What is a Safety Ratio?
Here are several definitions that my search on Google uncovered.
#1 – Society of Manufacturing Engineers:
Safety Ratio: A figure that establishes the relationship between the burst pressure and working pressure. A component with a safety ratio of 4-to-1 will likely fail if the operating pressure reaches a level 4 times the normal level.
#2 – General Accepted Accounting Principles (GAAP)
Margin of Safety Ratio (MOSR): The excess of budgeted or actual sales over the break even volume of sales. It stats the amount by which sales can drop before losses begin to be incurred. The higher the margin of safety is, the lower the risk of not breaking even will be.
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Margin of safety as a percentage of sales:
12,500 / 100,000
= 12.5%
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It means that at the current level of sales and with the company’s current prices and cost structure, a reduction in sales of $12,500, or 12.5%, would result in just breaking even. In a single product firm, the margin of safety can also be expressed in terms of the number of units sold by dividing the margin of safety in dollars by the selling price per unit. In this case, the margin of safety is 50 units ($12,500 ÷ $ 250 units = 50 units).
#3 – Wikipedia: Risk of Investment Loss When Selecting One Portfolio over
Another
Safety-first Ratio: It is the comparison of portfolio returns over time based on the (Expected ROI – Actual ROI) / the Standard Deviation over time.
There are many other “safety ratios” to be found, including one that applies to drugs and vaccines, one for the number of nurses needed for a number of patient, another for implantable medical devices, and still another that applies to the number of safety professionals needed based on the number of workers. WOW!
However, none of the definitions that I found had anything to do with work place safety.
What’s the Point?
First, that the terms “safety” and “safety ratio” have many definitions. Second, I heard about a company using a safety ratio to measure it’s safety performance, so I decided to Google it to find out more. What I found was nothing!!!
A “Real World” Situation
In talking with a safety professional working for an insurance company, she shared that one of her clients is trying something that is unique.
The client operates a pork processing plant. Management genuinely cares about workplace safety and demonstrates their leadership. The associates speak many languages and are from various world cultures. The company uses “coaches” who speak native languages to train new people and to communicate regularly about safety. There is a active safety committee. They have a good system for communicating the need for and importance of early reporting of injuries like strains or small lacerations. They even have a good return-to-work program. And to top it off, they just won the Governor’s Safety Award for top safety performance in the state.
However, they recognized that they needed to change something; their safety awards system. You see, it rewarded based on not having a visit to the doctor for an injury. Even though they stress the importance of early injury reporting, because of the multi-cultural environment and probable fear of individual attention the company recognizes that some physical problems -injuries - go unreported.
A ”Safety Ratio” We Can Use
The company safety director had recently attended a seminar that discussed the effective use of Near-Miss Reporting. Though they have good communication and safety record, the safety director felt they could do better. If employees would begin to report unsafe situation/conditions/and near-miss incidents and see improvements from this reporting, that trust could be built and some fear dissipated.
Here’s where the “Safety Ratio” comes into play. They are starting to keep track of leading indicators, including: Near-Miss reports filed and closed, training attendance, safety committee participation, inspections completed, etc. Each item receives a point and becomes the numerator in the equation. Then, to dissuade under reporting of injuries, 10 points are subtracted each late report. They then use the number of lost time injuries as the denominator to get the safety ratio – SR
Safety Activities – (10 x Late Injury Reports) ÷ Lost-Time Injuries = SR
The new safety awards program pays off when the safety ratio number grows, weekly/monthly/and annually. This is a real Win-Win for everyone.
The employees are going to love the Near-Miss Reporting program. Not only will they see their increased involvement pay off in better working conditions and work practices, but the numerator will grow and so will the Safety Ratio! They will be personally rewarded for their active participation in the safety program.
Obviously, the company wins as well. This is a good example of an organization that could have stayed as it was, but decided to continue to improve. They also recognized that they were rewarding for the wrong reasons and found a creative alternative that will drive even more improvements. Imagine how they will feel when the find out the real power of Near-Miss Reporting!
