Transcript SIKORSKY 30th International System Safety Conference Awards Luncheon The Business Value of Safety August 9, 2012 Atlanta.

SIKORSKY
30th International System Safety Conference
Awards Luncheon
The Business Value of
Safety
August 9, 2012
Atlanta
SIKORSKY
THE VALUE OF SAFETY
SIKORSKY
Macro
Sales
Stock Price
Market Cap
Right-to-Operate
Tactical
Cost-Benefit Analysis
ROI, NPV or DPP…
Cumulative Savings
THE VALUE OF SAFETY
SIKORSKY
Macro
Sales
Stock Price
Market Cap
Right-to-Operate
Tactical
Cost-Benefit Analysis
ROI, NPV or DPP…
Cumulative Savings
THE VALUE OF SAFETY
SIKORSKY
Macro
Sales
Stock Price
Market Cap
Right-to-Operate
Tactical
Cost-Benefit Analysis
ROI, NPV or DPP…
Cumulative Savings
THE VALUE OF SAFETY
SIKORSKY
Macro
Sales
Stock Price
Market Cap
Right-to-Operate
Tactical
Cost-Benefit Analysis
ROI, NPV or DPP…
Cumulative Savings
OBJECTIVES
SIKORSKY
Can System Safety yield
business and financial value?
Is SMS the correct roadmap?
Sikorsky’s legacy:
Does it actually lower risk
and earn money?
Should this all be considered by
our customers and their insurers?
SAFETY CULTURE INDICATORS
SIKORSKY
GENERATIVE
Chronic unease
Safety seen as a profit centre
New ideas are welcomed
PROACTIVE
Resources are available to fix things before an accident
Management is open but still obsessed with statistics
Procedures are “owned” by the workforce
CALCULATIVE
REACTIVE
PATHOLOGICAL
We cracked it!
Lots and lots of audits
HSE advisers chasing statistics
We are serious, but why don’t they do what they’re told?
Endless discussions to re-classify accidents
Safety is high on the agenda after an accident
The lawyers said it was OK
Of course we have accidents, it’s a dangerous business
Sack the idiot who had the accident
Presentation by Patrick Hudson of Leiden University to
Bristow Safety Conference, Lagos Nigeria, Feb 2011
CULTURE COMES FROM REPETITION
SIKORSKY
SMS
Basic Principles
Leadership
Risk Mgmt
Assurance
People
Culture & Value
CULTURE
Started at the top
SIKORSKY
Safety
LEADERSHIP
Principles/values help make daily decisions
“There are two things that must happen every day.
First, every Sikorsky aircraft ever manufactured must
land at the time and place of choosing of the pilot.
Second, every employee must go home exactly as
they came in, or better.
We must be perfect in both cases.”
SIKORSKY
Jeffrey Pino,
President Sikorsky Aircraft
CULTURE
Starts at the top
SIKORSKY
Safety
LEADERSHIP
SIKORSKY
HIGH RELIABILITY ORGANIZATION
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COMPETITIVE EDGE
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By protecting its
employees and
remaining dedicated
to “doing the right
thing”, Sikorsky has
reduced its accident
rates, workers’ comp
costs and carbon
footprint to become a
company synonymous
with strong
environmental
leadership, safety
and environmental
responsibility.
REAL VALUE
The macro business case
SIKORSKY
As a strong proxy for management quality,
environmental, health & safety performance
consistently correlates well with stock price
performance.
8
Innovest 2005
Sikorsky
Revenues
($ billions)
6
4
2
0
00
01
02
03
04
05
06
07
08
09
10
11
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We pioneer flight solutions
that bring people home
everywhere…every time™
SIKORSKY
And we know it makes
business sense…
TACTICAL RESULTS
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19
WE CAN CALCULATE IT PRECISELY
SIKORSKY
Avg Intervention Cost: $19,000
Avg NPV: $244,000
Avg DPP: 2.1 years
TASK FORCE FORMED IN 1995
SIKORSKY
In 1995, a taskforce of fifteen Fortune 500 companies
sponsored the development of a process and supporting
tool set to determine the financial value of Safety investments:
1. Build an accepted business tool.
2. Apply an easy to use process.
3. Communicate value of Safety investments.
4. Improve performance by encouraging
better decisions.
RETURN ON HSE INVESTMENT
BUSINESS TALK
SIKORSKY
Finance/Operations
Safety
Earnings/EPS
Accident rates
ROI
Property loss
Payback
Insurance premiums
PVRR
Fines and citations
Internal Rate of Return
No. of people trained
Production rates
Exposure Assessments
Earnings/employee
Near misses
Net Present Value
Cost Benefit
ROHSEI
bridges
the gap
Behavioral Observations
Audit findings
Develop and document the focus of the opportunity:
ROHSEI Analysis of SMS
SIKORSKY
Research/document relative numbers of accidents:
SIKORSKY
Determine financial cost of an accident:
SIKORSKY
Hit the calculations button:
SIKORSKY
Present results to your management:
SIKORSKY
MY CONCLUSIONS
SIKORSKY
1. Safety yields value.
2. This value can be calculated.
3. It should be considered
by our customers and the
insurance industry.
4. We’d love to share lessons learned.
David Eherts PhD CIH
VP and Chief Safety Officer
Sikorsky Aircraft Corporation
Stratford, CT USA
Office: +1 203 386 8666
Cell: +1 203 895 0410 ( GMT – 5 )
email: [email protected]