Cost Savings with Health and Safety
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IN THIS ISSUE |
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WELCOME |
This is our first newsletter of 2006 and though most of our readers have already made their new year’s resolutions, it is never too late for businesses to resolve to do better in regard to health and safety.
Our main article is concerned with the financial aspects of health and safety – the cost of not taking the matter seriously and the potential savings of good health and safety practice.
The fact is that Health and Safety, when done properly, impacts both the P&L Account and the Balance Sheet.
When things are done right, companies and individuals avoid the significant financial penalties that can be imposed by the courts. Sometimes, of course, that can include avoiding custodial sentences as well. However, these headline costs don’t tell the full story and usually represent only the tip of the iceberg that is the full financial impact of a serious accident on a company’s profits.
In our main article, we briefly examine the evidence that “good health and safety is good for business”. In the Case Law section, we relate the story of a company that recently got it wrong and finished up paying out far more than they were saving by not taking their responsibilities seriously enough.
Do yourself a favour. Resolve today that before this year is much older you will get your health and safety checked. Ensure you are on the right side of the law.
David Skews, (CEO)
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COST SAVINGS WITH HEALTH AND SAFETY |
Wrong Perceptions
We have covered the cost implications of health and safety on a number of occasions. Unfortunately, the view amongst many business owners is that from a company financial point of view, health and safety amounts to a net cost against profits in order to comply with UK government legislation and/or European directives.
In some cases, this view may be borne out in practice, but where this is the case, it is invariably because the whole issue is not given sufficient priority.
Good Health and Safety is Good Business
We have seen evidence from our own experience with clients from many industry sectors and varying in size from SMEs through to multi-national corporations. We have been able to demonstrate time and again that good health and safety can also be good for company profits, as well, of course, as ensuring the safety of employees and others affected by business activities.
However, as a health and safety consultancy, we are inevitably open to the charge of, “well you would say that wouldn’t you?” and therefore it is always encouraging when independent corroboration comes along that supports our assertion.
Just such evidence has come to light recently in some new research carried out on behalf of the Health and Safety Executive by a Consultancy firm specialising in ergonomics and human factors.
The research identified and examined 25 cases where companies had introduced changes to address risks of musculo-skeletal injuries – that could range from the various conditions that we describe as Repetitive Strain Injuries (RSI) to serious back problems. In each of these cases, the interventions resulted in significant financial benefits for the organisations involved.
Types of Intervention
The nature of the interventions varied according to the risks that were identified but could be broadly categorised under the usual headings of:
- Changes to the workstation
- Changes to equipment
- Changes to the working environment
- Changes to work activities
Example - NHS Trust
By way of example, an NHS trust identified a high rate of lost time injuries amongst staff working in their operating theatres. In response, the trust introduced new procedures to minimise the need to lift patients by hand onto and off the operating table, resulting in a significant reduction in lost time.
The trust analysed the financial consequences of this intervention and identified that over a five-year period, they achieved a ten-fold financial saving over the cost of introducing the changes.
Example - Oil and Gas Company
Another example concerned a company in the oil and gas sector that identified a high incidence of manual handling injury resulting from heavy lifting operations.
Responding to these findings, the company installed additional mechanical lifting equipment, at a total cost of around £15,000. In the first year, they saw a marked reduction in injuries, leading to financial gains of the order of £45,000.
Clearly it is difficult to state emphatically that all the savings were the direct result of the specific interventions – real life is rarely so straightforward. For example, some benefits may well have accrued from an increased awareness by staff of the health and safety risks and how they should respond to them.
However, whatever the case, it all comes down to taking a serious approach to health and safety and realising significant financial benefits alongside the obvious human benefits for members of staff.
Borne Out by Our Own Experience
We are able to quote examples from our own clients. Of course, the bigger the company, the larger the potential savings. For example:
- One of our clients was able to make a saving of 20% on a £1 million insurance premium - a whopping £200,000 added to profit.
- Another client ensured their RSI risks were properly managed, which resulted in a £50,000 saving on a premium increase.
By anyone's standards, those are hefty amounts and the cost of the intervention in each case was a small fraction of the savings.
Hidden Costs
Many organisations don’t reflect relevant costs in their financial reporting – such costs as:
- Lost production time due to sickness absence
- Temporary staff to stand in for injured employees
- Increased insurance premiums or failure to achieve premium reductions
- Lost management time following a serious accident or incident
The list could go on, though the point is that such costs are often hidden from view but they are real costs nonetheless.
It has often been quoted that “Good health and safety is good for business” and this is another piece of research that demonstrates the truth of this axiom.
Associated Links
We are a Health and Safety Consultancy with a mission to see every organisation in the UK as a safe and healthy place to work. If you need help to achieve this goal for your workplace, then give us a call to discuss what we are able to do to help and save yourself some money at the same time.
See edpFRAMEWORK for a broader perspective on Managing Health & Safety
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CASE LAW |
As a follow on from our main article, which concentrates on the benefits of taking preventative action, we have the report of a flooring company based in Coventry, who has recently been fine £40,000 plus court costs because of an injury that resulted from not providing adequate guards on a laminating machine.
The machine operator was threading a PVC sheet into the machine’s rollers when he was caught and drawn in to the machine. Heat from the rollers resulted in third degree burns for the operator.
Of course, as mentioned in our main article, the direct financial cost of the fine is probably only the tip of the iceberg compared to the full financial impact - if it were ever calculated.
What is perhaps more disturbing about this report, is that the company has been prosecuted by the HSE on a previous occasion and should, therefore, have been more aware than most of the importance, and financial consequences, of failing to fulfil their duties under health and safety legislation.
You can read the full story about this case on the Government’s News Network site
If you need a trained eye to conduct an assessment of your working environment, then contact us now for an estimate and to discuss your requirements.
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LEGAL MONITOR |
There has been little change in legislation to report since our last newsletter.
However, it is worth reiterating that the Health and Safety Executive now aim to release changes in regulations on two specific dates in the year. On this basis, the next tranche of changes are due in April.
As at the time of writing, we cannot guarantee what will actually come into force but, for example, it is likely to include:
- Changes affecting Consultation with Employees
- Exposure of employees to harmful noise levels
- Fully revised Fire Safety legislation
Consequently, there are few organisations that will not be affected in some way of another so this is a timely alert to consider what preparations for change you may need to make.
If your health and safety is currently up to scratch, there may be very little impact, but if you feel less confident about your current arrangements, it could be a very different story. Determine now that if the inspector decides to call on you, you won’t be found wanting.
View anticipated Changes to Health & Safety Law. Then decide how you might be affected and if you need to make changes in preparation.
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David Skews, (CEO)
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EDP Health Safety & Environment Consultants Ltd
Lakeside, Alexandra Park, Prescot Road, St. Helens, Merseyside, UK
Telephone: +44(0)1744 766000
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