Once you have developed engineering and administrative controls to eliminate or reduce injuries, the challenge becomes convincing management to make changes. Management will most likely understand the importance of taking corrective action and readily agree to your ideas. However, if management doesn't quite understand the benefits, success becomes less likely. Your ability to present effective recommendations becomes all that more important. This module will help you learn how to put together "an offer they can't refuse," by emphasizing the long-term bottom-line benefits of the corrective action you are recommending.
When recommendations are not acted upon, it is usually because the decision-maker does not have enough information to make a judgment. To speed up the process and to improve the approval rate, you must learn to anticipate the questions the decision-maker will ask in order to sign off on the requested change. This being the case, the more pertinent information included in the presentation, the higher the odds are for approval.
Let's look again at the scenario introduced in Module 6. We're going to use this scenario to make some effective recommendations for corrective action. We want to make sure this accident never happens to Bob (or anyone else) again. You'll do this by reviewing the accident scenario and answering six key questions.
With the information gained, you will conclude the investigation by writing a recommendation. Your job is to convince me (your supervisor) that your ideas make sense... and I'm busy, so make it good!
Answer the following six questions to help develop and justify recommendations.
1. What exactly is the problem?
2. What is the history of the problem?
Have similar accidents occurred previously? If so, you should be able to claim that the probability for similar accidents is highly likely to certain. What are previous direct and indirect costs for similar accidents? How have similar accidents affected production and morale?
3. What are the solutions that would correct the problem?
What are the specific engineering, administrative and PPE controls that, when applied, will eliminate or at least reduce exposure to the hazardous conditions? What are the specific system improvements needed to ensure a long term fix?
4. Who is the decision-maker?
Who is the decision-maker: the person who can approve, authorize, and act on the corrective measures? What are the possible objections that he/she might have? What are the arguments that will be most effective in overcoming objections?
5. Why is that person doing safety?
It's important to know what is motivating the decision-maker. Is the decision-maker doing safety to fulfill one or more of the following imperatives?
Employer motivation will determine the nature of the objections to the recommendations you submit. What are possible objections the decision-maker might raise? Whatever they might be, it's important you understand their motivations so that you are better prepared with responses that satisfy the decision-maker's needs.
6. What will be the cost/benefits of corrective actions and system improvements?
It's important to have the answers to all of these questions ready for the decision maker.
The maintenance supervisor may be able to help you estimate the investment required for recommended corrective actions.
Below are some additional ideas for you to consider.
Safety committees should promote the idea that future accident costs will equal the savings realized if management invests in safety by approving the recommendation.
To help estimate direct and indirect cost savings, you can use OSHA's Safety Pays software. This is an excellent software tool that determines direct and indirect accident costs. It also calculates the business volume required to cover those costs. The data is based on 52,000 lost-time claims submitted to a major workers compensation insurance carrier.
The indirect costs for accidents will usually be higher than the direct costs. Generally this ratio will be 4:1 or higher. See the equation below that shows how the ratio is determined.
Let's say an employee injured his hand (requiring surgery) while working around the machinery in our scenario. If the indirect (uninsured) accident cost totals $160,000 and the direct (insured) cost is $40,000, the ratio of indirect to direct costs will be 4:1. This ratio just happens to be the most common or "average" ratio between indirect and direct accident costs in the USA.
This ratio is a little more dramatic than contrasting the indirect costs with direct costs. It helps emphasize the fact that direct costs are actually just the tip of the iceberg. See the equation below that shows how the ratio is determined.
In this case, if the indirect (uninsured) cost totals $160,000 and the direct (insured) cost is $40,000, the ratio of total costs to direct costs will be $200,000/$40,000 = 5:1. What will XYZ have to earn in sales to pay back this lost money? If XYZ has a 5% profit margin, they'll have to earn 20 times the total accident cost, or $4 million in sales!
To determine ROI, it's necessary to compare the amount of the requested investment in corrective actions against the expected direct and indirect accident costs if a future accident occurs. To estimate the ROI, use the equation below.
Let's say our investment to train all employees on lockout/tagout procedures, machine guarding and PPE while working around machinery will be $20,000. If our total accident cost is $200,000, our ROI will be 10 times the investment or 1000%! Now that's a return.
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