Return on Investment from Your Environmental or Health & Safety Management Systems
March 20, 2014 - Kestrel Management
One of the first questions Kestrel Management is asked when an organization is contemplating the design and implementation of either an environmental or a health & safety management system is, “What will my return on investment (ROI) be?”
Kestrel asked this question of a few North American Die Casters Association (NADCA) members who have been through the process of designing, implementing, and earning a registration certificate. As we expected, each organization will realize a different ROI based on a number of factors. The feedback discussed below should help others—in all industries—gain a better understanding of the costs, time requirements, and actual savings from the management system design/implementation process.
Design of a Management System
The design of an environmental or a health and safety management system may take anywhere from four (4) months to one (1) year to complete. The time required depends on:
- Whether the organization is already registered to ISO 9001
- Whether the organization will use a consultant or develop the system in-house
- The organization’s internal knowledge of the standard’s requirements
- Management commitment
- Use of trained internal auditors to find and define non-conformances
- Use of Corrective/Preventive Action program to rectify issues identified
- Strong Management Review meetings with defined responsibilities and expected outcomes
To design a holistic management system, the organization must also drive a cultural shift within the company to help employees identify other areas for continuous improvement and drive costs even lower. This shift in the mentality of the associates is very important to the overall success of the organization over time.
Cost to Design and Implement a Management System
The costs to design and implement an environmental or a health & safety management system include consultants, internal auditors’ time, management time, third-party registration audit, and ancillary costs.
Based on comments from NADCA members who have been through the design and implementation process, the cost ranges from $25,000 – $50,000. However, as one NADCA member commented, “The fact that we were sourced additional business once we received certification was more than enough payback for project.”
Implementation vs. Registration
Do organizations receive the same value by just implementing a management system without seeking registration?
Most NADCA organizations who have decided to implement an environmental or a health & safety management system have done so to meet customer requirements. Their belief is that just implementing a system (as opposed to certifying it) helps drive a cultural shift within the organization. Another company stated directly that they would have received same value whether seeking registration or not. So, the short answer is yes!
The Return on Investment
Every NADCA company talked extensively about savings realized as a result of the management system design/implementation process. Most started out very carefully and looked for simple projects—like recycling—to encourage all associates to be participants in the success.
Each company had many recycling success stories, including recycling waste in trash cans, reducing the amount of trash removed from facility, reducing oil use based on leaks, removing possible fire hazard from leaks, reducing cardboard waste, repairing air and oil leaks immediately, upgrading equipment to more energy-efficient designs, and “recycling everything”. One company saved approximately $168K over the life of its ISO 14001 environmental management system just by reducing the number of dumpsters used per year.
On the health and safety side, the savings are not as quantifiable, but not injuring an employee or outside contractor—or possibly having an onsite death—is immeasurable.
Of course all of this does not even begin to talk about state or federal agencies that could fine an organization if an environmental or health & safety compliance issue was involved. Both EPA and OSHA have been ordered to become self-sufficient by this administration. The only method they can employ to meet these requirements is to increase the level of fines levied against an employer when compliance issues are found.
When thinking about ROI, most organizations think of more than just dollars. They are happy that employees are engaged and looking for methods to help the organization identify continuous improvement ideas and act upon them. What is the return on that? It is incalculable!
Submitted by: Randy Block