Does Safety Pay? The Importance of Prevention to Social Security

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LEADERSHIP THE BUSINESS CASE FOR HEALTH SAFETY
XVIII World Congress on Safety and Health at
WorkMay 29 July 2, 2008Seoul, Korea
Maureen Shaw, President and CEO Industrial
Accident Prevention Association (IAPA) July 1,
2008
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Leadership The Business Case for Health
Safety

• We know that health, safety,
• and environmental programming
• is a corporate economic imperative.
• Increasingly, so does the business community.

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IAPA Vision

• A world where risks are controlled
• because everyone believes suffering and loss are
  morally, socially, and economically unacceptable.

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Why Do Businesses Invest?

• Global
• The ILO estimates annual global losses in
  gross domestic product (GDP) due to workplace
  illness, injury, and death at 1.25 trillion
  (US1,250,000 million), or 4 of annual global
  GDP

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Why Do Businesses Invest? (contd)

• Canada
• Absence due to employee illness and
  disability costs Canadian companies CDN16
  billion annually
• Lost productivity due to mental illness costs
  Canadian companies CDN11 billion annually

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Health, Safety, and Environment A Business
Imperative

• Signs that the business community is recognizing
  health, safety, and the environment (HSE) as a
  business imperative
• CEOs are taking on HSE as a measure of their
  own performance
• Businesses are publishing their HSE results
• Financial analysts are watching
• Investors are acting
• The media are reporting
• Regulatory penalties and civil awards are
  growing

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Health and Safety Continuum of Business Advantage
Satisfied to do the minimum required to comply
with law/regulation
See HSW excellence as a business advantage
Want to build and sustain their HSW program

• Adherence to laws/regulations
• Avoid penalties/fines

• Reduce premiums
• Decrease injury costs
• Lower injury rates

• Increase share price
• Preserve or increase brand value

Leadership The Business Case for Health
Safety XVIII World Congress on Safety and Health
at Work Seoul, Korea - July 1, 2008 Maureen Shaw,
President and CEO, IAPA
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South Africa

• Anglo American offers free antiretroviral
  treatment to HIV employees at an annual cost per
  employee that exceeds annual income of most black
  workers

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Canada

• DaimlerChrysler plant introduces a program to
  improve employees cardiovascular health
• Half lose an average of 16 lbs (7 kilos)
• 1/3 smokers stop
• Overall risk of heart diseases goes from
  medium to low

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What is the Connection?

• The bottom line.

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Bottom Line Results

• Anglo American
• Cost of treatments are more than offset by
• Lower absenteeism
• Reduced health care
• Greater retention of skilled employees
• Improved Productivity

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Bottom Line Results (contd)

• DaimlerChrysler
• If this program were expanded to all Canadian
  plants, the company would save CDN2M over a 10
  year period

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Financial Returns

• Over 60 of CFOs recently surveyed by Liberty
  Mutual said that each 1 invested in injury
  prevention generated returns of 2 or more
• The US OSHA asserts that companies implementing
  effective safety and health programs can reduce
  injury and illness rates by 20 or more, and
  generate a return of 4 to 6 for every 1

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Stories from the Business Community

• Alcan EHS First program
• IAPA Safety Groups
• Sears Roebuck

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Alcan

• In 2005, Alcans environment, health, and safety
  management system EHS FIRST delivered US43
  million in benefits, mostly from safety.

IAPA Leadership Forum April 2007
Leadership The Business Case for Health
Safety XVIII World Congress on Safety and Health
at Work Seoul, Korea - July 1, 2008 Maureen Shaw,
President and CEO, IAPA
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IAPA Safety Group

• IAPA brings participating companies together,
  facilitates exchanges of expertise and ideas, and
  offers one-on-one assistance as needed
• Membership has increased by 528 since its
  formation from 121 firms in 2004 to 760 firms
  in 2008
• In 2006, there were 548 companies involved. They
  achieved a 32.67 reduction in lost-time injury
  rates and more than CDN3M in a collective rebate

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IAPA Safety Group (contd)

• Since joining IAPAs Safety Group, our incident
  and accident rates have dropped tremendously and
  our return-to-work program has been a great
  success.
• Egan and Team Board

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The Service Profit Chain
Employee Satisfaction ( 5)
The Bottom Line ( 0.5)
Customer Loyalty ( 1.3)
Source Harvard Business Review, Jan/Feb, 1998
Manager Accountability
Leadership The Business Case for Health
Safety XVIII World Congress on Safety and Health
at Work Seoul, Korea - July 1, 2008 Maureen Shaw,
President and CEO, IAPA
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Additional Gains

• Greater productivity and reliability
• New competencies
• Enhanced organization capacity
• Better employee relations
• More public trust

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Common Success Factors

• Creating the Right Culture
• Setting your own standards and expectations
• Establishing an HSE management system
• Integrate HSE into operations
• Train employees
• Integrate HSE into supply chain management
• Look beyond financial returns

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Call to Action

• A 2007 survey of top executives around the world
  found that 9 out of 10 respondents are
  incorporating environmental, social and
  governance issues into their firms core strategy
  more than they were five years ago.

One voice is a single person. Many voices are a
movement.
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Thank You

• For a copy of this presentation, speaking notes
  and/or the paper on The Business Case for Health
  and Safety Go to
• www.iapa.ca

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