Home > How Health and Safety Makes Good Business Sense - A Summary of Research Findings

How Health and Safety Makes Good Business Sense - A Summary of Research Findings

Establishing the links between safety, health and workplace productivity

In Brief

As recognition grows that safer and healthier workplaces translate into increased productivity, more job satisfaction and stronger bottom-line results, the imperative to prove the links has grown stronger. This has been driven by government agencies, trade unions and progressive employers. (Brandt-Rauf, 2001; Occupational and Environmental Health Foundation (OEHF), 2004; Boles et al, 2004; De Greef and Van den Broek, 20041

"High levels of worker productivity are critical to the success of all sorts of organisations, whether for-profit, government, or non-profit... As a result, health [and safety] risks and productivity are being discussed within corporate medical departments, executive suites, academic centres, and government agencies around the world." (Brandt-Rauf et al, 2001:1)

The drive to link employees' productivity with their overall health and safety is fuelled by four things:

  1. The need for more innovative ways to reduce the high rates of workplace injury and illness.
  2. The pressure to reduce the social and economic costs of injury and illness, particularly compensation costs.
  3. The need to improve labour productivity without employees needing to work longer hours and/or taking on more work.
  4. The need to offer good working conditions as an enticement to recruit and retain skilled workers in a tight labour market.

Most workplace health and safety programmes that try to prevent incidents, illnesses and death focus on:

"Improving the fit between humans and tools inherently means a more effective match.... good design permits more output with less human effort." (MacLeod, 1995:19)

How it works in theory

Academic research over the past decade has filled previous gaps and begun to provide rigorous, empirical evidence, particularly within the disciplines of ergonomics and occupational medicine/health promotion.

Within the occupational medicine/health promotion discipline, health and safety prevention and intervention programmes are deemed to play a critical role, as they can create a virtuous circle by:

Combined into a virtuous circle, all of the above have the potential to reduce health and safety risks. This can be represented in many ways, as shown by the following two diagrams.

Virtuous Cycle 1.

Virtuous Cycle 2.

The table (below) presents the virtuous circle in linear form, as a pathway to productivity. It shows the flow-on from health and safety interventions, to reduced short-term costs, to the long-term outcomes of increased productivity and reduced costs.

Pathways to Productivity.

How it works in practice

For many decades, research into whether OHS measures increase productivity focused almost entirely on inventing and promulgating prevention and intervention programmes, with little scrutiny of their effectiveness.

As more attention is given to that scrutiny, more substantial links are being made. Over the past decade in particular, academic research has filled gaps where rigorous, empirical evidence was missing.

To date, research leans towards the acceptance that health and safety measures have both direct and indirect benefits, including raising the level of productivity. As well, production costs can be directly or indirectly related to health and safety hazards, including the costs of incidents and the loss of productivity and quality.

"...many interventions in occupational safety are implemented with the sincere hope that they will work, but with a lack of solid evidence of their effectiveness [and] can sometimes make the situation worse." (Shannon et al, 1999:161)

Some of the direct and indirect benefits of OHS interventions identified in the literature are summarised below:

Direct Benefits Indirect Benefits
  • Reduced insurance and workers' compensation premiums
  • Reduced litigation costs
  • Reduced sick pay costs
  • Lower injury and illness costs
  • Fewer production delays
  • Reduced product and material damage
  • Improved production/productivity rates
  • Reduced absenteeism
  • Reduced staff turnover
  • Improved corporate image
  • Improved chances of winning contacts
  • Improved job satisfaction/morale

"...health and safety measures have a positive impact not only on safety and health performance but also on company productivity. However, identifying and quantifying these effects is not always straightforward... some of the important consequences of health and safety risks can be externalised (e.g. hazards with long-term effects), thus putting a strain on society and not immediately on the company." (De Greef and Van den Broek, 2004)

Research suggests businesses that demonstrate the link between quality of work and productivity have the following common elements:

As already stated, research in the past 10 years has particularly focused on the disciplines of ergonomics and occupational medicine/health promotion. Studies of productivity payoffs from ergonomics in manufacturing and office settings are summarised below.

Researcher Improvement Cost benefit or productivity increase Payback period
American Productivity Centre (1982) Furniture Not reported 6-24 months
Brown et al (1991) Material handling equipment 85% productivity increase; cost-benefit ratio of 1 to 10 Not reported
Francis and Dressel (1990) Furniture 20.6% 10.8 months
Gilbert et al (1990) Layouts, reaches that decrease loss of time $5,000 investment 2 weeks
Rawling and O'Halloran (1988) Manual material handling 10-20% productivity increase Not reported
Schneider and Mitchell (1989) Changed type of switch; eliminated poor neck posture $145 cost yielded $100,000 savings per year About 3 hours
Spilling et al (1986) Various workstation changes An investment (in Norwegian crowns) of 350,000 produced savings of 3,000,000 over a 12-year period Not reported
Springer (1986) Furniture 15% 5-6 months
Steele et al (1990) Various workstation changes 32% time reduction Not reported
Sullivan (1990) Furniture and organisation 64.2% 24 months
Thomas et al (1989) Various workstation changes Projected 30-50% increases in productivity <1 year
Thompson (1990) Exercise breaks 25% Not reported
Webb (1989) Various workstation changes $5000 cost; 1,000% productivity increase <3 months
Westinghouse Architectural Systems Division (1982) Furniture Not reported 6-24 months
Wick et al (1990) Various workstation changes 36% labour saving Not reported

Source: MacLeod, 1995

Evaluating the economic benefits

One of the primary drivers for introducing workplace safety and health interventions is the economic benefits that follow.

Managers are more likely to make a decision to implement health and safety measures in order to increase productivity based on the knowledge that there are economic benefits. This economic argument is used to:

One reason it is not easy to convince employers of the economic benefits is that they typically underestimate the cost of an OHS problem while overestimating the costs associated with its remedy. Also, establishing the cause-effect relation is often not straightforward. This difficulty is complicated by the fact that, typically, several initiatives will be implemented at the same time (not only health and safety actions, but also human resource actions), which makes it difficult to link a specific initiative to a specific outcome, such as increased productivity equals increased profits.

"Studies measuring the effects of health [and safety] on worker productivity in the past 5 years have dramatically increased... driven by the desire of employers to understand and control health care costs... Better management of worker health [and safety] and related productivity outcomes may create a competitive business advantage." (Sullivan, 2004:S56)

Even so, there are several ways to estimate the cost of an OHS intervention. The two most prominent ones are the insurance model and the cost benefit analysis model.

The insurance model uses workers' compensation insurance information to provide an estimate of the costs of OHS interventions. Although this approach has the advantage of simplicity in that it relies on only one source of information, it is also limited as it does not measure, for example, productivity losses and employee turnover. Because of this, it may seriously underestimate the total costs of injury absence, as well as the potential savings from investing to avoid these costs.

The cost benefit analysis model provides a more comprehensive picture because it measures all significant employment and production factors. That is, it assesses the total costs of employment and the losses due to workplace injury or illness. Because it is specific to the organisation, it is a better reflection of the actual economic benefits. An overview of the cost benefit model is shown in the flow diagram below. Its four elements are:

  1. The cost of the intervention's equipment and labour enters the cost equation as a positive component.
  2. The degree of effectiveness of the interventions determines the value of the avoidable costs of injuries and illnesses.
  3. The increase in productivity results principally from the technological design of the equipment.
  4. The displacement of workers that might result from an increase in productivity because of the intervention.

Both the second and third components enter the accounting equation as negative expressions and help to reduce the real cost of the intervention. The cost of retraining for displaced workers enters the equation as a positive cost from the societal point of view.

An overview of the cost benefit model

An overview of the cost benefit model.

A word of caution

As well as identifying the positive links between health, safety and productivity, the literature also identified a potential tension. In some cases, by increasing productivity through some health and safety measures (such as ergonomic improvements), an organisational culture might seek to drive workers longer and harder, thus causing increased exposure to other workplace hazards, such as increasing stress and fatigue.

One study showed that, while exposure to hazards associated with machinery and manual handling was being reduced, other risks associated with increases in labour productivity were on the rise:

"The fact that over half of these new cases of work-related ill health stem from... stress, depression and anxiety, and musculoskeletal disorders, also raises an important issue of policy, particularly when account is taken of the further fact that, against a background of increasing work intensity and declining worker discretion, the prevalence rate for stress and related conditions has recently grown substantially...

It also further suggests, given the way in which these conditions are intimately connected to workload levels and the nature of work tasks, that the achievement of reductions of this type will require employers to be placed under much greater pressure to design work tasks and establish workloads that are not detrimental to worker health." (James, 2006:11)

1 The findings of Smallman and John (2001) are also supported by earlier studies by Bond (1999) and Warrack and Sinha (1999), and the approach adopted by the European Foundation for Quality Management (1996), outlined in their Model for Business Excellence.