Losses had risen to $0.63 per man-hour worked, the method used to measure this company’s performance. American Safety implemented its 15-point Total Safety Management program and, within two years, help drive down the costs to $0.14 per man-hour. We did so well so quickly that the company CEO remarked: “I sure am glad we decided to pay you a fixed fee instead of a percent of our savings!”
Then, a phenomenon called the Accident Cycle manifested itself. It works something like this: When costs or accident frequency reaches what is referred to as the “Upper Tolerance Limit,” management is driven to take action on the problem. As things improve to the “Lower Tolerance Limit,” management turns its attention to other matters. Unfortunately, the problem often resurfaces.
After driving down the costs to $0.14 per man-hour, losses rebounded to $0.40 per man-hour over a four year period as the managers of this company’s 11 locations assumed the problem had been solved and turned their attention to other matters. After we refocused their attention, we once again reversed the negative trend and drove losses down to $0.10 per man-hour.
The message here is that once you have a program in place, such as American Safety’s 15-point Total Safety Management program, you need to keep it in place. The safety and workers compensation problem is never permanently solved. Rather, it requires an aggressive and ongoing effort.