Calculating the Cost of Nothing

Hundred dollar bill fade

By Phil La Duke

I’ve been writing this blog for almost 10 years (I started in July 2016) and during a decade of writing it, I haven’t said much about what I do; that is to say, I don’t share much about my day job. In part that’s to protect my client’s confidentiality, and partly because I don’t want to lose credibility by turning this into a weekly commercial. If I’m quiet about my work, mostly it’s because I want to explore and debunk the cherished truisms of safety. But today I have to explain a little of what I do to provide a context for the topic d’jour.

So what is it that I do? Years ago, working with a team of system management and OD experts I developed a revolutionary approach to worker safety for a major manufacturer (even though what I am about to divulge has been made public by the company I’m not going to mention the company for the sake of professional decorum and for all intents and purposes it doesn’t matter.) By the companies own calculations the new system had lowered its Incident Rate from 17.5 to 3.5 after five years, its severity rate had fallen over 90%, and by its reckoning, it had avoided over 14,000 injuries and reduced its Worker’s Compensation costs by over $55 million. We were all pretty pleased with ourselves, when the old school defenders questioned if we really saved any money or did they just get lucky. I devised a way to determine if it was because of the organizational changes using statistical analysis. It was crude by mathematical academic standards (there was a lot of “noise” in the data) but it was enough to determine, statistically speaking, where the company would have ended up had it done nothing (standard progression) and where it did end up after the engagement (logarithmic progression). In simplest terms we took ten years worth of injury data and identified the trend, then we took that same data and compared what actually happened. In the case of this company it was trending downward but slowly and relatively flat compared to the rapid improvements we saw. By comparing the difference between the trend and the actual costs we were able to prove (within a minute margin of error) the savings. Fortunately for us we calculated the savings at $54 million (which was well within our margin of error).

One would think that would be enough to convince the most ardent skeptics that the process works, and yet when (after designing and building—with the company’s permission our own propriety version) the company for which I worked at the time got even better results from a new client (this time saving $5 million in Workers’ Compensation claims in only 8 months, and saving $15 million when doing the statistical analysis) the client was incredulous; they claimed it just wasn’t possible, that we somehow must have manipulated the data (eventually they realized that the numbers were true). Eventually we saved the company $12 million in quantifiable cost reductions, and then it was on to the next company only to face the same incredulity. It’s exhausting.

The difficulty is always the same: people don’t want to believe that they actually saved money because saving money means that you used to be wasting money and when the figure is in the millions of dollars it implies that the company has been wasting millions of dollars, often without even knowing it.

Cost Avoidance Versus Cost Savings

There’s a difference between cost avoidance and cost savings and there’s a difference in the emotional charge each term carries. Cost savings: you reduce one fixed cost, for example you pay $.20 less per safety glove and you used 10,000 safety gloves so you saved $2,000 (10,000 x .20). Cost Avoidance: you pay less for a variable cost then you did historically, you “avoided” incurring a cost that you had every right to expect to pay, for example getting regular oil changes and avoiding paying for costly repairs. Most of us don’t see a meaningful distinction—and frankly without statistical analysis cost avoidance doesn’t mean that much—between cost saving and cost avoidance for a good share of us money is money and if at the end of the day we have more of it, so much the better. But for a lot of business people, particularly at the site level, cost avoidance is trivial and not something you can use to calculate return on investment. The idea being that maybe the company would have spent that money and maybe it wouldn’t, maybe we got lucky; coming back to our regular oil changes example one could argue that maybe if we didn’t change the oil in our car we might have a break down and we might not, and the cost of the oil change can be calculated but the return on investment cannot because we don’t know what the cost of repairing the engine would be, if anything. We can’t even calculate the reduction in the life of the engine (car companies can by conducting studies of numerous engines and by varying the frequency of oil changes).

Card Tricks For Dogs

Reducing costs, whether through saving or avoidance means a lot to us in safety, because we are so often seen as burdensome costs that return very little value. Like most of you I resent this and can point to a real, quantifiable statistical value to cost avoidance. For me, it shouldn’t matter if I return hard saving or true cost avoidance, if, through my efforts I am able to keep more money in the corporate coffers it positively impacts the bottom line, but when I make this argument to people who dismiss millions as “cost avoidance” it’s like doing card tricks for a dog. For me, as I’ve said above, money is money. I live in Detroit where my natural gas and electric bills are combined. In the winter my gas costs are naturally higher because I have a gas furnace and in the summer months my cost for electricity goes up if I use the air conditioner. If I invest in energy efficient appliances, insulate or replace my windows, and change my behavior to reduce usage I will save money, but if we have a mild winter my costs will go down naturally as I will require less energy to heat the house. Since there is no way to say how much of the money I didn’t pay out is because of the changes I made and how much is because of the weather I can’t calculate exactly how much of the savings is because of what I did. When you apply this to safety and the cost of injuries, and have this argument with some business leaders it’s a bit like doing card tricks for a dog, no matter how many times you make the argument and how carefully you explain statistical analysis they just won’t get it.

I had a Vice President of Human Resources of a Fortune 500 company tell me that “unless I can eliminate bodies” (directly reduce labor cost) he would never be interested in what I have to sell. “It’s just cost avoidance” he said dismissively. It was in that instant that I knew that despite my ability to save companies tens of millions of dollars in sustained annual costs for more than just a few trying to help them save money by literally saving lives I would never be able to persuade them.

 

 

#costs, #culture-change, #injury-costs, #phil-la-duke, #return-on-investment, #return-on-investment-roi, #safety, #statistical-analysis-of-injury-costs, #worker-safety

micro lessons, safety messages and Pam Anderson

A friend of mine has stated producing safety micro lessons (short, one objective lessons). He sent me a sample that is one in a series of ten. view it quick because the link is only good until the end of March. 

http://videos.sproutvideo.com/embed/a09bddb5161cedc028/fd921185e099e9db?signature=%2BIcyFBI9qIE0ac%2FDwh8aHg7EAPo%3D&autoplay=false&expires=1459407600&type=hd 

Persuading Executives That Safety Is Worth Supporting

By Phil La Duke 

In my last post, Injured Workers Need More Than Just Philosophical Support For Safety I talked about the difference between supporting safety philosophically and operationally. One reader posed the question, “how do you get leadership to move from philosophical support to actual support?” It’s a good question, and like most good questions doesn’t have any simple answer, at least not ethical ones.

In many cases, we’re to blame for people supporting safety philosophically but balking at taking any action that would expose the hypocrisy endemic to valuing something in the abstract but not really caring (enough to DO something of substance) enough to do something. I think most of us, if we are honest with our selves, are hypocrites about some things—for example I care about the homeless but you don’t see me building bunk beds in my basement (although I have volunteered to feed the homeless, but doing something once a year is hardly doing making a difference except for making me feel better.)

Most MBA programs don’t cover the basics of safety and what little many executives know about safety was taught to them by one of us; and let’s face it I’ve met heads of lettuce with more going on intellectually than some of the puffed up self important safety “professionals” who corrupt entire generations of leaders with the heretical beliefs about safety. So if we are going to change the values of leadership it will be an up hill battle.

Of course the best way to get buy in is for the leader to have a significant emotional event. This is safety-speak for something that happens to a person that really shakes them up. One colleague and friend of mine tells of the 23-year old who died when he first became a safety professional. He told me in all earnestness how profoundly it changed him and how he doesn’t think he could do what he does without having had that experience. Any of us who have had someone die on our watch, suffer the loss of a loved one, or been injured themselves doubts the power of a significant emotional event. The problem is these experiences are tough transfer. We can watch Charlie Moorecraft and hear his story and be touched by it and probably empathize with his horrific experience, but no matter how much we sympathize it’s not OUR significant emotional event and our sympathy will fade. Years ago I was driving through Tennessee to Kentucky when I witnessed the aftermath of a fatal traffic accident (a pedestrian tried crossing the a freeway at rush hour and was struck by a speeding car). As I crept through the traffic I saw the corpse covered with a sheet and its foot was exposed; bone white, cold and dead. I didn’t know the man and yet I still can see that foot, and remember the look on the trooper’s face, I can remember the time of day, how the rain looked on the bridge; the minutest details. I can tell you all about that brief last moment of a stranger’s life but I doubt 10 years from now you would remember much about it. Maya Angelu once said (hell she may have said it a hundred times, it’s not like I knew the woman) “I’ve learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel.” Alas, the most persuasive among us can ever convey how it feels to spend the day watching his father die of mesothelioma watching him fade in and out of conscious and wondering if his father knows he’s there. So those who try to create these kinds of emotional responses artificially are either very skilled (and I know a handful who are) or mush-headed simpletons who have an exaggerated sense of their own talents.

So how do you convince someone who SAYS they value something to put the company’s money where its proverbial mouth is? The not so satisfying answer is sometimes we can’t. The good news is we don’t always have to. We may not be able to convince someone that safety is the right thing to do because people may die and we want to avoid adding to the net sum total of human misery in the world. We can often get people to support safety by closely linking it to making more profits for example (if that is important to them, which it might surprise you to learn how many executives really don’t care about profits, at least not the relatively small amount likely to be brought into the coffers by savings realized from safety.

Maybe the solution is to reeducate the leaders, but if that’s your solution remember you have to get them to unlearn what others have taught them, and let’s face it we don’t exactly stand on the shoulders of giants.

 

Forgetting Andy: Why Scare Tactics Don’t Work

there’s been some recent interest in this piece so I thought I would reblog it to my current site

The Safety Net

By Phil La Duke

If you’ve been in or around the safety industry for more than fifteen minutes or so you likely know “Andy”[1].  Andy is a safety pseudo celebrity who makes his living telling the story of how he was horrifically injured in an industrial accident, because by his account he failed to follow the rules. Rules, he’s quick to recount, that were put in place for his protection.  Andy now makes his living speaking to safety audiences who nod knowingly in silent reproachful agreement.

There are many, “Andys” out there. They are well-intentioned, good people who desperately want to share their stories. They want nothing more than to glean some tiny kernel of good to come out of their tragedies.  My issue isn’t with the Andys of the world; do they make money off their situation? Sure, but so what? Several of these Andys are good…

View original post 1,266 more words

Rules Only Protect People If Everyone Follows Them

Source: Rules Only Protect People If Everyone Follows Them

Dear Readers:

Last week I celebrated my tenth anniversary as a blogger ( I think, there was a time when I was given an ultimatum to either have all my articles censored by an employer or lose my job (ironically the same employer who ordered me to start blogging, I resisted because I thought (and think) that blogging is for bellyachers and malcontents who don’t write all that well and generally have an exaggerated sense of there own importance in the universe. Maybe that describes me to a tee, but I have to acknowledge that there over the past ten years there have been some great bloggers emerge and what was once a haven for emotionally overwrought teenagers has grown into an art form in it’s own right.
The first piece I wrote, What’s Wrong With Safety Training and How To Fix It as a white paper that was posted on O/E Learning’s website and quickly was published by Fabricating & Metalworking magazine it wasn’t long before I had written 45 articles, mostly in a monthly column, The Safe Side. My editor, Mike Riley, is a saint who put up with my last minute submissions, blown deadlines, and more than a couple of bland columns. My publisher, Tony Morrison, was beloved and it was a shock to all of us when, tragically he died suddenly at the age of 44. I haven’t published my column in about six months. Mike and I talked and decided that all would be better served if I just submitted pieces and he would run them throughout the year where they fit editorially. I recently shared with Mike that I was looking to scale back on my writing (at my height I was churning out 10,000 words a month). I was approaching 100 published works (not counting blogs or guest blogs even for respected blogs like MONSTER, ISHN, or SafetyRisk.net) and I thought it would be nice to retire from Fabricating & Metalworking with a five part series. I had hoped to have the last of these published in June which would mark my 10 year anniversary at the magazine, sadly that won’t happen. The magazine has been sold and it’s hard to say which direction the magazine will go, but it is certain that Mike will not be able to read the three articles currently in his in-basket and there is no chance that I will hit my goal of 50 and out.
So I’m looking for a home for the series, it’s focused on business owners and Operations leaders and their roles in the foundations of safety. I’m submitting works to ISHN and Health & Safety International, but these don’t feel right for these audiences. At around 1,000 words a piece they are too long for Facility Safety Management and Entrepreneur magazines. They’re not prurient enough for Penthouse Forum so I am looking for a magazine that might be interested in publishing them (hell at this point I would settle for a coloring book). So please if you have any suggestions let me know. Otherwise, they will end up on the trash heap in my computer with the sundry pieces that I started and abandoned because they never came together.
Thanks to all of you who have helped me to achieve the meager success that I have, and don’t be shy in telling me where I can send this series of articles

Injured Workers Need More than Just Philosophical Support For Safety?

philosophy

By Phil La Duke

Does your leadership support safety? Does your organizational culture? Do you? Most of you just answered a resounding “YES!!” when I asked you, some of you said it when asked about your culture (cultures are easy to malign) and far fewer likely answered yes when I asked about your leaders.  The reality is that, when asked, most people would by insulted that their sincere support of safety was being questioned.

But if the whole world supports safety why is it so difficult to run an operation where injuries are a rarity? And why do we have to fight so hard to get the resources we need to correct hazards, and finally, why is it that so many people fail to do their jobs when it comes to safety?  Greg Gerweck once told me that you always have the time and money for what is truly important to you.  Some of you will become immediately offensive because you will claim that you value your family more than your job, or that you honestly wish you had more time for x but you have to do y.  Just think of what Mr. Gerweck said, if it is truly important to you that’s where you spend your time and money (and I would add efforts but I suppose that’s a subset of time).  If you want to understand what you really value, you have to reflect on how you spend your time and money, and furthermore, if you SAY you value something and you are spending most of your time and money doing something else…well, my guess is that you are either lying to yourself or are deeply unhappy. That’s not to say that there aren’t time when you miss your kid’s ballet recital or soccer game to get a big proposal written or to investigate a serious injury, but I believe that if that becomes the norm you are lying to yourself about your values and it’s probably making you unhappy.

It’s not uncommon to believe that you value something more than you  really do, because believing that you value safety for example but doing nothing of substance to make it a reality is really a philosophical believe.  “Workers deserve to come home uninjured” is hard to argue against, in fact, I’ve never met a person who has fought me on that.  But it gets complicated when we have to make choices; hard choices.  Do I shut down production because we’re working out of process and there’s a strong possibility that the will cause an injury? Or do we keep going because we’re already behind and maybe someone will get injured and maybe they won’t?  In this case we are philosophically supportive of safety but we aren’t operationally supportive of safety.  I can already hear the safety professionals weighing-in in agreement, but I could have just as easily asked the question, “Am I going to get off my lazy ass and check out how things are running in production, or am I going to spend the next 2 hours getting caught up on emails and paper work?”  If your answers tend to favor production (even of emails) over safety then you don’t truly support safety at an operational level.

I’ll take it even further, If you don’t do your job because you have convinced yourself that the problem lies in the culture, the leadership, or the employees themselves, then you don’t support safety at an operational level.  There is something so deeply satisfying in excusing the fact that we aren’t successful in building a safer work place by decrying it as impossible.  It’s a bit like getting in shape.  We’ve tried dieting  and that didn’t work so now we eat what  we want and get fatter, we value our health, but not enough to do anything about it.  We try exercising, but that didn’t work either so we have the exercise bike gathering dust.  If we give up when we don’t see immediate results, we really can’t say we value something or support it.  When we support something that someone else is doing can we really call that support?

Values are the deep-seated, hardwired beliefs that determine how we will make every choice and how we will spend our time and money.  Saying safety is a value sounds nice and looks great hanging on the wall in the lobby but unless it manifests in how decisions are made from the CEO to the temporary worker who cleans them restrooms all it these posters are decoration, and tacky ones at that.

We can’t change anything by grousing about it on the sidelines.  Safety connects to everything we do so if you are in an organization that doesn’t seem to value safety, and you are a safety professional, it’s your job to connect the dots for them. From safety to profits, or productivity, or whatever it is they do value.  It’s not an easy job to the minds of people who have been actively antagonistic of safety, but over time, and through continually asking the question, “do you support safety?” sooner or later most of the organization will come around to your way of thinking.

So whether you see your job as merely counting bodies, or further making safety look ridiculous through safety BINGOs and children’s art contests, or saving lives, get out there and support safety, not philosophically, but in practice.  And at the end of each work day ask yourself, “what I done to make the workplace safer today?” Only then can you claim to support safety and have that claim really mean anything of substance.

#attitude, #attitudes-toward-safety, #behavior-based-safety, #culture-change, #increasing-efficiency, #loss-prevention, #oil-and-gas, #phil-la-duke, #philip-la-duke, #process-safety, #risk, #safety, #safety-culture, #stop-trying-to-prevent-every-possible-accident, #variability-in-human-behavior, #worker-safety