Virtually every organization has a unique set of key performance indicators (KPIs) based on its strategic objectives and operational priorities. Companies that are highly dependent on supply chain performance, for example, might zero in on their cash-to-cash cycle, supply chain costs as a percentage of sales, or on-time deliveries to customers. Professional services firms are likely to focus on utilization and average billing rates, while retailers and distributors usually pay close attention to things like inventory turns and days of inventory on hand.
There are, however, some common KPIs that apply across virtually every industry. Human resources leaders are concerned with rates of absenteeism and employee turnover. Finance and accounting personnel pay attention to the hard dollar costs associated with liability insurance and worker’s compensation. Corporate risk officers, as well as the legal department, are concerned with questions of legal liability.
As performance metrics, none of the KPIs associated with these categories necessarily touches upon human costs, – which are undoubtedly the most important variable when it comes to health and safety. Even with the best insurance programs in place, there are significant social, emotional, and potentially financial implications for employees or other stakeholders who have been injured as a result of inadequate safety practices at your company.
A strong culture of safety, enabled and supported with the appropriate technology tools, has the power to minimize the incidence of workplace accidents, injuries, and near misses. Safety begins with having the right policies, procedures, and training programs in place; but if protocols are not observed, if training is not current, and if the equipment is not properly maintained, it can leave your organization exposed to significant risk.
A corporate culture that fully appreciates the importance of safety, therefore, is essential for companies that intend to achieve their safety-related KPIs. At the same time, that safety-oriented culture can have powerful side effects that benefit many other areas of the business. Let’s explore some of those side effects.
Human Resources KPIs
We’ll begin with the obvious benefits in the realm of human resources. Safety is of paramount importance to the employees throughout your organization. For workers in especially hazardous industries such as logging, oil, and gas, or construction; safety practices can literally mean the difference between life and death. For numerous others, workplace accidents can lead to chronic pain and suffering, medical expenses, and prolonged absence from work.
In addition to caring for the well-being of employees, the HR department is responsible for seeing to it that the company is fully staffed such that operations can carry on without disruption. The rate of absenteeism, therefore, is a critical KPI for virtually every company that has employees. The cost of absenteeism, likewise, is another key metric. In companies with a strong culture of safety, accidents and injuries are minimized. This has a direct positive impact on those important absenteeism metrics.
In today’s competitive hiring environment, most companies also place a high value on employee satisfaction. Those who work in a safety-conscious environment are more likely to understand and appreciate their employer’s commitment to their well-being. That, in turn, can be a strong factor in overall rates of employee satisfaction.
Other key metrics that are important to the human resources department include employee turnover, which also affects training costs and recruitment costs. When employees feel safe, – when they believe that their company is looking out for them, – they’re more likely to stick around for the long term.
As previously noted, there are significant risks associated with a lack of adequate safety protocols. If your organization is lacking a strong safety orientation, then equipment might not be maintained properly or according to recommended schedules. Training might not always happen when it should. Procedures might only be followed sporadically.
Aside from the risks that these problems pose in terms of human costs, – there are powerful financial implications as well. Poor safety practices expose the company to legal risk and lead to higher insurance premiums, both for liability insurance and worker’s compensation.
Employee productivity is a key factor in overall profitability. When employees suffer an injury, there can also be significant implications for productivity. Workers who are re-assigned to new tasks due to impaired physical capabilities must be retrained, and may not immediately be productive in their new roles.
Although most of the focus here has been on KPIs, – that is, specific measurable results that track the most important factors influencing strategic outcomes, – it’s also worth noting that a strong culture of safety rarely exists in isolation. In other words, when a company has successfully cultivated a safety-oriented culture, it is often accompanied by broader adoption of high standards, accountability, and fidelity to process throughout the company.
Organizations that adopt EHS systems, QMS systems, and similar structured approaches that leverage modern software technology, – tend to also be highly solution-oriented. They are inclined to avoid finger-pointing and blame-shifting when problems occur, – instead of aiming to identify root causes and put solutions in place that can prevent similar problems from occurring in the future.
Safety-oriented cultures are really about diligence. That spills over into quality. It fosters a culture of accountability in which people are held to high standards and are expected to follow through on their commitments. That impacts organizational performance in a myriad of different ways. No matter which key metrics drive your success, a culture of excellence in safety, quality, and customer service will have benefits that cross departmental lines.
If your organization is committed to fostering a culture of safety, Intellect can help. We would love to talk to you about our highly configurable Environment, Health, and Safety (EHS) solutions, as well as our Quality Management Systems. Our platform is designed to be powerful and easy to use and can be tailored to the unique needs of any organization, without custom programming. Virtually anyone can configure Intellect’s software; no special technical skills are required. To learn more about how Intellect can help your company achieve its KPIs, contact us today to arrange for a free demo or simply to discuss your needs.
Now that you've learned about the reasons why safety culture increases the organization's KPI, learn about "Tracking Quality Performance To Improve Workplace Culture".