S 22 PROFESSIONAL SAFETY APRIL 2004 www.asse.org Business of Safety Business of Safety The Cost of Safety Cost analysis model helps build business case for safety By Michael Behm, Anthony Veltri and Ilene K. Kleinsorge SH&E PROFESSIONALS HAVE OFTEN become vic- tims of their own success in achieving regulatory compliance; many business executives view beyond- compliance spending as a fruitless exercise (Soyka and Feldman 61). Compounding this problem is the fact that SH&E professionals seldom use business models or speak in business terms. Safety jargon is often considered irrelevant and inconsistent with standard business terminolo- gy and objectives (Hill 25). If the SH&E department does not understand the financial loss to an organization, sen- ior management will find it difficult to understand the financial benefit the safety department provides (LaBelle 38). The end result is that SH&E issues are not fully integrated into the stan- dard business framework; as a result, management views the SH&E function in terms of a compliance-oriented, reactive strategy. The fact that SH&E pro- fessionals need to build a business case for their efforts is well-documented (Hill 19). Knowledge in business and accounting helps SH&E professionals speak to man- agement and maintain credi- bility (Blair 32). To work more effectively with other financial and operations management personnel, it has been suggested that SH&E professionals must become better versed in the common language of busi- ness (Adams 23). Cost analysis models are needed to help SH&E professionals measure, analyze and com- municate safety strategies in business terms. This arti- cle details one such model from the quality management literature. Relationship Between Safety & Quality Many authors, including Manzella, Blair, Weinstein and Manuele, have made clear the link between qual- ity management and safety management. Upon reviewing quality management literature, Manuele concluded that the word “quality” is interchangeable with the word “safety,” and his premise remains sound (12). To show how safety mirrors the quality function, Manuele inserted “safety” for “quality” in the following statement: When quality (safety) is seamlessly integrated into the way an organization operates on a daily basis, quality (safety) becomes not a separate activity for committees and teams but the way every employee performs his or her job (203). The similarities between safety and quality in the construction industry have been summarized as well. Coble, et al introduced the cost of quality (COQ) model as a tool that could be applied for evaluating safety costs (160). The research presented in this article builds on these concepts and describes how the COQ model can be applied to safety. A case study is provided to demonstrate how costs associated with managing an ergonomics program at two organizations were col- lected, analyzed and interpreted. SH&E professionals can use this model to track, analyze and report SH&E function-related costs. Thus, the model can help them make the business case by driving decision making and operating action within the SH&E function. COQ Framework & Its Application to Safety The COQ framework consists of four main cost activity groups: prevention, detection, internal fail- Michael Behm, CSP, is a Ph.D. candidate and graduate teaching assistant in Oregon State University’s Environmental Health and Safety Program. He has more than 10 years’ experience in occupational safety and industrial hygiene. Behm received a B.S. from Millersville University and an M.S. from Temple University. Current research interests include safety through design and safety management. He is a professional member of ASSE’s Columbia-Willamette Chapter. Anthony Veltri, Ph.D., is an associate professor of environment, safety and health sciences at Oregon State University. He specializes in assessing SH&E strategy and its economic impact on a firm’s competitive performance. Current research is aimed at making the business case for safety, profiling the cost burdens and profitability potential of SH&E activities. A professional member of ASSE’s Columbia-Willamette Chapter, Veltri is the faculty advisor for ASSE’s Oregon State University Student Section. Ilene K. Kleinsorge, Ph.D., is the Sara Hart Kimball Dean of the College of Business at Oregon State University, where she directs a program with more than 2,100 students, including 92 M.B.A. students. Kleinsorge earned her B.S. from Emporia State University and her Ph.D. from the University of Kansas. An OSU faculty member since 1987, Kleinsorge’s teaching and research focuses on cost and managerial accounting systems, with emphasis on multinational companies and healthcare.