What would you do if asked to cut an already lean safety budget?
November 20, 2008 by Fred HosierPosted in: cost of safety, In this week's e-newsletter, Latest News & Views
PDF Periodically, we ask three safety pros how they’d handle a difficult work situation. Today’s problem: A manager is asked to cut an already lean safety budget.
The Scenario:
Manager Mike Kelly was standing in front of the soda machine, getting ready to make a purchase when he heard, “Hey, can I borrow a dime?”
It was Bill Vilis, the company’s controller.
“The way you’ve slashed my safety budget, it’s kinda funny that you’re asking me for a dime,” Mike responded good naturedly as he handed Bill 10 cents.
Bill stood there with the dime in his hand. “Well, this is kinda awkward. Can we talk?”
Mike didn’t like the sound of Bill’s voice. They walked to Mike’s office in silence.
Good job - now cut more
“Let’s talk about next year’s budget,” Bill began.
“You’re going to give me back the money you cut last year, right?” Mike said.
“I really appreciate the cuts you made,” Bill said. “But I need you to cut 5% more from your budget.”
“Bill, I can’t cut another dime,” Mike said. “If you really appreciate what I was able to do last year, then I’m going to need at least a small increase because the cost of everything is going up.”
“Everybody has to make these cuts, Mike,” Bill said. “I can’t exempt your safety budget from that. Times are tough.”
“But I don’t think … ” Mike said before Bill cut him off.
“Have the budget numbers on my desk in two weeks,” said the controller as he walked out.
Mike wished he hadn’t given him that dime.
If you were Mike, what would you do next?
Penny Gledhill, Safety Director, Saegertown, PA
What Penny would do: First I’d try to show him the value of the safety department, why it was worth it to put a little more money into it. But if that didn’t work, I could try to come up with a few new ways to trim.
Reason: I don’t have much of a budget to work with here, so I’m used to figuring out how to meet safety requirements on a shoestring.
Jeff Grace, Safety Director, Massillon, OH
What Jeff would do: Research it and see the money impact either way. If you’re cutting money that’s saving the company in a safety-related area, cuts just wouldn’t make sense.
Reason: You’ve got to do your homework and see if you’re actually justified in asking for your money back. If you have high injury and lost time numbers, you’ll have fuel to ask for more money to combat that.
Dennis Giuliani, Director of Facilities, Oakton, VA
What Dennis would do: My inclination would be to go back to the previous year’s cuts and put them on the table in front of the controller. I might even bring in the people involved in those cuts. It’s important for the person making that final decision to see how we are putting ourselves at risk when safety’s cut.
Reason: If you lose a year, it takes a while to catch up to that. It could take you years to get back to where you’re already supposed to be, which sets back the whole company.
If you’ve faced a similar situation, what would you do? If you haven’t, do you know what you’d do if asked to make a substantial cut in your safety budget? You can tell us in the Comments Box below.
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Tags: costs, safety budget, value of safety
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November 24th, 2008 at 1:30 pm
In most cases, the people requesting the cut are numbers people and that is all they understand. You have to put it in their language. For example, if they are requesting cut backs in overtime used for safety training, show them the cost of an OSHA citing if training is not provided as required and compare to the OT or if you can not purchase new PPE, and an employee gets hurt using outdated, overused PPE, show them the cost of medical treatments or worse loss time costs as well as potential OSHA fines vs the purchase cost of PPE. Commit to reduced travel - as this is where a lot of savings can be found.
November 24th, 2008 at 2:50 pm
Cost justification is a dangerous game for safety pros and we should stop doing it. Budgets get cut and they are not picking on safety alone. Be creative to find a way to get the job done. The reason this is dangerous? What if, from strictly a cost justification point of view, the cost of maintaining a safety department/program exceeds losses due to injuries? I am asked similar questions every week from our engineers. How much are injuries costing us in job “X” because I need to cost justify a solution to a safety problem. If the injuries are costing $5,000 and the fix is $10,000, isn’t a natural conclusion to accept the injuries and not fix the problem? This is the moral and ethical dilemma we create when we try to cost justify safety. Our obligation as employer is to provide a safe work environment with the tools we have available. With enough money, an orangutan can run a safety program, but as safety pros we need to manage to what we have available. That’s what we get paid for. If you are not up to the challenge, leave the profession and go to the department that gets all the money.
November 24th, 2008 at 4:37 pm
The reality is safety is the first place most CFO’s look to cut. They do it because it doesn’t generally show up on the bottom right away. It’s like floating a check and hoping it doesn’t clear before they have the funds to cover it. However, deferring safety programs is like signing up for a sub-prime loan. The question is when and how are you going to pay the real cost of losses when the balloon payment is due? Show me an organization that thinks worker injuries are simply the cost of doing business and I’ll show you:
Poor Morale
Poor Productivity
Poor Retention (of qualified staff)
High Absenteeism
Low customer confidence (unhappy employees talk)
Increased Work Comp Rates (next budget cycle)
Regulatory citations and fines (inevitable)
November 25th, 2008 at 9:37 am
Many times you have to look for costs and cost savings that are not always visible when talking budget. One of the first things that I look at is safety supply vendors. It’s amazing the difference in retail costs between vendors. One example are prices for brand name nitrile gloves that I purchase. One vendor quotes me $4.99 a box and another vendor quotes $12.80 a box. That adds up over a years time.
Another cost not normally seen is the WC insurance premium. If your incident and DART rates are running low, then most likely your premiums are at a lower cost. Stress the fact that if you need to cut cost, more injuries may occur that would affect you WC insurance premium. Also note the possibility of lost or restricted duty time and lower production.
My company is audited for EHS on a regular bases by our customers. They review all aspects of the EHS program. Stress that cost reductions may affect those audits, which in turn can affect the customers confidence in the company.
There are many hidden numbers that need to be addressed when looking at anyones EHS budget.
December 1st, 2008 at 2:51 pm
Although it may be hard to justify costs, you can demonstrate how past safety iniatives have brought a return. For example, if a safety iniative is measured and it reduced injuries by 50%, what are the dollars kept as compared to the dollars spent on the iniative. If you can demonstrate that safety can be a cost reduction center instead of cost center, you may have more luck.
December 1st, 2008 at 5:36 pm
Whoa!!!!!!!!!!!!! Glenn D. -Stop and think about what you are saying.
“Our obligation as employer is to provide a safe work environment with the tools we have available. With enough money, an orangutan can run a safety program, but as safety pros we need to manage to what we have available. That’s what we get paid for. If you are not up to the challenge, leave the profession and go to the department that gets all the money.”
SEC. 5. Duties
(a) Each employer -
(1) shall furnish to each of his employees employment and a place of employment which are free from recognized hazards that are causing or are likely to cause death or serious physical harm to his employees;
(2) shall comply with occupational safety and health standards promulgated under this Act.
There are a lot of things we can do to provide for a safe environment for all employees and save money while getting it accomplished. When required to cut our EH&S budget, don’t step over dollars to pick up dimes. Your budget should already be justified at the current level and holding the line on cost depends on your next injury or OSHA fine.
Charita, John F. and Steve D. gave very thoughtful insight to the question and everyone should try these ideas before jumping off onto Glenn D. and having your bean counter hire a monkey to run your program.
December 8th, 2008 at 5:18 pm
Robert G. I have to respond. Look, it goes without saying that we have to provide a workplace free from recognized hazards. You missed my point by a mile. But, getting guards on machines and PPE is not usually in a Safety Department’s budget. If it is, you are doing it all wrong. That stuff is blocking and tackling and if organizations are not incorporating those costs into their production and engineering budgets, then they need to take a second look at their accounting practices.
Most of the whining here is with pet old school safety projects. Useless, non-required training and gifts for stupid incentive programs. There are many ways to get our jobs done without requiring a Brinks truck for the costs. There are countless training methods available if only people will think outside the box.
December 15th, 2008 at 1:14 pm
After 4 previous attempts at establishing a First Response team, my new boss finally gave approval with 2 conditions: 1) Budget limited to $200 2) No more than 2 hours training time per year.
Impossible? Well, yeah….but I went ahead anyway and succeeded by soliciting pre-trained employees (and found at least 2 on each shift). Eventually we’ll need to spend some money on recertifications though and I blew that 2 hours per year requirement off as fiction (and haven’t been beat up over it…I think the value of my team has proven itself).
September 21st, 2009 at 1:33 pm
My Safety Budget is minimal, in fact I am a safety dept. of one in a 40 million dollar company.
But the owners do understand even know most emplyers see the safety department as a negative from a financial cost.
So justifying my position is that if I didn’t enforce safety, the possible injuries and fines would greatly surpass my wages as well as the safety items that I purchase which are mainly, Safety Glasses, Hard hats, safety vests and rubber gloves and respirators. I don’t spend money on posters or ploof mats pushing safety. Instead I try to use stories from this and other safety publications in my bi-monthly safety meetings, to try and hit home with my co-workers about how important it is that they are all safe.
December 17th, 2009 at 3:22 pm
I can’t believe you folks even have a safety budget. I get zero. I rely on OSHA training websites, safety websites, univerisites, and other resources to find and distribute free training. We don’t have a safety department. I am the department. We have not had any OSHA reportable incidents since I’ve been here but a couple of finger cuts and such due to people not utilizing their PPE. We’ve had employee complaints about PPE affecting hand dexterity and we’ve compensated with metal mesh gloves that contour and provide similar protection.