The study was a multi-phase effort that resulted in a number of findings about IH and its relationship to the business process. The study debatably is one of the most significant steps taken by the American Industrial Hygiene Association (AIHA) and the American Board of Industrial Hygiene (ABIH) in years.
“This is a significant step for the organization, at a significant cost,” said Tom Grumbles, who launched the study when he was president of AIHA. “In the past, AIHA did not spend money on research of this nature.”
Working with EG&G Technical Services, a division of URS, and its partner, ORC Worldwide, AIHA began an intensive process to create a strategy to help industrial hygienists in the field identify ways in which IH contributes to the success of a company. What resulted was a six-phase intensive study that analyzed the qualitative and quantitative impacts of IH.
ORC Worldwide developed and tested a strategy, the Strategy for Demonstrating the Value of Industrial Hygiene (IH Value Strategy) that enables industrial hygiene (IH) managers and professionals to conduct practical and credible business case analyses that demonstrate the value IH programs and activities bring to business at the facility, business unit and enterprise levels. In addition, EG&G conducted a survey to identify components of management systems that have demonstrated the value that IH and occupational health (IH/OH) program practices can bring to an organization’s business results.
When the research was completed, it became obvious that many business leaders do not fully understand the value that IH brings to the business, and, conversely, that many industrial hygienists do not understand the company’s business and how their work adds value. Researchers also found that many IHs lack the tools and practical knowledge to make the business case, and that a perception exists that the data do not exist to capture IH value.
The Old Way of Thinking
In the past, many EHS professionals judged their worth and the worth of their programs by the reduction in injury- and illness-related costs. According to the report, “Making a value proposition based primarily on how IH programs or activities have reduced incident-related and workers’ compensation costs ignores other potential benefits that individually or together may outweigh the value of such reductions. This approach can also fail to show an adequate return to justify the investment in prevention programs.”
Researchers went on to say, “IH practitioners who rely solely on cost reduction to make their value propositions are taking the risk of losing support and being seen as irrelevant to the business. Without compelling business value information, management is likely to look at IH projects and programs as efforts that, while in some cases necessary, can afford to wait for additional resources while projects with a clearer connection to the bottom line are given higher priority.”
They pointed out that projects that are not regulatory-driven may suffer a worse fate: be vetoed completely. In today’s business environment, it is becoming increasingly critical to the survival of IH and IH practitioners that they make a strong value proposition for their programs, so that they can compete successfully for limited resources with other business functions.
The IH Value Strategy is based on a tool created by ORC, Return on Health and Safety Investments (ROHSI), which enabled users to calculate individual business financial measures that were recognized by other parts of the business – such as Return on Investment (ROI) and Net Present Value (NPV) – for select health and safety interventions. Interest in the tool grew, and several years later, the ROHSEI approach (which now includes environmental parameters, the “E” in ROHSEI) became a recognized benchmark for business case development for health, safety and environmental (HSE) programs.
The IH Value Strategy is composed of two sub-approaches. The Quantitative Approach allows the user to calculate generally accepted financial business metrics by capturing detailed business data that demonstrate the IH impact on cost avoidance, cost savings, revenue generation and other strategic aspects of a business. The Qualitative Approach allows the user to estimate the value of the IH contribution by evaluating its impact on health, risk and the business process through an evidentiary cause and effect chain that relates intermediate outcomes to the value streams listed above and concurrently isolates confounding factors that could have produced the same effects. The Qualitative Approach will generate the business values for individual IH risk abatement projects and single-issue programs.
The AIHA Value Strategy has eight steps:
- Identify key business objectives and IH hazards – The industrial hygienist completes an inventory of work processes and operations, hazards associated with processes and business objectives.
- Evaluate and prioritize value opportunities – Once the company-specific business objectives inventory is built in step one, the industrial hygienist evaluates how the IH program or activity under consideration influences those business objectives. The industrial hygienist begins to identify and prioritize value opportunities for further evaluation.
- Assess risk reduction – The industrial hygienist identifies the actual or predicted risk reduction(s) associated with the implementation of an IH program, activity or intervention.
- Select approach of the value proposition – The industrial hygienist evaluates the data (cost, performance, quality) available related to an IH program or activity or intervention and determines if the value proposition is best made using a qualitative approach, a quantitative approach or combination of both.
- Identify changes – Following selection of the qualitative and quantitative approach, the industrial hygienist next identifies the real or anticipated changes resulting from implementation of the IH program.
- Assess impacts – The industrial hygienist identifies impacts associated with changes in health status, the IH risk management process and business processes.
- Determine value – The industrial hygienist determines the overall value of the IH program, activity or intervention.
- Present value proposition – The industrial hygienist prepares an executive summary presentation that describes the overall value of the IH program or activity.
During the course of the Value of the Industrial Hygiene Profession study, a wide range of IH interventions were found that made substantial business contributions far beyond the immediate area of application.
Nearly all of the interventions examined had a strong value proposition:
- Eliminating lead from a raw material stream saved tens of thousands of dollars and kept a facility from closing.
- Substituting a less toxic material for a chromate primer saved an aircraft company nearly half a million dollars in processing costs and significantly improved productive capacity.
- Installing engineering controls to control exposure to nano particles at a small company resulted in a ten-fold increase in production capacity.
AIHA has created a Web site, http://www.ihvalue.org, and plan to offer educational courses to members and non-members who wish to learn more about the IH Value Strategy and how to apply it to their workplace.