The Bottom Line Value of Ergonomics: Save Revenue and Large ROI
In Part 1, I stated that successful ergonomics programs manage risk and optimize human performance and reviewed key elements of a successful program. Now that we know ergonomics is not about safety, we need to convince the C-level and operations people that ergonomics truly is a worthwhile investment.
ROI Justification Models
There review the top 3 ways that can be used to convince management to implement ergonomics programs. Each model has its own strengths and weaknesses.
1) Regulatory Compliance (OSHA): This is “using the hammer” to get approval. OSHA doesn’t have an ergonomics standard so currently ergonomics falls under the general duty clause. California is the only state that has its own ergonomics rule (injury and illness prevention program). Regulatory compliance could be a factor in your facility if the incidence rate is much higher when compared to the industry average. However, for facilities that have low incidence rates it may be difficult, if not impossible to justify the ergonomics costs and convince management to approve ergonomics based only on regulatory compliance reasons.
2) Health and Safety Costs: This method analyzes the cost of work-related injuries. The direct costs of an injury can be substantial. Thousands of dollars can be spent on sprains/strains, cumulative trauma and lower back injuries. Those are the direct costs which a nominal compared to the indirect costs. One can think of an iceberg when considering direct costs (ice you see above the water) and indirect costs (ice that you don’t see that’s below the water). This method determines the amount of additional product the company would have to produce to make up for the injury expenses. This could be quite significant depending on the workers’ compensation insurance costs and profit margin. The challenge with this model is that it is entirely reactive.
3) Productivity and Efficiency Improvements: This method is the most powerful and convincing of the three. It examines the time saved through different improvements. For example, if the assembly department is rearranged in such a way that risk factors are lowered and seconds/minutes are shaved off by having the tools within easy reach and wasted steps removed then time is saved. Quantifying the time can then be used to state how much more product can be produced or how this time saved can be used for another task. Time is easily converted into a monetary value. This money (time) saved is calculated as ROI. Another improvement that is easily quantifiable is reduced errors/defects. Less defects means less rework. There is a dollar amount that can be assigned to that improvement. This method is by far the one that convinces C-level and operations people to approve ergonomics.
Business Case and Metrics
It is imperative that the ergonomics (and EHS professionals) determine meaningful metrics for their ergonomics improvements. We need to move from lagging to leading metrics. Some examples include measuring the percentage of new tools or equipment with low risk for injury at purchase; the percentage of targeted areas/workstations/tools assessed for risk; the percentage of ergonomics team members who attend the meetings; and the percentage of employees who have completed training.
We need to constantly measure, analyze and, if indicated, improve our ergonomics efforts. We can’t afford to be satisfied with our accomplishments once we’ve made progress. This is the stage where ergonomics programs tend to fall apart as the drive and enthusiasm wanes once a few victories have been attained. Don’t get complacent because if we do the support and funding that we struggled hard to get approved will go away. If this happens, don’t be shocked or dismayed because we did it to ourselves.
In conclusion, ergonomics is not about safety. It’s about being proactive, reducing risk and optimizing human performance. If we can accomplish this, the bottom line value of ergonomics will be immense to companies.