Workplace Safety: An Analysis - Case Study Example

Workplace Safety: An Analysis Submitted by: Submitted by: In Partial Fulfillment of the Requirements in of Subject] Date Submitted Introduction The case presented involves companies in the meat packing industry found to have unsafe working environments for its mostly immigrant workers. As a result, the Human Rights Watch is calling for strict measures such strong state regulations to halt underreporting of injuries, stronger worker compensation laws and enforcement of anti-retaliation laws, compliance with international standards on workers freedom of association and new laws ensuring workers safety regardless of their immigration status. The aim of this paper is to formulate a conclusion whether such strict safety measures are agreeable. To do this, a cost-benefit analysis would be conducted which will provide the basis for the decision. Safety as an Additional Cost Why do companies refuse to implement strict safety and health programs for the workforce? The primary reason why top management of organizations is not keen to strictly apply safety procedures is the financial investment required for such purpose. Items such as Personnel Protective Equipment like cover-all, masks, boots, gloves and eye protection all present additional costs to the company. This cost can appear to be insignificant for a large company but the burden can be bothersome for an organization struggling to survive in a competitive environment especially considering that replacement of the PPE is necessary over time. Aside from the PPE, medical and insurance coverage would also eat away from their profits. Costs become more significant when change in infrastructure or machinery is involved. Greater work space, automation of highly hazardous item process and replacement of some machines and equipment again presents significant investments. Full compliance to occupational safety standards would also require that people work only for a certain amount of time which is undesirable for companies trying to beat a deadline. Extreme conditions such as high and low temperatures, low oxygen levels and poor lighting also call for work stoppages that will affect production and efficiency levels. Making the Business Case for Safety In the previous section, we have seen how safety can incur cost for a company. Here, we are to discuss the benefits companies can derive from implementing safety policies. There is no question that safety is a moral responsibility. The Golden Rule states that you should ‘do unto others as you would have them do unto you’. Even ancient rulers like Hammurabi have recognized that people have safety obligations toward others. The Bible and the Quran are replete with examples of caring for other people as they are also children of God (Eckhardt, 2001). Moral principles are important to any organizations but it is usually brushed aside when financial matters are involved. For companies to embrace stringent safety procedures there must be convincing evidence that they will benefit even if it is in the long term. In the following discussion, we will be discussing the different factors that could persuade management to implement safety. Worker’s Compensation In a study conducted by the Liberty Mutual Workplace Safety Index in 2003, it was found that workplace injuries and illnesses is costing US business not less than $1 Billion peer week. The top 10 workplace injuries are shown below (Liberty Mutual Group, 2010): Event:      (Billions)  Overexertion    $13.4  Falls on the Same Level         $6.9  Bodily Reaction        $5.1  Falls to Lower Level        $4.6  Struck by Object      $4.3  Repetitive Motion      $3.0  Highway Incidents      $3.0  Struck Against Object      $2.2  Caught in or Compressed by        $2.0  Assaults & Violent Acts      $0.4  All other       $5.8 Table 1: Top 10 Workplace Injuries From the table above, one can see that workplace injuries equate to a substantial amount of money. In case of deaths, the organization is expected to compensate the bereaved family in usually large amounts commensurate to the loss of income opportunities. Work compensation claims for injuries, with government regulations, covers doctor fees, medicine costs, ambulance and other hospital charges. This is aside from the indemnity payments made to the injured. Oftentimes, companies would prefer that the death or injury is kept secret from public knowledge to avoid any legal actions against them. This would necessitate an even larger sum of money to be given to affected persons (National Safety Council, 2010). A closer look at the causes of workplace injuries would reveal that much of it can be prevented if only proper safety systems are installed. For example, falls can be prevented by providing harnesses. Overexertion can be prevented from conducting job suitability analysis or providing extra mechanical equipment. According to the Office of Safety and Health Administration (OSHA), workplaces that seriously incorporated safety and health management programs were able to reduce injury-related costs by as much as 40%. IBM was able to reduce Workers’ Compensation by as much as $500,000 when it implemented a safety and health program in 1994. Horizon Steel Erectors Inc. was able to obtain a 96% reduction in accidents by providing fall protection and supervisory accountability (Safety Partners, 2010). There are many other examples of success stories but the key point is that savings are tangible. To put it into perspective, OSHA (2010) stated that a safety and health program saves $4 to $6 for every $1 invested. Economic theory also suggests that there is a direct relationship between the degree of hazard to degree of compensation. This means that when the employee is fully aware of the safety issues in the workplace he is to work in, there is the tendency to ask for ‘wage premiums’ or more commonly known as hazard pay. Hence, it would make business sense to lessen the risk involved so that wage premiums can be minimized (Shapiro, 1999). This dimension for safety provision is less discussed in literature precisely because actual scenarios point out that wage premiums are dependent on many factors such as bargaining power, awareness of safety issues of the individual and underreporting of incidents. In many cases, employees in production industries such as in meat processing and packing have low levels of educational attainment and do not have any choice but to accept their working conditions. Employers also take advantage of immigrants especially those who have entered the country illegally. This is one of the reasons why this author agrees with the strong recommendations of the investigative body regarding stricter and more involved action by the government. Only by government intervention can people assert their rights to wage premiums from their employers. Note that companies are only required to pay wage premiums when their workplace is safe. If the hazards are lessened, then the employers could do away with wage premiums representing significant savings to the company. Only government regulation and monitoring can bring about significant changes in the system. Productivity and PR losses Replacement cost refers to the expenditure incurred by a company when replacing a former employee. As employees are deployed, they get to understand the workings of their position and become adept in the trade. Hence, employee resignations due to safety concerns present a significant loss in investment especially when the hazards could have been addressed in the first place. This is the reason why prevention of high turnover is also a motivating factor for companies to implement stringent safety policies. Death and injuries in the workplace are entirely undesirable and bad for business as it can several negative effects. First, deaths and injuries are bad for the company’s image and can affect future business contracts. In the oil and gas industries, for example, petroleum companies require that all their contractors have a proven track record in safety. Contractors who have suffered deaths or injuries can only expect to lose to safety-oriented entities. Second, employee morale would suddenly drop as they lose an acquaintance or a friend to a work-related accident. In my personal experience, no amount of inspiring talk would enable the workers to perform as per their usual levels. Productivity and efficiency would suffer. In 2000, the Bureau of Labor Statistics found that about 5.7 million workplace injuries were reported with almost half of the injured requiring days away from work. A reorganization of values and priorities would occur that can sometimes lead to resignation as employees become concerned with their life. Third, government regulations would often require a halt to operations until it is proven by inspection that the causes have been adequately addressed or when investigations have been successfully concluded. In some cases, closure of operation is implemented. Synthesis In the preceding discussion, it is apparent that safety translates to additional costs but it can also present huge savings. Central to the question of providing workplace safety is up to what degree should it provided. As a rule, there will always be risks in everything we do and we cannot hope to address them all. The higher the degree of safety required, the higher the preliminary costs will be even though it can be recouped later. Most companies would often find it hard to divert funding to safety programs due to fear of losing capital that can be used to stay competitive. The demands of the Human Rights Watch can be seen as extreme and intensive requiring policy adoptions and changes that would need a large amount of funding for companies to comply. Nonetheless, these demands can be seen to be appropriate when it is made applicable to all organizations, in this case, the meat packing company. Hence, all of them would be forced to comply which implies that all of them have to invest money. A company’s competitiveness, then, is not compromised as other competitors are required to do the same. Safety should be an issue of to what an extent rather whether it should be provided or not. The logic is simple. People work to earn money for their family. Companies profit from the efforts of their employees. It is only right and proper to see to the welfare of these profit generators. This is why safety makes business sense. References: Eckhardt, Robert (2001). The moral duty to privde workplace safety. Professional Safety. Des Plaines: Aug 2001. Vol. 46, Iss. 8; pg. 36, 3 pgs Liberty Mutual Grouo (2005). Workplace Injuries. Retrieved Apr 01, 2010 from http://www.libertymutualgroup.com/omapps/ContentServer?cid=1138358195557&pagename=LMGroup/Views/lmgView98&kw=false&c=cms_asset National Safety Council Online (2010). Estimating the Costs of Unintentional Injuries. Retrieved Apr 01, 2010 from http://www.nsc.org/news_resources/injury_and_death_statistics/Pages/EstimatingtheCostsofUnintentionalInjuries.aspx OSHA (2010). Reducing the Costs of Incidents. Retrieved Apr 01, 2010 from http://www.osha.gov/SLTC/etools/safetyhealth/mod1_reducecosts.html Safety Partners (2010). Company Overview. Retrieved Apr 01, 2010 from http://www.safetypartnersinc.com/company.php Shapiro, Sidney (1999). Occupational Safety and Health Regulation. John M. Rounds Professor of La. University of Kansas Read More