Does safety pay? As safety professionals we answer affirmatively and it is obvious (to many) that safety is an integral component of business success. However, why does the discussion not end here? The root of that answer lies within the American Society of Safety Engineers White Paper Addressing the Return on Investment for Safety, Health, and Environmental (SH&E) Management Programs, where the following is stated:
The key question asked of many SH&E Professionals by financial planners in business and industry is: Do safety and health management programs improve a company's bottom line? The answer is a resounding "YES", although benefits may be somewhat hard to quantify.
That response should be troubling to safety professionals, but yet it is a true and factual response. Imagine the same financial planner discussing a possible personal investment with you and s/he states that the investment will improve your personal bottom line, but that the benefits may be somewhat hard to quantify. Would you make the investment? Would you ask about other investment options that are more straightforward and simpler to quantify? Our basic assumption in this paper is that the overwhelming majority of safety professionals would not make the investment until the benefits become clearer and more quantified, utilizing recognized financial planning and economic tools; therefore, other personal investment options would be considered. We need to expect the same decision-making process of our business managers and the senior-level executives who make similar economic decisions, albeit on a larger scale.
In this paper, we will review existing safety literature related to making a business case, but more importantly we supplement it with literature from outside the field of occupational safety and summarize it for use by safety professionals. By understanding the views of economists, business researchers, and the finance community, safety professionals will gain a better understanding of how they can make a business case for OSH issues. More importantly, they will understand why the safety function should strive to make a business case. We will provide guidance and a framework such that safety professionals can go about their work of enhancing compliance and reducing risk, and at the same time, making a business case for safety initiatives. Lastly, we will briefly review techniques, including a cost analysis model which was developed to help safety professionals begin to make the business case for their investment recommendations.
The review of literature highlights two diverging views on the issue of whether occupational safety is a construct of traditional business performance indicators. Many occupational safety specialists and academics have answered yes (American Society of Safety Engineers, 2002; European Agency for Safety and Health at Work, 2004; Jervis and Collins, 18; Liberty Mutual, 2001; Smallman and John, 227−239); however, the claim that good OS performance is a good business strategy is largely anecdotal (ASSE, 2002), is opinion-based (Smallman and John, 2001), and centers on individual case studies that usually are not generalize-able (European Agency for Safety and Health at Work, 2004).