| A poor lost-time injury record nearly closed us down |
Why you should be concerned with safety costs
Contributed by Scoggily Vitchum, Detroit, Michigan
I learned why front-line managers have to be concerned about safety in the school of hard knocks.
I was promoted to cutting supervisor in a vinyl fabric plant. Our section made vinyl bags. Costs were high, margins low. What
is more, we were regularly undercut by off-shore suppliers who could produce finished goods for hardly more than we paid for
our raw materials.
It was a marginal operation, and a small part of a larger operation that served the automobile industry. I was placed in my new position with the express objective of reducing costs. My boss had cheerfully informed me, "You have six months. At the end of that period we are taking a look at the operation. If costs are not reduced, you, and the thirty-odd people in your department are going to be out of a job."
I asked our accountant how I could reduce costs
She showed me the figures, and explained how to interpret them.
We were already paying low wages, and our experienced workers seemed to be working as efficiently as could be expected. There was little I could do to reduce cost of raw material. Energy use was nominal, productivity good.
One figure, however, jumped out at me.
Our department was being saddled with a huge percentage of the company's worker compensation costs. Worker compensation costs for the whole company came to about 6.5% of operational expenditure, but for my department, worker compensation costs were a whopping 17% of our operating budget!
"That's not fair," I gasped.
"You'll have to talk to our risk manager," the accountant informed me.
I bounded into the risk manager's office.
"How come . . ." I began.
"Oh yes, the bag section," he nodded wearily.
Our risk manager politely heard me out.
"You actually cost us more than the figure you see," he explained. "But I have been able to deflect some of your costs into general operating expenses as some of your work is done for the automobile seat section."
He showed me the records: several carpal tunnel injuries, lacerations, an eye injury. "Normal in a cutting and stitching operation I am told," he concluded.
Ouch!
I learned these lessons that day:
- Always know how much your workers' compensation costs are.
- Learn how these costs compare with industry averages. Make sure you are not being unjustly penalized.
- Check your safety record. If it is not among the very best in your industry, you need to find out why, and what you can do to improve it.
|
|  
|
