Companies that embrace a safety culture change process demonstrate their caring and commitment to employees' health and safety by implementing improvements that enhance processes while controlling spending.
I am currently talking to a company that has a 6.0 OSHA recordable rate and they want to become a safer organization. Based on my experience as a culture change professional, I estimate the 6.0 recordable rate could be reduced to 1.5 by 2009. And by 2011, the recordable rate could be down to 0.7. That's an 88% reduction over 5 years.
This company's workman's compensation is costing $2.5 million per year and that doesn't include administrative, training, and various other overhead costs. That $2.5 million could be reduced, in my estimation, to $600,000 by 2009 and $300,000 by 2011. That represents an $8.4 million savings over the 5 year period simply by implementing a culture change process.
Culture Change is not new; it has been used successfully by major corporations such as Southwest Airlines and Alcoa. In both examples, the CEOs focused on their people.
Herb Kelleher, CEO of Southwest Airlines, recognized the importance of people and their role in making a company successful. Kelleher espoused a philosophy of "treat employees well." He said, "You have to recognize that people are still most important". Southwest has posted 27 years of sustained profits.
Paul O'Neill, now retired Chairman and CEO of Alcoa, recognized the importance of people and their role in making a company successful. When O'Neill took over, Alcoa's lost time rate was one third the national average. When he retired 14 years later, the lost time rate had been reduced to less than one-twentieth; an amazing reduction by any standard. O'Neill believed that for Alcoa to be a world-class company, it first had to become the safest. He accomplished his goal by focusing on lost time injuries despite the fact that CEOs usually focus on profit margins, sales growth, and stock share appreciation.
O'Neill's emphasis on safety changed the culture. Productivity rose as did the financial results. In 1986, Alcoa posted sales of $4.6 billion with 35,700 employees. When he retired in 2000, sales were $22.9 billion with 140,000 employees.
I recently had the pleasure of consulting with two plant managers who I will call my "plant managers plant managers". When asked why they were implementing a culture change process, their responses were the same: they wanted their people to realize that good safety is not a matter of luck or chance; it requires deliberate effort. One responded by saying "I want them to have the necessary skills to be safe". The other stated that he knew there are a number of changes that will occur in this industry and he wanted his employees to be able to maintain their focus and avoid getting injured.