The Real Cost of the Status Quo

April 26, 2016
Despite changes to technology and the potential for increased efficiency, a majority of managers in the health and safety industry continue to rely on paper processes to manage their safety programs.

A recent survey conducted by Business and Legal Resources (BLR), revealed that more than 78 percent of EHS professionals have yet to embrace technology when managing their safety programs. Despite changes to technology and the potential for increased efficiency, a majority of managers in the health and safety industry continue to rely on paper processes to manage their safety programs.

This begs the question: why do these professionals maintain the status quo when such processes are out-dated and inefficient? Nearly 60 percent of the BLR respondents identified budget constraints or the inability to convince management of the value of technology. This suggests that the management teams of most at-risk companies have yet to realize the large cost saving potential of a digital system.

From 2014-2015, eCompliance, an online safety software group, worked with more than 105 companies to determine the total cost of paper processes to a company’s bottom line. By using the Board of Certified Safety Professionals’ Salary Survey, time spent on safety tasks using paper processes was calculated (including paperwork, following up on action items, running incident reports for management or clients, etc.) and monetized.

The results were staggering. For every 100 full time employees, the cost of paper processes ranged from $143,000 to $615,500 per year. On average, the cost of the status quo per 100 employees was $379,500.

Beyond this nearly half a million-dollar investment into the status quo, at-risk companies also need to consider the cost of workers’ compensation claims, human investment of injuries and the business investments of delays, contract breaches and damaged reputations in the marketplace, which were not included in this assessment.

One recent study by the Aberdeen Group showed that top safety performers achieve nine times lower recordable injury frequency rates and actually spend five times less on health and safety budgets than their peers. These best-in-class companies recognize that, in the long run, completing an action with a safety-first mentality will result in lower costs. They have abandoned the status quo and reallocated their budget to a paperless, digital solution, allowing them to adequately fund continuous improvement processes and safety initiatives.

Yet, most companies have not considered the digital evolution. Ask yourself: Does your company spend enough in each of the following four key areas: internal staff (leadership, admin, etc.), external vendors (training, outside auditors, etc.), personal protective equipment (boots, monitors, etc.) and support systems (software, supporting infrastructure, etc.) to adequately reduce risk and identify opportunities in your organization?

The fact is most companies do not cover all four key areas and are inefficiently allocating their resources. For example: Internally, most companies keep five administrative staff busy with paperwork. This task easily can be automated and free up $260,000 per year to be reallocated for support systems.

Consider these additional scenarios from groups that have chosen to abandon the status quo:

  • Safety teams who use software to reduce their administrative workload spend 30-50 percent of their time identifying trends and acting on improvements in their program. These teams are more likely to proactively reduce newly identified risks within the organization.
  • Companies that reallocate resources to a health and safety software system proactively flag training requirements based on changing job profiles. This enables managers to strategically spend their training dollars across the organization by matching demand with supply.
  • Well-resourced safety teams have a complete view of all outstanding corrective actions related to PPE and have fewer PPE related injuries.

By maintaining the status quo of paper processes, high risk industries are spending a large part of their safety budget on administrative tasks and are failing to realize opportunities for improvement. By analyzing and re-thinking how dollars are spent on internal and external staff, support systems and equipment or other hard assets, companies have an opportunity to achieve the best bang-for-your-buck safety budget.

By eliminating paper processes and adopting technology, high risk companies can improve the output of each key area and their overall safety performance, while also decreasing their safety budgets in the long term. By embracing technology when managing their safety programs, you can bring safety into the 21st century.

Adrian Bartha is the CEO of eCompliance, which he joined in 2012 after experiencing first-hand how a workplace incident affected a power and utilities company that he led as a member of the board of directors. Previously, he was an investment professional for a $5 billion dollar private equity firm investing in energy, construction and transportation infrastructure companies across North America.  

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