Safety Practices, Firm Culture, and Workplace Injuries

Introductory chapter | Table of Contents

In 2001, there were approximately 3.7 fatal workplace injuries per 100,000 workers (including 9/11), workers made 2.1 million trips to the emergency room, and workers’ compensation insurance cost employers $63.9 billion. In addition, the indirect costs of workplace accidents—lost wages, equipment damage, and training and rehabilitation—were several times this amount. Despite the fact that human resource management (HRM) practices can directly affect the severity and costs of such accidents, HRM is usually seen as an auxiliary function that contributes nothing to a firm’s output.

Richard J. Butler and Yong-Seung Park hope to draw attention to this oversight by presenting analysis of the impact of various HRM practices on firms’ workers’ compensation costs; specifically, which practices lower firms’ workers’ compensation costs and whether the impact is the result of changes in technical efficiency or comes through induced changes in workers’ behavior.

Traditional models of firm behavior ignore such HRM practices, assuming management simply chooses labor and capital to maximize firms’ profits. Management is also assumed to know everything that workers know about their own behavior and about their firms’ technology. But, as Butler and Park point out, this is not realistic. Asymmetric information, where, for example, employees have knowledge that is difficult or costly for management to obtain, is common. Therefore, the authors develop a new model of safety outcomes that incorporates HRM practices. They estimate this model using data on an important outcome -- safety costs. Their results show that HRM practices do affect employees' injury claims, may help reduce injury claim frequency, and can reduce injury-claim severity. Furthermore, they weigh in on the question of whether these results occur because HRM practices are improving technical efficiency or because HRM practices are reducing disability benefits consumption associated with asymmetric information.

Butler and Park conclude with a set of policy implications for firms, workers, and workers’ compensation policy.

105 pp. 2005.
$40 cloth ISBN 0-88099-277-8 / ISBN-13 978-0-88099-277-8
$15 paper ISBN 0-88099-275-1 / ISBN-13 978-0-88099-275-6

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