Cost Justification for Implementing Ergonomics Intervention - Fundamentals and Assessment Tools for Occupational Ergonomics - page 50

In this article we will consider the “economics of ergonomics” and show that good working conditions
are compatible with profit. We will discuss:
. The economic reasoning behind cost-benefit analysis in enterprises
. A cost-benefit model that ergonomists and others may use to support their economic arguments
for good working conditions
. Case studies to illustrate that “good ergonomics is good economics”
4.1.2 Why Should Economics be Part of Ergonomics?
In these times where expenditure is considered in terms of its impact on enterprise profits, the so-called
“bottom-line,” it is not enough for ergonomists simply to imply that they told management about the
safety problem but management chose to ignore their advice. Ergonomists need to use the language
of accountants and finance managers to argue for the ergonomics interventions required. Those con-
cerned with health and safety have a responsibility and need to use all reasonable means to get their
ideas accepted and implemented.
There have been many literature references discussing the finances (benefits as well as costs) of work-
place interventions and, to support our argument, some are mentioned below.
Dr. Arne Aar ˚ s has done some remarkable work in controlling and reducing musculoskeletal
illnesses in a telephone wiring company and in his paper (Spilling et al., 1986), he has also discussed
the cost-benefit of this intervention. Comparing a 7-yr period prior to the ergonomics intervention
with a 7-yr post intervention period he showed that there was a saving of about nine times the outlay
for ergonomics improvements, measuring only injury and labor turnover reduction. The length of the
study and its results, both in injury prevention and cost effectiveness, has been a highlight in ergonomics.
It is commonplace nowadays that, before governments introduce safety legislation, they make a cost-
benefit prediction. This is often in response to industry saying that it cannot afford whatever is proposed
— almost a knee-jerk reaction to any thought of expenditure. In an early paper on the economics of the
introduction of regulation or code on safe manual handling (Oxenburgh and Guldberg, 1993) unsafe
lifting was determined in terms of the code and thus what the code would do in preventing injury.
A statistically determined cross section of workplaces was surveyed by a team of investigators who
measured the number of unsafe lifting practices (i.e., lifts addressed and potentially “corrected” by the
code). The cost to correct each unsafe lift was determined and the cost expanded to an estimate of
the entire industry and related to the estimated savings in back injuries. Although it was shown that
the industry-wide costs outweighed the financial benefits the difference was considerably less than
that estimated by industry. No estimate was made of the reduction in public expenditure due to fewer
injuries. An interesting side issue in this study was that a considerable portion of industry was already
reducing injury potential for financial reasons, independently of whether the code was introduced or not.
Professor Guy Ahonen surveyed 340 small- and medium-sized companies in Finland in order to
develop their occupational health and safety practices. He compared the individual companies with
the best in its industry group based on sickness absence; a “best practice” methodology. Ahonen was
then able to estimate the financial benefit to an enterprise of reducing the absence rate both in actual
savings and in productivity increase (Ahonen, 1998).
Connon et al. (2003) have taken a slightly different approach to Ahonen to measure the value of good
working conditions and the company finances. Through site visits, they were able to show a positive
relationship between the organizational health aspects and low workers' compensation claims (safe work-
places) in the furniture manufacturing industry.
On a broad front, there is literature regarding the financial results from good working conditions but
there has been very little development of generic models available for the ergonomist to use in any given
situation.
Dr. Paula Liukkonen of Stockholm University was instrumental in helping Swedish industry examine
the costs of poor working conditions. We believe that she was the first to codify injury and low