How a culture of safety impacts financial performance

A well-developed culture of safety not only enhances safety performance but also drives financial success, according to an international research study.

It found companies that invested in robust safety policies, employee training, and comprehensive safety management systems saw substantial improvements in safety metrics, which translated into better financial results.

“Our findings provide strong support for the premise that companies with policies aimed at improving employee health and safety, employee training, or having safety management systems positively influence safety performance, which in turn has a positive impact on financial performance,” said the authors of the research report, Safety culture, safety performance and financial performance. A longitudinal study, which was published in Safety Science.

“We also find that the better the safety performance, the better the firm’s performance. This research provides evidence that both safety culture and safety performance, as measured by total injury rate, are positive predictors of a company’s financial performance.”

The research, led by Irene Bautista-Bernal, Cristina Quintana-García, and Macarena Marchante-Lara from the University of Málaga, also found that, to enhance safety performance in a firm and reduce the total injury rate of employees, the most relevant initiatives are having an employee health and safety team and health and safety management systems in place such as OHSAS 18001 or ISO 45001.

Whereas to reduce the total injury rate of contractors, the paper said the most influential initiative is having a policy to improve employee health and safety in a firm’s supply chain.

The authors of the study noted that cultures of safety must be developed at both individual and organisational levels, requiring a comprehensive approach that considers technological, organisational, and human aspects.

“When addressing safety culture, a comprehensive approach should be followed, where technological, organisational, and human aspects are taken into account as interrelated elements,” the research paper said.

The authors of the study utilised a panel data set of European companies from 2005 to 2019, encompassing various sectors, thus avoiding the selection bias seen in previous studies that focused on single industries.

The use of quantitative methodologies also allowed for a more precise analysis of the relationships between cultures of safety, safety performance, and financial outcomes.

The study suggests that organisations should prioritise a culture of safety as part of their strategic objectives, integrating safety into various aspects of organisational operations.

“In particular, our results suggest that an incentive-based approach may be followed to persuade firms not only to promote the adoption of OHS systems but also to create and maintain an employee health and safety team or to encourage firms to develop a policy with preventive initiatives to improve safety conditions in the supply chain,” the authors said.