Ergonomic programs targeting musculoskeletal disorders (MSDs) as the most common workplace injuries require time, as well as human and financial resources to succeed. The improvement initiatives are more likely to receive support if they involve cost justification. Ip et al. (2016) claim that the return on investment (ROI) is a vital part of an ergonomic program, as it is commonly used to define the payback on an investment and its value. The authors of the article discuss cost justification models, share the elements of determining the return on investment, and aim to offer guidance on the investment data needed for the return calculation.
The article begins with the discussion of cost just as a process of weighing the costs and benefits of an improvement initiative. Ip et al. (2016) argue that cost justification is a significant business process as it facilitates communication between safety, engineering, and management, requires a firm to take reactive and proactive measures and prioritizes countermeasures. The researchers indicate three standard cost justification models: cost-effectiveness improving the number of injuries, cost-benefit contributing to the cost savings, and cost-utility enhancing employee satisfaction. The introduction of cost justification in the article allows the reader to understand the role of ROI in ergonomic programs and the reduction of hazard exposures.
The next key point in the article is ROI, which is often used by managers for cost justification of equipment purchases or investments in services. The authors suggest that calculating the ROI of ergonomic improvements involves specific variables in addition to the traditional division equation of benefit/cost. Ergonomic programs involve set costs of training delivery and engineering controls, while resource costs are the hourly costs of people supporting or managing the program, such as ergonomics managers, team members, sponsors, or engineers. Performance costs include injury treatment, compensation, and decreased production costs, as well as the costs of poor quality or worker turnover. The benefit is another part of the ROI equation that should be converted into a monetary value to reveal the cost. Effective benefit measures contribute to decreased MSD injuries and improved productivity (cycle time), quality of work/product, and employee retention. Therefore, the analysis of the ROI’s benefit/cost constituents demonstrates that ROI in ergonomics programs has its peculiarities that should be accounted for in the process of cost justification.
The concept of ROI might be applied to advocate for the implementation of engineering controls. For instance, Humantech conducted survey-based research to evaluate the ROI of the ergonomic programs of five manufacturing firms hypothesizing that the ROI might be 2 to 3 times the investment. Engineering controls were considered the most efficient measures for reducing MSDs through the improved “design, geometry and adjustability of workstations and tools to fit the workplace to the people” (Ip et al., 2016, p. 51). The control improvements offered the benefits of injury cost reduction of 4.9-9%, increase in productivity ($42,538-$305,833) and quality ($12,500-$25,000), and the decrease in employee turnover ($3,000-$30,000) (Ip at al., 2016). Thus, the analysis of ROI in improvement initiatives reflects the need for the implementation of appropriate engineering controls.
All in all, the authors of the article concluded that assessing the ROI of ergonomic improvements requires the consideration of the key actions before and after the implementation of the program. Additionally, the benchmarking project allowed the researchers to confirm the hypothesis that the return might be 2 to 3 times the investment that was consistent with the data from other safety management programs. I believe that investing in engineering controls is reasonable as it responds to the risk factors for MSD, improves productivity, quality, and employee retention. Moreover, the results of the ROI calculations reflect the efficiency of ergonomics programs, with an average percentage of 378%. Overall, cost justification measures involving the ROI allow the managers to demonstrate the positive impact of engineering controls improvements on the value of the ergonomics program.
Reference
Ip, W., Gober, J., & Rostykus, W. (2016). Ergonomics return on investment: Show me the money. Professional Safety, 61(4), 48–52.