From a cost versus benefit perspective, it is understood that value must justify the cost for leadership buy-in. These decisions are made regardless of the underlying motivation, which has consistently caused a disconnect between the safety technology industry and adoption.
You’ve just invested a large sum of money on a new piece of equipment, and now you have to consider paying out more for optional safety equipment. That follow-on purchase can be a hard pill to swallow, but there are some very good reasons to take your medicine.
For decades, fleets have considered the staggering cost of collisions as unavoidable as death and taxes. These days, as new technologies alert drivers to potential collisions—and, increasingly, take complete control of the vehicle to avoid the collision altogether—fleet owners may well be wondering if there will come a day when collision costs become marginal.
A study published in Journal of Accounting and Economics came to a conclusion that won’t surprise many people in heavy-duty industries: When you try to meet or beat earning expectations or reach other lofty financial goals, employee safety can suffer. How can managers solve this three-dimensional chess game of being fiscally responsible while ensuring the highest standards of safety? With ever-increasing pressure on profitability, it can be a very tough nut to crack.
“If managers believe that the firm may miss expectations under the ordinary course of business,” the study reports, “they may increase employees’ workloads or pressure them to work faster. In response, employees can compromise safety by overexerting themselves or by circumventing safety procedures that slow the flow of work. Second, managers may cut explicit and implicit safety costs, such as the costs of maintaining equipment and training employees, in their attempts to report higher earnings.”
If we think of the economy like the tide, we know that for every flow there is an ebb. Although we can’t predict the size or timing of each ebb and flow, we are better prepared to weather financial ups and downs when we anticipate both and plan accordingly.
When the economy tightens, we might live without some personal luxuries. Maybe we give up dining out, have staycations instead of vacations, and rent movies instead of going to the theater. We might shop for lower-cost services that still provide the necessities to get our must-dos done right. In business, some companies might even go through hiring freezes or discontinue low-selling products or services. Pulling back on expenditures makes sense (and dollars and cents) when the economy ebbs. Except, that is, when it comes to safety.