APPENDIX 1-1

WHAT DIFFERENCE DOES IT MAKE?

There are several good reasons for improving the way you manage your worker protection program. The most compelling, of course, is the intent to reduce human suffering. In addition, better management can help reduce lost time and costs; increase efficiency; improve productivity, morale, and quality of product; and prevent OSHA standards violations that can lead to OSHA citations. Should the need ever arise, evidence of a comprehensive, well managed safety and health program may strengthen your company's position during any administrative proceedings.

REDUCED INJURIES

Worksites participating in OSHA's Voluntary Protection Programs, over the years since the VPP began in 1982, have reported OSHA-verified lost workday cases at rates 60 to 80 percent lower than their industry averages. VPP requirements consist of management systems consistent with these Guidelines.

Between 1983 and 1987, a major chemical company brought all of its then existing plants into the VPP. During that period, recordable injuries for the company dropped 32 percent. Lost workday cases dropped 39 percent, and the company saw a 24 percent decrease in the severity of cases.

In the construction industry, a major utility company brought two large power plant construction sites into the VPP in 1983 and 1984. By 1986, one site had reduced its total recordables by 24 percent and its lost workday cases by a third. The other site reduced recordables by 56 percent and its lost workday cases by 62 percent.

A rail car manufacturer in Georgia began preparing for VPP participation in 1989. That year it experienced a lost workday case rate of 17.9. One year later the company had reduced that rate by two-thirds. By 1991, its lost workday case rate was down to 5.9.

A resident contractor at a petrochemical plant in Port Arthur, Texas, in 1989 made the commitment to begin developing a VPP-quality safety and health program. By 1992, the year it was approved for VPP participation, the contractor had reduced its total recordable injuries by 61 percent, from 18 injuries in 1989 to 6 in 1992. The company's lost workday cases dropped by 66 percent during that period.

We emphasize again: All of these rates have been verified by OSHA.

REDUCED COSTS

The Business Roundtable's widely read Report A-3, "Improving Construction Safety Performance" (New York: The Business Roundtable, January 1982), concludes that in the construction industry, an effectively administered safety and health program will produce savings of 3.2 times the program's cost. A subsequent companion publication takes an in-depth look at the alarming upward spiral of workers' compensation costs and finds:

Contractors, by implementing an effective safety program to reduce work site accidents, can influence their workers' compensation premium costs. Lowering the frequency and severity of construction accidents will lower experience modification rates and manual rates which, in turn, lower workers' compensation insurance premiums.
"The Workers' Compensation Crisis...Safety Excellence Will Make a Difference" (New York: The Business Roundtable, January 1991).

Frank E. Bird, Jr. and George L. Germaine, in Practical Loss Control Leadership, (Loganville, GA: International Loss Control Institute, Inc., 1992), use the analogy of an iceberg to describe accident costs. They contend that the often very significant medical or insurance compensation costs are, nonetheless, but the visible tip of the iceberg. For every $1 spent on these obvious injury and illness costs, from $5 to $50 more is likely to be spent on below-the-surface, uninsured costs to repair building, tool, or equipment damage; to replace damaged products or materials; to make up for losses from production delays and interruptions; to pay for legal expenses; to replace emergency supplies and equipment; to rent needed interim equipment; and to pay for time spent on the investigation. Even more hidden are the additional $1 to $3 that will be spent for uninsured miscellaneous costs. These include wages paid for time lost by the injured worker and co-workers; the cost of hiring and training replacements; overtime costs; extra supervisory time; clerical time; decreased output of the injured worker upon return to work; and loss of business and goodwill.

The authors do not consider the impact of reduced commitment to work when employees operate in an environment where injuries are common. Nor do they address the costs specifically associated with occupational illnesses. OSHA believes that the financial impact of work-related illnesses may be even greater than work-related injuries, because illnesses frequently involve longer absences.

One plant manager has testified that the adoption of a single work practice change at his 44-employee chemical plant during the first 3 years of VPP participation resulted in increased volume of product and a savings of $265,000 per year. (Proceedings of Public Information Gathering Meeting on Suggested Guidelines for General Safety and Health Programs, U.S. Department of Labor, OSHA, Docket No. C-02, p.77, October 6, 1988.)

The previously cited major chemical company cut its workers' compensation costs by 70 percent, or more than $1.6 million. This occurred between 1983 and 1986, during the years the company was qualifying its plants for the VPP. In the ensuing years, the company has continued to enjoy impressive savings. In addition, its sister oil company, at its Joliet, Illinois refinery, had average annual workers' compensation costs of almost $300,000 during the early 1980's. By 1991, workers' compensation payments were down to $69,000, and the following year they dropped even further to $33,000. Additional savings have come from reductions in third-party lawsuits from contractor employees.

For the year 1986 alone, at the two power plant construction sites cited above, direct cost savings from prevented accidents were $4.14 million at one site and $.5 million at the other.

From 1985 through 1988, while participating in the VPP, a Nebraska agricultural implement manufacturer saw its workers' compensation costs decrease by half.

The resident maintenance contractor had workers' compensation costs of $245,543 in 1989. By 1992, these costs were down to $93,166.

BETTER EMPLOYEE MORALE, PRODUCTIVITY, AND PRODUCT QUALITY

During the 3 years in the VPP cited above, the agricultural implement manufacturer noted a 13 percent increase in productivity and a 16 percent decrease in scrapped product that had to be reworked.

The oil company's Joliet refinery saw an already low absenteeism rate drop an additional 50 percent between 1988 and 1992.

Additionally, OSHA has received considerable anecdotal information on improvements in morale, productivity, and product quality. These improvements are cited often enough by VPP participants to indicate the strong possibility of a causal relationship between improved management of safety and health protection and these benefits.

OSHA ENFORCEMENT

Over the past several years, OSHA has added more and more safety and health management provisions to its promulgated standards. These provisions include self-inspections for specific conditions, employee training, and specific types of hazard analysis. We also have focused more on the management of workplace safety and health when enforcing the "general duty clause" (Sec. 5(a)(1), 29 U.S.C. 654), which requires that each employer "...furnish to each of his employees employment and a place of employment that are free from recognized hazards that are causing or likely to cause death or serious physical harm to his employees." As an employer, you have a responsibility to take feasible steps to render your workplace free of recognized hazards. As part of this responsibility, you have a duty to establish and to maintain management practices necessary for ensuring that safe and healthful work practices are followed.

LEGAL PROCEEDINGS

When an employer is cited for a violation that he believes, for example, was caused by an employee's failure to obey a safety rule, evidence of good management practices is particularly important in establishing a defense. Decisions from the Occupational Safety and Health Review Commission and the U.S. Courts of Appeal clearly hold that, to establish certain affirmative defenses, for example, unpreventable employee misconduct or infeasibility, an employer must demonstrate that it has adopted appropriate safety rules and that it enforces these rules through such means as regular training, adequate supervision, and disciplining violators. In short, an employer's credibility is closely tied to maintaining a comprehensive, adequate safety and health program.