If you're truly taking a holistic view of a company's risk portfolio, you will quickly get beyond financial controls and insurance. In fact, for many industries, employee safety is among the first areas that you will address.
Many middle market companies have not substantially invested in employee training on safety or in the processes and procedures required for a safe workplace. Failure to address safety can lead to expensive and unexpected consequences and can easily kill an exit deal or, at the very least, discourage a pool of buyers from bidding. In fact, the sheer optics of obvious safety issues, can make the difference between creating the perception of a well-run, disciplined company and a mom-and-pop style, high-risk business.
The potential human costs to employees for not adequately addressing workplace safety are substantial and obvious. Workplace injuries can cause great harm to employees and their families including long-term health issues, economic hardship, and family challenges.
The hard costs to the business are also substantial. In addition to opportunity cost and lost capacity, litigation can be expensive and lengthy, government compliance will include fines and expose issues in the rest of the business, and if you're looking at an exit or financing the internal and potentially external exposure will create massive unknowns that will quickly disengage many buyers and investors.
With one of my clients, a manufacturer, recently undertook the first of a multi-stage process to improve employee safety. Today we held the first training session with Field Safety Corporation on hazard communications. This is the first installment in a multi-step process to get them up-to-speed and, so far, is dramatically transforming not only the safety of the plant but the culture.
Successful safety programs are easy to implement, relevant for the employees, and are rolled out in an organized, controlled fashion. They are also an appropriate scale for the enterprise.
Unsuccessful programs are boilerplate, hard to relate to, and only intended to mitigate the risk of fines. Massive, sprawling, complex programs are also impossible to sustain over time. When US Steel was a client of mine, we would have meetings where the first item on the agenda was the proper use of a stapler or how to sit down in a chair safely. This is not a joke - these actually happened. I do not recommend this level of detail in a safety program - it needs to fit your business.
Key areas to be aware of:
- Which are the key areas that your business needs to address first? Chemical safety? Machine guarding? Fall protection? Each business has unique needs - customize the program and roll-out to fit yours.
- How much time can you dedicate? Many mid-sized business are time-constrained and can barely meet capacity. If that means you need a slower rollout, that's fine - but plan all of the safety program components up-front and be disciplined at implementing over time.
- Do you have the right managers and do they have the right skill-sets/mindset to sustain a successful safety program?
When Ronan Consulting Group teams perform a risk assessment, we look at all aspects of risk. Certainly we need to guard against the risk of fraud or financial impropriety as well as cybersecurity, but we also look at any area that could create an unexpected event for an investor and lingering consequences for a company. Safety is often at the top of that list.