ABSTRACT
The language of business is dollars, and in today’s business climate successful ergonomists know that cost-justification of ergonomic interventions/programs is essential. Performing a cost benefit analysis is an important skill for all health and safety professionals. The purpose of this project is to demonstrate how ergonomics affects the business drivers of quality and productivity and how a cost-benefit analysis can be used to justify ergonomic interventions in the workplace. The National Occupational Research Agenda priority addressed in this project includes Social and Economic Consequences. Specific research priorities addressed include economic consequences to employers, macroeconomic impact, and cost outcome analysis. This project includes a discussion on current quality operations, management issues, and the role that ergonomics plays in product quality maintenance. An explanation of how ergonomics can reduce product quality costs will be included. Additionally, we will illustrate how ergonomic principles can lead to improved productivity and reduced corporate labor costs. In order to cost-justify ergonomic interventions, the full representative injury costs must be determined. An explanation of both the direct and indirect costs of injuries will be included in this project. Cost benefit analysis methods including internal rate of return, return on investment, and payback period will be presented, as well as how these methods are used to cost-justify ergonomic interventions. Finally, strategies for justifying ergonomic interventions will be presented and illustrated with real world examples. Not only does ergonomics play a vital role in injury reduction and prevention, but economically effective ergonomic principles can lead to improved corporate financial performance and strategic competitive advantage.
Check the full document at http://www.mech.utah.edu/ergo/pages/NORA/2004/29-40_DouphrateDavid.pdf
CONCLUSION
Health and safety professionals all too often believe that organizational decision makers proactively support ergonomics simply because it is the right thing to do. It is hard to argue against doing anything that may better the human condition, and so this alone should be a compelling argument for actively supporting the use of ergonomic principles. In reality, managers need to be able to economically justify any investment in terms of its concrete benefits to the organization’s ability to be competitive in its market. Effective ergonomics programs not only benefit and protect the organizations that implement such programs, but also promote the interests of United States companies in a globally competitive environment (American Society of Safety Engineers, 2002). That something “is the right thing to do” is, by itself, an excellent but insufficient reason for managers to support ergonomics. In his 1996 Presidential Address at the 40th Annual Human Factors and Ergonomic Society Annual Meeting, Hal W. Hendrick stated, “we have done a poor job of documenting and advertising the cost-benefits of good ergonomics—of getting the word out that most often, good ergonomics is good economics” (Hendrick, 1996). Health and safety professionals need to take a proactive approach with respect to justifying ergonomic proposals from an economic perspective. The true cost of injuries, absenteeism, and poor productivity and quality must be fully understood. Additionally, the positive influence that ergonomics can have on reducing these negative factors must be recognized. Cost benefit analysis should be used to economically justify ergonomic proposals. This will enable the ergonomist to assist corporate managers by providing them with cost-saving information that is relevant to the survival and success of the corporation. Four reasons have traditionally been used to justify ergonomic principles:
1) injury reduction/safety improvement, 2) improvement in the overall quality of worklife, 3) improved product quality, and 4) improved production efficiency/ productivity. It can be argued that a fifth reason for ergonomic justification is the contribution to the profitability and strategic competitive advantage of the company. Ergonomics is good economics, and should be justified from both a humanitarian and an economic standpoint.
David I. Douphrate, Colorado State University
John Rosecrance, Colorado State University
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