The Business Impact of a Fit for Work Program in Castlereagh Mining

Castlereagh Mining employs 360 staff and promotes a “safety first, production second” workplace culture. Castlereagh Mining recognised the need to implement pro-active strategies that enable management to optimise its human resource and protect it against exposure to workplace hazards, in particular manual handling. Castlereagh Mining determined that the number of manual handling accidents resulting in severe lower back injury was equivalent to the state occupational average of 39% of the total number of compensable injury claims suffered by self-insured employers. The total number of compensable injury claims for Castlereagh Mining during the 2003/2004 financial year equalled 19.

The organisation implemented a pilot project to determine the benefits versus the costs of implementing a Fit for Work Program.

A component of this program is one of Castlereagh Mining’s Occupational Health and Safety (OH&S) instruments, a Functional Capacity Evaluation (FCE). The FCE is an essential component of the pre-employment medical and it is a 1 hour assessment carried-out by an Occupational Physiotherapist and costs about $160. During this assessment a detailed physiological examination is carried-out in order to determine the applicant’s capacity to safely complete those frequently performed manual tasks as described in specific job role criteria. If, based on the FCE, the applicant’s physiological capability indicates potential for high personal injury risk then they are not recommended for appointment. A high injury risk classification identified during the FCE will generally result in failure of the pre-employment medical, which is justified on the grounds that Castlereagh Mining, and the individual, are bound by duty of care and risk management legislation governing workplace health and safety.

The FCE reduced the potential for new employees to suffer body stressing related injury’s derived from manual handling. Since the implementation of the FCE eight applicants were not recommended for appointment due to identification of a high potential risk for body stressing injury (mainly to the lower back).

Additionally, all the organisation’s employees at the time of the pilot project, were also reviewed using the FCE. This review recommended that up to 85% of the total mining crew could benefit from an improved physiological capability.

Given the outcomes of the pilot project Castlereagh Mining proceeded to implement the “Fit for Work” strategy where the objectives were to improve the physical capability of all employees and in doing so improve workforce morale and productivity. The direct costs to implement the “Fit for Work” program across the entire workforce were estimated at $325,000 per annum. Management believed they could isolate the effects of the program using company OH&S statistics combined with results from staff surveys and actual production results versus budget key performance indicators.

After a comprehensive data collection program was undertaken, the Cost Benefit Ratio and Return on Investment for the Fit for Work Strategy was as follows:

The Cost Benefit Ratio: Benefits / Costs = $2,668,833 / $1,216,380 = $2.19 : $1.00

ROI: Net Benefits / Costs = ((($2,668,833 - $1,216,380) / $1,216,380) x 100) = 119%

A number of cost elements were identified and converted to monetary value. Based on the outcome of a 12 month pilot study if no investment in the Fit for Work Program was made Castlereagh Mining could expect to incur the consequences of maintaining the status quo which at that time was estimated to cost the organisation $1,252,236 per year. In addition, if the program was not continued Castlereagh Mining would forfeit all cost benefit opportunities which have been shown to positively impact on the business bottom line by as much as a further $2,668,833, (including revenue generated by production gains). When all cost variables were applied to the “cost of doing nothing” formula, the total net impact on Castlereagh Mining was an estimated loss of $2,704,689 each year that the program was not available to the workforce.

If the Castlereagh Mining executive decided not to implement the Fit for Work program it would cost the operation approximately $52,013 per week over the next twelve months which would be the equivalent of 1,143 Cat785 truck loads of ore at an average mined grade of 1.17g/t.