People Sustainability: Turning Data into Knowledge for a Safer Workplace

U.S. federal and state governments continually focus on reducing operating budgets and labor costs. However, by improving workplace safety, significant cost reductions are possible. For decades, the government has collected vast amounts of public data through agencies such as the Occupational Safety and Health Administration (OSHA), the Department of Motor Vehicles (DMV) and the Department of Labor (DOL), and disseminated this information to businesses for statistical purposes. Labor unions and corporate management teams support these efforts, since the health and well-being of the workforce is critical to productivity and the sustainability of an organization. These statistics are also making a major impact on recruiting and retention efforts, both of which represent major investments by government and the private sector. We believe it is time to begin leveraging the leading indicators as key benefits of this data - rather than lagging indicators - so as to focus on preventing accidents rather than investigating them. While the cost savings and sustainable benefits to the government are significant, a focus on safety is even more important because it helps to ensure that employees return home to their families each night.

By providing observations and predictions of behavior, government agencies can now harness the power of this data to use leading analytical indicators to foster safety. Efforts currently underway have focused sustainability work in many areas, and yet the sustainability of our valuable workforce is often overlooked. With the recent advances in analytics, the time is right to direct the predictive nature of data toward the workforce-safety issue. The recent headlines should remind all of us that advancing workplace safety remains a priority, and although others will argue that some accidents are not preventable, we tend to disagree. We believe all organizations should have a goal of zero accidents.

Our government's efforts toward safety include "ensuring safe and healthful working conditions for working men and women by setting and enforcing standards, and by providing training, outreach, education and assistance." This is the core mission of OSHA that resides within the Department of Labor. Such goals lay the foundation for the use of advanced analytics - particularly critical to complex agencies such as the Department of Homeland Security (DHS) - as predictive elements that can form a more robust and cohesive approach to workplace safety, with the added benefit of enhancing the effectiveness of OSHA's role. 

Each year, workplace injuries and illnesses cost companies billions of dollars. In 2005, the total employer cost for workers' compensation benefits and administrative costs was $88.8 billion(1). Eighty five percent of these costs relate to injury. Workers' compensation benefits represent only a fraction of the related direct costs (e.g., medical, drug, rehabilitation and insurance administration). The overwhelming burden of these costs is incurred by injured individuals and their families, or by other mechanisms such as sick leave, short- and long-term disability, social security disability and Medicare.

Direct costs, however, represent only a small portion of total workplace accident and injury expenditures. Indirect costs, such as employee lost wages, loss of productivity at home, employee retraining and workplace disruption, are two times greater than the direct costs. The combination of these direct and indirect occupational injury and illness costs has been estimated at nearly three percent of U.S. gross domestic product(2). Extrapolated to 2007, this suggests that the total cost of occupational injury alone exceeds $350 billion. On a per capita basis, the cost of occupational injury in the U.S. is $2,300 per worker, per year.

To reduce these costs, sustainable organizations continually invest in workplace safety, knowing that for every dollar invested more than three dollars in savings are generated(3). Improving workplace safety is also associated with an organization's ability to maintain, or enhance, enterprise sustainability efforts. Accordingly, enterprise sustainability is rapidly becoming a critical business strategy, driven by a convergence of factors such as increasing regulation, changing customer expectations, competitor and technology advances, value-chain partner requirements, brand equity protection and global risk management. Leading companies have already begun driving improved shareholder value by broadening the definition of "sustainable enterprise" to include investing in the health, safety and welfare of their most important asset: their people. We see growing indications that the government is making efforts toward driving a similar enterprise value, and are slowly beginning to note financial investments on its part toward that objective.

So what are the motivations to improve?

In many organizations, the cost of accidents is treated as a cost of doing business, but studies show that "safe" organizations gain in reputation, and therefore in their ability to recruit and retain key staff. This ultimately leads to further gains in productivity. Conversely, unlike in the private sector, injury costs in the government sector negatively affect government budgets and the financial well-being of all citizens. We will eventually see safer and more sustainable government agencies sharing in similar improved recruiting, retention and productivity efforts, but with cost (tax dollar) savings enjoyed by all taxpayers.

Understanding the causes of accidents and injuries enables management to focus resources to proactively implement safety enhancements or risk-reducing interventions. For example, particular worksite locations may be identified as experiencing a disproportionately high incidence of hand lacerations. Analytics can help identify and analyze these high-incidence events and isolate the work areas and people in them that show the greatest risk of being affected. This enables management to proactively mitigate and invest in safety enhancement and risk interventions; this may be as simple as providing personal protective equipment such as work gloves. Furthermore, instead of focusing time and resources on areas already experiencing good safety or loss records, management can concentrate on those factors directly responsible for elevated accident/injury rates and severities.

Advanced analytical data analysis should be the foundation of all safety programs. These methods may be applied to the simple investigation of accidents, and to sophisticated statistical modeling and data mining. The application of advanced analytical tools results in mathematical formulas that are used to predict outcomes of interest and to quantify the relative contributions of the many causal factors influencing adverse events. As it applies to analytics, these techniques can be used to predict injury rates and severity, as well as to identify and better understand causal factors of workplace related accidents and/or injury. For example, work areas and/or worker groups that may be prone to these adverse events can be identified. In addition, contributing factors, such as the role of a variety of work practices (e.g., shift work, magnitude of overtime work, frequency of equipment maintenance, etc.), can be assessed. Armed with this insight into historical accident and injury etiology, organizations can take proactive steps to mitigate the frequency and severity of future events, thereby creating a safer and healthier work environment.

Hence the intent of safety-related advanced analytics is twofold: to predict the outcome(s) of interest and to parcel-out the individual effects of the many contributing factors. Analytical development typically initiates with several hundred potential explanatory variables obtained from both internal and external data sources. Examples of internal variables include past injury history, details of safety preventive measures, safety or loss-control audits, and aggregated personnel information such as average job tenure of employees at each site. External variables can come from a variety of sources, including government agencies (e.g., OSHA, Census Bureau), and extensive vendor data repositories. These variables are distilled to a subset that both accurately estimates the outcome(s) of interest and is able to estimate the relative impact of the contributing factors. 

Development of advanced safety analytical solutions is not a "one size fits all" exercise - it is based on scientifically driven data analysis performed by occupational epidemiologists and statisticians in cooperation with target agencies. The on-the-ground knowledge of the specific workplace data sources and procedures is imperative to determining the optimal set of risk characteristics that best captures their accident and injury experience, while concurrently adding value to the government. Solutions development, therefore, is tailored to the specific needs of each agency organization.

Ultimately, this quantitative process results in output designed to give management the ability to efficiently assess thousands of locations and situations, identify those situations at risk for injuries, and then take action to reduce the risk. This, however, is not a one-time event, as workplace dynamics change over time. Many of these changes, such as those that affect supervisory staff, implementation of safety programs and updates to the safety-related data, may either influence the contributory factors impacting safety and/or provide additional information to better understand these causal factors. As a result, analytics solutions should be updated and refined periodically to reflect such changes.

There is a blending of both science and art that results in improved safety and loss outcomes, reduced costs due to workplace accidents, and increased compliance with local and federal safety regulations. In addition, by improving workplace safety through advanced analytics, federal, state and local government agencies can enhance their images with regard to fiscal and social responsibility among their peers and within the taxpayer communities/constituencies they serve. By building world-class eminence around safety, government agencies can enhance enterprise sustainability efforts and outcomes.

Federal government agencies

The total direct costs of workplace injuries are reported by a federal agency in the graph below. Indirect costs can be estimated at nearly 20 percent of the direct costs in lost productivity, according to industry averages(4).

These indirect costs can be attributed to the following:

-Overtime pay as a result of the need to fill job functions of displaced employees due to loss, injury or illness.
-Increased exposure to risk/injury due to additional hours worked.
-Temporary staffing as a result of the need to fill job functions of displaced employees due to loss, injury or illness.
-Increased exposure to new risk/injury due to inexperience of temporary workforce.
-Additional training/educational costs to fill displaced job functions.
-Additional travel and expense to fill displaced job functions.
-Additional IT costs to maintain and support various systems and typologies.
-Additional cost to locate and hire new staff due to increased attrition resulting from potential risks/injuries.

The graph below illustrates the immediate impact of a focus on Safety, as a result of President Bush's 2004 Federal Employee Safety, Health, and Return-to-employment (SHARE) Initiative to increase workplace safety. While this federal agency has maintained the trend of continuous improvements, others have continued their upward trend in direct claim costs, driving costs higher as a whole. As the agency begins to see diminishing marginal returns from its investment in its internal safety database and the use of external third-party experts, it is likely to see increasing marginal costs as a result of the other components' continued poor results.

Graph 1: Immediate cost impact of a focus on Safety

In this one federal agency, it is estimated that there are substantial improvement possibilities through the addition of sustainability-driven solutions and, as shown here, through the combination of better utilization of third-party experts and the use of advanced analytics. All the related value and benefits described earlier can be increased exponentially when taken in the context of the federal government as a whole. This would be a great benefit for the U.S. government and its staff, the citizenry and taxpayers.

*Footnotes