Are Safety and Profitability Competing Goals?

When an incident occurs, companies typically have their own internally mandated investigation process as well as a legal obligation to investigate and report on the incident.

The intention behind these investigation reports is to uncover why the incident occurred, in order to prevent it from happening again. However, in spite of the fact that these investigation reports occur, we somehow keep repeating the same safety mistakes over and over again.

A new study by the McCombs School of Business at the University of Texas, Austin found that organizations go through cycles of learning and forgetting, a process they refer to as “organizational oscillation”. In other words, an incident forces an organization to focus its attention on safety and learn from the mishap, while proactively creating new regulations to prevent another crisis. However, as time passes, companies gradually forget this focus on safety and allow other goals such as profitability to come to the forefront.

Studies show that fluctuations between learning and forgetting mainly happen because of pressures from external and internal elements. Investor demands, executive leadership changes and complacency due to long periods of no serious safety errors are a few examples of these pressures. Eventually, shifting the focus away from safety, leads to employees and supervisors forgetting the lessons learned from previous incidents and results in repeated mistakes. To identify what causes repeated organizational errors, researchers analyzed 146 pharmaceutical companies between 1997 and 2004. They found that 33% of them experienced serious drug errors. Following an error, drug companies significantly reduce patent applications, while increasing drug testing and scientific articles connected to clinical trials. However, this caution and investigation into potential problems declines with time.

Many organizations mistakenly assume that both safety and profit making are competing goals; therefore, they feel the need to shift their focus from one to another. Organizations have limited amounts of resources and need to decide how to best allocate their time and assets. However, the problem here is not where to allocate resources, but how to make the most efficient use of each available resource. For example, a safety manager, who needs to track corrective actions for multiple job sites, will need to spend an exuberant amount of his/her valuable time going through piles of paperwork, before being able to determine what the safety deficiencies are. In contrast, automating the process and having a dashboard that tracks corrective actions and enables a two-way communication from the boardroom to the front-line, will immensely reduce the time and resources used by the organization to ensure the safety of their workforce.

Organizations need to understand that increased profitability is an outcome of a strong health and safety program, not a competing goal. A strong safety program increases productivity and reduces absenteeism, staff turnover, healthcare / insurance costs, and, most importantly, the number of injuries that could result in heavy fines and litigation. OSHA reports that by implementing a strong safety and health program, a Fortune 500 company increased productivity by 13% and a small, 50-person plant decreased faulty products and saved more than $265,000. However, as we saw in the safety manager example, profitability and safety can only become a mutually inclusive reality when an organization makes the best use of its resources and reduces the inefficiency caused by excessive paperwork and administrative burden.

This is where technology, such as a safety management system, comes into play. Abandoning the status quo of paper processes and embracing technology can help ensure that safety is a continuous priority, which does not oscillate with a learning and forgetting cycle. When safety data can be accessed immediately, rather than gathering dust in a binder, it can stay in the forefront of employees’ minds and help prevent organizations from repeating safety mistakes.