What You Don’t Know About Company Size Can Hurt Your Employees!

What size companies are at the most risk of safety incidents?  Did you say Mom-and-Pop businesses?  That is what I would have guessed until very recently.  It only stands to reason that, the smaller the firm, the less money to hire full-time safety professionals, adopt best practices or afford training.

But the statistics say otherwise.  In fact they indicate that firms with less than 50 employees have the best safety records.

Who is has the highest incidence rates?  

It turns out, mid-sized companies have the highest rates.   According to the Bureau of Labor Statistics, firms with between 50 and 249 employees have the highest recordable nonfatal occupational injury and illness incidence rates.   From 2011-to-2015, the Bureau found that those companies had rates of between 3.7 and 4.2 per 100 workers, above the national average for incidents and well above smaller companies.

Total recordable nonfatal occupational injury and illness incidence rates by employment size, private industry, 2011-2015. Source: Bureau of Labor Statistics.

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Why are big company rates lower?

Maybe large companies may have lower incidents the mid-sized companies because they:

  1. Have more resources to address hazards and incidents;

  2. Can use economies of scale to apply training and other costs throughout the company; and

  3. May have more incentive to work safely because they have regulators’ attention, are more likely to be responsible to public shareholders and may have more union pressure.

Why are small company rates lower?

Other than the simple fact that smaller companies may be involved in less hazardous office or retail operations, their rates may be lower they have a more direct relationship between the owner and the employees.  I remember the captain at one towboat company I worked with said that one reason they had a very low number of accidental oil spills was because the crew knew the costs of a spill would come out of the owner’s pocket and no one wanted to have to face him if that happened.

That captain may have put his finger on the real issue – the dynamics of organizational size.  An HR executive for one of the largest oilfield services companies once told me that “small companies manage people.  Large companies manage processes.”

Looking at the incident rates by size, in small companies the owner knows everyone by name.  Unsafe behavior can be dealt with directly.   Large companies have systems to manage safety.  They can develop and implement safety through managed processes.  But many mid-sized companies are stuck in the middle.  They have outgrown Mom-and-Pop status, but they still think like small businesses.  They haven’t adopted a systems approach to their organizations and things can slip through the cracks.

Organizational size and accidents.

It turns out there has been a lot of research in this area and, yes, size matters.   Some experts in organizational behavior talk about the “Dunbar’s number” that says the upper limit on organizations is about 150.  After that, we lose track of who is who, communication breaks down and organizations need more rules and systems to be effective. An interesting study titled Organizational size and knowledge flow: a proposed theoretical link proposes that at around 150, companies become less effective at sharing information internally.   This leads to breakdowns in organizational structure, communications, management awareness and, most significantly, trust by individual employees.

What Should Companies Do?

  1. Recognize that 150 is not a magic number.   I have known organizations that started to run off the rails when they hit 100 employees (and a few that couldn’t handle two employees).  The more important key is whether upper management still has a direct relationship with employees and whether those employees still feel like they are part of a close group.

  2. Focus on communications.   How do you share information about safety policies, incidents, and lessons learned.  If the answer is, “we don’t,” fix it.

  3. Think systems, not just people.   Small companies may say, “We are safe because Bill, the supervisor, really knows his stuff.”  That works when the company is small and the owner went to high school with Bill, but  growing companies get into trouble when they have to rely on five or six Bills to manage crews.

    1. Budget for systems.  Too many growing companies just tell their managers to go into the conference room and develop a process for addressing a problem.  Process systems need resources and, above all, management.  Someone needs to be responsible for them and executives need to support them.

    2. Make sure it is the right system/process.  The approach you take needs to fit your company’s size, culture and operations.   Just as companies make the mistake of thinking they can keep running like a Mom-and-Pop as they grow, they also make the mistake of adopting complex and time-consuming management systems that a consultant “borrowed” from very large company.   GE’s safety management system will be a bad fit for a 200 employee machine shop, no matter how pretty the binder looks!

  4. Don’t lose sight of safety priorities.  Busy leaders need to make the time for company priorities and safety is one of them.  Show up on the work site. Personally recognize a worker who has prevented an incident or privately coach one who was injured in an accident.  These are all critical.

  5. Be honest about your heroes.  This is very tough for growing companies.  Small companies owe their success to a small group of internal “heroes” who are willing to do extraordinary things for the company.   As the company takes on new responsibilities, they are handed to that one employee who is willing to take on new tasks or work the extra hours to make it all work.  Unfortunately, as the company grows,all the knowledge winds up in the heads of a select few.  They become overwhelmed and risk burnout.  If they leave because of the pressure, they often feel unappreciated, the company is left with no one to fill their shoes and there is no institutional knowledge.  Instead, growing companies need to respect the value those heroes bring, while pushing them to create systems for sharing what they know.

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