed specifically to assess agricultural operations on how they manage their employees, the GRASP risk assessment system covers employee health, safety and welfare. In signing up, Verdonk Broccoli has committed to the provision of decent work, opportunities for quality training, good housing, and safe working conditions.

EU-OSHA’s campaign promotes musculoskeletal disorder (MSD) prevention and Verdonk Broccoli has invested in this at source, so its four permanent and 35 seasonal workers minimise the risk of developing MSDs and reduce physical strain, notably when stacking broccoli crates.

To best fill the trucks transporting the broccoli during harvest time, high stacking was required, which meant the workforce had to lift the crates above shoulder height. However, palletisers purchased in mid-2020 have reduced this physical strain on employees. There have been fewer health complaints and absences, and the company has recorded a 30% reduction in staff turnover.

Although the business spent nearly €44,000 (£38,800) on the palletisers, the equipment has resulted in business efficiencies, freeing up staff who would have spent the entire day stacking. It has also saved costs on absenteeism, replacement workers, possible injury claims and increases in premiums.

There can be a temptation to see legislation as the main driver for influencing OSH investments, particularly in relation to avoiding fatalities and injuries. But, as the Delft study illustrates, demonstrating a wider return on investment arguably offers a more convincing argument.

Danny Clarke CMIOSH, commercial director at the National Federation of Builders, says this makes more sense for businesses than any legal requirement, because ‘return on investment’ is a language that business leaders understand and aligns better with their objectives.

‘They are not doing the right thing because there is a document that says: “The risk assessment says you do that.” They do that because it’s a standard they and their peers have adopted,’ he says.

But Sarah believes the two complement each other well. ‘You can use that broader valuation of safety to better achieve what is set out in legislation,’ she says.

OSH professionals have a critical role in demonstrating that broader safety value to the executive board. Danny says organisations that employ an OSH professional in a senior management position are already heading in the right direction. What the OSH professional needs to do is engage and influence the senior management team to demonstrate the wider value of OSH investment.

OPINIONS DIFFER ON HOW VALUE IS DEFINED, AND PEOPLE ATTACH MULTIPLE VALUES TO SAFETY

IOSH’s competency framework defines the skills, knowledge and behaviours needed to influence, such as collaborative working, communication and culture. ‘The most important thing is that culture piece and making sure it is sustainable,’ Danny says. ‘You can have the best documentation policies, but if people aren’t reading them, nor understanding what you are trying to achieve with them, they are never going to follow them. Equally, in other places the documentation is awful, yet people just do the right thing. People are a fundamental part of OSH.’

RECOMMENDATIONS

What can OSH professionals do next?

The Value of Safety report recommends practitioners:

• Integrate the hierarchy of safety values into the development and implementation of safety interventions to deliver maximal value.
• Ensure social values become part of the discourse around safety and safety interventions.
• Standardise safety terminology within organisations and globally to allow for better knowledge-sharing and integration.
• Implement a value-based safety management framework to maximise the impact of safety interventions.

(Yang et al, 2022)

A NEW FRAMEWORK

Part one of the Value of Safety project recommends that employers implement a value-based safety management framework. As Ming explains, this comprises four steps in a safety lifecycle management system: define the sociotechnical systems; identify the safety values; measure those values; and manage them via design and operation.

The framework is an attempt to answer the question, the safety of what? It looks at how the value of safety can be measured given the context and the stakeholders’ values, Ming says. ‘We have also looked at how we can invest in improving the safety conditions, whether it is minimising risk, enhancing reliability, or enhancing resilience.

‘We have made [the framework] a cyclical process, so we can achieve continuous quality improvements. It also follows the plan-do-check-act cycle.’

The NSC will be reporting on the recommendation in part two.

So how can OSH professionals begin to measure the real value of safety to their organisation to make the case for investment? Danny uses the example of mental health first aid, which works most effectively as one strand in a wider strategy. ‘Quoting plan-do-check-act, the entire point of mental health interventions is to review and evaluate its effectiveness,’ he says.

‘What we are not so good at is demonstrating that return on investment and the value it has brought by looking at the data we capture.’

He refers to the mental health assessments businesses undertake and the risk profiles they develop to understand what controls are needed. ‘Implementing a rule that says one in X number of employees has to be a mental health first aider without a wider strategy of prevention is nonsense,’ he says.

‘You should be going back to say: “Has it worked? Is it making a difference on-site? Are absence rates affected? Have return-to-work rates been affected? Are we looking at turnover rates and interview data? Are we looking at how many employees and managers are undertaking mental health training?”

‘If you want to show return on investment, look at the data you capture.’

REFERENCES

Dony J. (2022) Creating a business case for safety. Lloyd’s Register Foundation. See: lrfoundation.org.uk/en/evidence-insight/business-case-for-safety/ (accessed 20 February 2023).

EU-OSHA. (2022) Healthy workplaces good practice awards. See: osha.europa.eu/en/campaigns-and-awards/awards/good-practice-awards (accessed 20 February 2023).

Institute for Economics and Peace, Lloyd’s Register Foundation. (2022) Safety Perceptions Index 2022: understanding the perceptions and connections of global risk. See: visionofhumanity.org/wp-content/uploads/2022/06/SPI-2022-web-2.pdf (accessed 20 February 2023).

IOSH (2021) Catch the wave. See: iosh.com/businesses/iosh-for-business/catch-the-wave/ (accessed 20 February 2023).

IOSH. (2022) Competency framework. See: iosh.com/my-iosh/competency-framework/ (accessed 20 February 2023).

Lloyd’s Register Foundation. (2022) The value of safety. See: lrfoundation.org.uk/en/news/eic-value-of-safety (accessed 20 February 2023).

Newcastle University Business School. (2022) The value of safety: reducing risks to human life. See: ncl.ac.uk/business/research/showcase/value-safety/ (accessed 20 February 2023).

Yang M, Chen C, Yuan S et al. (2022) Value of safety. Delft University of Technology. See: https://repository.tudelft.nl/islandora/object/uuid:cd62c5ed-719a-466a-97d1-56476b121ef9?collection=research(accessed 20 February 2023).

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