How to Budget for Health and Safety Improvements Without Sacrificing Operations

Why safety spending is an operational decision, not just a compliance one

Most pushback against health and safety expenditures is due to how it’s framed. If safety is seen as a cost center, a line item that only serves to help you not get penalized, then it will struggle for air versus any project that is directly making money. The more effective frame: Safety spend is largely an insurance policy against operational outages, and the numbers generally work in favor of that spend before you even start adding in the human element.

Start with what inaction actually costs

Before you even begin to think about building a safety budget, you should run a cost-of-inaction analysis. Take your highest-priority risk – unguarded machinery, for example, or workers operating in remote locations without check-in protocols – and model what a single incident would cost. First, you have direct costs. If someone loses a hand in your unguarded machine, what’s the disability payout? How many productive years did you just lose from that worker? What’s the fine for having the unguarded machinery? But the direct costs are the smallest number on your spreadsheet: the indirect costs are where things start to get uncomfortable. How many production days will you lose? (How many widgets could that worker have made in a career?) Who’s going to cover that job while you find a replacement? How much management time will be lost to investigations? How many additional incidents will happen because someone is filling in on that job and hasn’t been fully trained? How bad are the lawyers going to screw you? And how unattractive will your worksite be to prospective employees once your incident record becomes public? Add those up, and proposed safety improvements tend to look cheap by comparison. This isn’t a rhetorical trick so you can get sign-off on a bigger budget. It’s an accurate assessment of how operations managers should evaluate risk. If you don’t put a number on the downside, you can’t rationally evaluate how much you should spend to prevent it.

Audit before you allocate

Before you approve any new spending, look at what you’re already spending that’s intended to improve safety – and what sort of safety results it’s really driving. The fact is, most companies have ongoing operational costs related to monitoring systems, communication protocols, compliance line items, even equipment that nobody uses because the system it’s meant to work with has been mothballed.

Lone worker safety is a common area where this tends to float to the surface. Lots of businesses have outgrown their lone worker monitoring solution but are still paying the same fees. The Lone Worker Call Cost Calculator can help you quickly detail exactly what your monitoring arrangements are costing you per worker. Then it’s easy to see whether you’re overspending on a low-risk population or underspending on the people who actually are exposed.

Use a risk matrix to sequence your investments

All safety gaps are not created equal, and when you treat them as equal your budget doesn’t quite achieve the best results. A risk matrix places each identified hazard on a grid with two variables: likelihood of the hazard occurring and severity of the harm if the hazard occurs. The boxes you want to find money for first are high likelihood and high severity. Those are the gaps that will cripple you.

It also meets the ALARP principle – to reduce risk “as low as is reasonably practicable,” which is pretty much how most reasonable regulatory and oversight bodies tend to view the world. They don’t expect all the risk to be gone. They expect the risk to be reduced in a manner directly proportionate to how egregious the risk is to life and property, public welfare, and employee health and safety. The risk matrix makes that proportionality obvious and defensible.

Lower severity or low probability risks, you can push off until the next budget submittal with a clear conscience, or go the procedural route to chase them. This is the way your safety funding doesn’t get completely mortgaged to the operations department’s new plant.

Build safety into operations rather than bolting it on

A reliable approach to reduce the overall cost of safety investments is to not consider them as individual expenses. Ordering safety technology as an add-on to install on existing facilities is the most expensive option as you effectively pay twice: once for the base system and once again for the additional safety component.

A better approach is to include safety elements in your procurement decisions from the start. Condition monitoring built into your machinery from the outset adds cost at the beginning of a project but is far more cost-effective than retrofitting standalone sensors or adding time consuming manual inspection regimes later on. In most cases, the safety performance is also inherently better, as the protective measure is integrated rather than relying on staff memory as an additional item on the checklist.

Predictive maintenance can be thought of in the same way. It’s an operational strategy to replace or repair equipment before its due to fail, but it is also the single most effective safety action you can take. When safety and operations have this in common, arguing over a budget for them becomes less of a win-lose trade-off.

Pilot before you scale

Implementing new safety technology poses financial and operational risks. Instead of a wide implementation, trying out a solution on a single site, shift, or team before full deployment allows you to verify the safety advantage and operational suitability before making a final decision.

This is important because safety enhancements are effective only if they are adopted. For instance, a monitoring system that is overly cumbersome for field personnel will not be consistently used, regardless of the benefits it promises. Pilot tests reveal adoption challenges early on, when they are less costly to address.

It is not necessary to overestimate the return on investment for safety spending. Lowering the number of incidents results in cheaper insurance, less absenteeism, and reduced management time spent on reacting to crises. The idea is not to increase spending on safety but rather to spend on the right risks, in the right order, and with sufficient evidence that the investment is worth it.