Magazine article Occupational Hazards

Right-Sizing Health and Safety

Magazine article Occupational Hazards

Right-Sizing Health and Safety

Article excerpt

Corporate industrial hygiene and safety departments have suffered significantly during recent economic times. I believe two factors have played a large role in this -- marginally effective corporate and plant organizational structures, and an overzealous emphasis on trying to justify the value of health and safety based almost solely on direct contributions (or savings) to the bottom line.

For many years, certain risk control functions have been carried out in companies from a central corporate office. This has been considered the most efficient and least costly way to structure these functions.

Corporations protect their assets by having a central group responsible for functions such as accounting, legal, and insurance. Basically, these are service or support functions unrelated to the plant's function of getting product out the door to customers and represent an "extra" cost of doing business.

Like safety, industrial hygiene, and environmental, these service functions are all costs to the corporation. Consequently, there will always be pressure to reduce this nonproductive "overhead." Good arguments can certainly be made that they also save the company money by preventing fines, penalties, litigation, and losses from natural or man-made disasters. On balance, though, they still represent a cost of doing business.

Insurance provides an example of the "risk control" versus the "implied threat" method (the traditional safety and health approach of do this or get sued or go to jail) to justify corporate existence. Insurance is not purchased to save money but to protect the corporation from risk. A company could easily go for decades not recouping the cost of premiums as directly paid benefits. In fact, most companies want it that way.

Why Do They Need Us?

Because I am a consultant, you might suspect that I would be totally in favor of outside contracts for safety, industrial hygiene, and environmental services. You are wrong! I believe in corporate support services. In my mind, they should exist as an important corporate resource to the operating plants. What I have witnessed over the last couple of years is the wholesale destruction of these corporate structures with replacement of staff by a single "manager" to reduce overhead.

Without corporate oversight, each plant is free to reinvent the wheel. We all know of plant managers that embrace safety, health, and environmental matters, and others that simply view it as something that erodes their bonus potential. Unfortunately, people usually are long gone before the effects of their neglect are seen.

The service functions of industrial hygiene, safety, and environment are now necessary because of the law as well as assuring good business practices (including the ethical and moral components). How should we justify this overhead expense? There are cost savings from preventing accidents, illness, and environmental degradation, but one cannot totally justify programs on cost/benefit grounds. In some cases, it might be cheaper to simply allow the injury, illness, or environmental damage to occur rather than install elaborate control systems that can cost millions of dollars.

From a societal point of view, it could further be argued that installing a safety, health, or environmental control could result in a competitive disadvantage resulting in a loss of jobs. On an overall basis, that might represent a worse evil than compliance with the regulation. The Quality Car Co. could simply manufacture in the country of Hinderland, which may be desperate for work and feels prevention of starvation is more important than prevention of environmental degradation. Even if the Quality Car Co. is highly supportive of its workforce and the community, the competition from overseas may force it to close operations if it is not cost-competitive. Clearly, no one would want that situation.

We follow "good" safety, health, and environmental regulations for a number of reasons that include regulatory compliance, public relations, societal pressures, ethics, and good business practices. …

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