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Building a business case for improved WHS: report

Release Date

27 October 2014

Latest news from WorkplaceOHS: By James Harkness on 27 October 2014

Safe Work Australia has released a resource to assist managers in developing a strong business case for securing the necessary resources and commitment for work health and safety improvements in their organisations.

The Workplace Health and Safety, Business Productivity and Sustainability report was produced for Safe Work Australia by the University of Melbourne’s Centre for Workplace Leadership.

It provides a summary review of research findings concerning the relationship between work health and safety (WHS), business productivity and sustainable business performance.

Broadly, the evidence was that prudent investments in WHS yield a positive return on investment through better business performance, including increased productivity, reduced costs associated with poor WHS outcomes, greater innovation, continuous improvement and higher profitability. It also protects organisations against the risk and liabilities associated with WHS failure in the long-term, and there are other outcomes that add value to the business.

A future focus

Evidence that poor WHS performance has consequences for intangible business assets such as brand equity, consumer sentiment and reputation was considered useful for managers seeking to build a compelling business case for investing in WHS improvements, particularly when external stakeholders are showing “an increasing willingness to punish businesses that are not socially responsible”.

The researchers indicated the need for businesses to take a broad strategic and long-term view when considering a business case for WHS improvements.

The traditional approach of conducting a cost-benefit analysis of proposed WHS improvements was deemed ‘narrow’ by the researchers. It was suggested organisations adopt a ‘future-focused’ approach involving an assessment of the strategic value of such improvements i.e. whether or not improvements will maintain intangible assets critical to the future success of the business.

High costs of poor safety

The director of the Centre for Workplace Leadership and author of the report, Professor Peter Gahan, noted that investing in WHS improvements was crucial as the costs associated with poor safety records were high. For instance, the economic cost associated with work-related deaths in Australia is estimated to be between $11 million and $19 million.

Professor Gahan gave the example of productivity declining when poor safety results in employees being injured and having to take time off work.

“Finding and training suitable replacements is far more expensive than reducing risks in the workplace in the first place,” he said.

“There is a strong case to be made that Australian businesses need to invest more to protect employees from accident, and to protect themselves from the costs associated with workplace injury.”

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