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A monthly column on strategic EH&S management, sustainability and Responsible Care Management Systems by experts who have spent time in both the trenches and the boardrooms.
- A Primary Way for EHS Department to Add Business Value
- Becoming an Independent Practitioner - Part II
- Postscripts: The Myth of the Hydrogen Economy?
What is the single, most direct and quantifiable way for an EH&S department to add business value?
Steve: In my opinion (and it's only that), personnel safety. In the U.S., the use of a standardized measure such as Total Reportable Injury Rate (TRIR) presents several unique opportunities - it is:
- Understood - manufacturing, business, accounting and human resource staffs are familiar with the measure; there's nothing new for them to learn;
- Ubiquitous - it is applicable and comparable within and across many industries;
- Measured and Reported - data and benchmarks already exist, are reported and are readily available;
- Relatable - there is a direct relationship between performance measure improvement and economic value.
Talking about the business value achieved per incremental 0.1 point reduction in a company's TRIR, however, is the more difficult part. This is because, as one EH&S executive recently told me, it suggests 'economic value' judgments will be made regarding employees' safety.
For those not familiar with TRIR, it is a measure of the rate of federally-reportable workplace injuries, normalized per 100 workers per year. While a TRIR of 2.0 indicates 2 injuries per 100 workers per year, it provides no indication of the severity of those injuries. In real, economic terms, a company of 5000 workers with a TRIR of 2.0 and a lost-time injury average of 10 days (plus other assumptions) could equate to a business loss of over $200,000. A reduction in the TRIR to 1.0 would provide $100,000 in direct business value; reductions in workman's compensation insurance, increased productivity and decreased costs for employee health/life insurance would provide additional value.
Of course, the business value potential would be even higher in a) companies with more employees and b) companies/industries with higher typical average TRIR rates. For example, the chemical industry's average is around 2.0; the textile, construction and mining industries have much higher average rates.
It will be important that any TRIR reduction efforts establish the historical/existing TRIR, a clear communication of the intended reduction target and business value equivalent, and a delineation of the specific actions that produced the value created.
Steve: Continuing with my list from last month, here are five more 'lessons learned':
- Keep adding reasons for clients to hire you. Develop new products and services; obtain new qualifications and certifications. Also, don't forget to ask for referrals from satisfied clients.
- Be very selective in what you provide for free, and to whom. Give some free advice to demonstrate your competency or foster positive client relationships, but keep your most valuable advice and services as something folks have to pay to receive (e.g. "value for value"). Otherwise, you'll operate as a non-profit and earn the reputation for providing free services.
- Use your advertising budget and time for targeted, person-to-person efforts. I've never experienced, nor heard of anyone else experience, print or banner ads even coming close to returning their cost in new business. Develop a 'word-of-mouth' referral network; find ways to network with, and through, others. Trust me, making cold calls (or even 'warm' calls) and sending emails are two of the least enjoyable, although necessary, things you'll ever HAVE to do.
- Evolve with your markets and customers - or die. Businesses must listen to their marketplace (or as I say, 'keep the sonar on and listen for the pings') and change appropriately. Otherwise they slowly (and sometimes quickly) fade away. For example, Back Thru The Future Microcomputers has recently added a new, sophisticated service to manage the data security and risk management needs associated with clients' obsolete computer equipment; this supplements the company's equipment recovery and recycling services.
- Provide project confirmations, not just proposals. The activities, timing and deliverables should be already agreed upon verbally, along with the amount and timing of payments, before spending the time to develop a formal job request for client signature. That way, the document is a project confirmation for client signature than a proposal for client consideration.
Also, include a
date by which the offer remains valid; otherwise clients may hold you to the
'offer' long after you thought they lost interest.
You may also want to review the April 2003 column for advice on setting your billing rates.
Next month: The last five most important 'lessons learned'.
Postscripts: The Myth of the Hydrogen Economy? As noted in the December issue's Postscripts, I feel it is important that we all keep 'checking back in' on the assumptions and information that form the bases for our individual judgments and opinions on various issues. In that column I indicated a slight shift in my opinion on the greenhouse gas/climate change issue. A recent project is questioning my opinion on the benefits of the still-emergent hydrogen economy.
While there are multitudes of studies and publications touting the environmental advantages and economic challenges of the hydrogen economy, the more I read about the real or potential upstream and downstream consequences the more I question whether of lot of work is being conducted to produce little incremental benefit. For example, when natural gas undergoes steam reformation to produce hydrogen for 'clean burning' applications, the carbon in the molecule doesn't just go away - it is typically burned in a co-generation turbine or CO boiler so still gets emitted as CO2. An electrolysis system disassociates the hydrogen from water, but the high levels of electricity needed to produce large volumes of hydrogen still produces CO2 if generated from fossil fuels, especially coal.
Also, having worked with hydrogen in my former days of designing thermal denox control systems, it is quite explosive. The number of people I see smoking while refueling their cars at gasoline stations, despite the 'No Smoking While Refueling' signs, instills within me a foundation of concern should those same stations add hydrogen to their refueling options.
While I don't have detailed scientific knowledge about hydrogen production or the potential hydrogen economy, the I've read and/or seen publications dealing with these issues, including Harnessing Hydrogen (J. Cannon; 1995; especially pages 215-230), The Hydrogen Economy (J. Rifkin; 2002), The Hype About Hydrogen (J. Room; 2004) and a recent article in Business Week ("Hydrogen Cars Are Almost Here, But "; January 24, 2005). It seems, however, as if there should be even more literature that investigates the potential upstream/ downstream consequences and offer balanced assessments of each of them before we, as a society, delve too deeply into a major shift that may have much less benefit than is currently promoted.
It's the only way that we can make intelligent, informed choices and not get into the otherwise unforeseen consequences after the fact. Kudzu, anyone?
|Steve Rice (973-966-5505) is president of Environmental Opportunities, Inc., a strategic EH&S management and project support services company in Florham Park, New Jersey. He has 30 years of executive EH&S leadership experience, including 25 years with both Exxon and BASF, and is an ACC- authorized Responsible Care Management Systems (RCMS) auditor.|
Copyright 2005, Environmental Opportunities, Inc.