Edition No. 12
Today’s EHS Landscape—Navigating the Changes
By Glenn Fishler, CIH, President and CEO, EORM, Inc.
As CEO and strategic development leader of EORM, a top environmental, health, and safety (EHS) management consulting firm, I strive to keep abreast of current EHS trends across the United States and internationally. In support of this effort, I participate in weekly or am debriefed on many of the 40 to 50 consultative discussions about complex business and EHS issues occurring within our client and prospect companies. In addition, to keep EORM in the forefront of EHS consulting, we regularly forecast business EHS trends through our largest customers in many different vertical market areas. Our company also participates in industry conferences where we are involved in strategic business and EHS discussions. In fact recently, we participated in the National Association of Environmental Managers (NAEM) conference in Orlando, where we networked with several hundred high-level EHS Managers, and met specifically with about a dozen EHS directors and vice presidents from a wide range of US firms.
 |
|||||
Also in this Issue... |
|||||
|
|||||
 |
|||||
Through this article, I hope to share with you some of my observations about what’s currently happening across the EHS landscape in the United States and several trends I've recently observed.
The Effect of a Shrinking Infrastructure
As companies in the US expanded in the 1980s and '90s, EHS staffs beefed up to accommodate the growth. More people were hired and EHS jobs became more vertically specialized along the lines of industrial hygiene (IH), safety, and environmental management. During the most recent 2001/2002 economic recession, US corporations were forced to become leaner; consequently, their infrastructures (including EHS) shrunk. For many corporations striving to maintain or regain profitability, controlling the size of their infrastructure has become a critical (and necessary) part of expense reduction. Right now, EHS staffs nationwide are as lean as I can remember in the last 20 years. We’re seeing with our largest customers that EHS functions are driving EHS requirements into their supply chain where their forecast of EHS expectations is set by key strategic customers. As a result, the EHS function has increasingly become more of an enabler to the business and better integrated into the value chain. It ensures that the company’s activities are prioritized and therefore, creates the most value to the business. An example of this is illustrated in Figure 1.
© 1999 EORM, Inc, and Bovo-Tighe, LLC
As corporations become more profitable, they can choose to stay lean and weave EHS into the fabric of operations (e.g., the EHS Management Systems approach), rebuild infrastructure and self-perform more EHS again, supplement with outsourcing, or use a split model, with part of the rebuilding through self-performance and part through outsourcing. My belief is that corporations will be conservative and use the split model or management systems approach at least until they are confident that their return to profitability is sustainable for the long term through top line growth, and not simply a result of expense reduction efforts.
Surviving the Changes
Another phenomenon that I think is interesting is what I call the EHS Survival of the Fittest. When companies are leaning out their expenses to become more profitable, they often target their most expensive and least valuable items. In regard to human capital, this typically means that expensive and/or non-versatile labor is cut. My observation over the last three years is that many highly compensated IH, Safety, and Environmental specialists have been cut from corporations’ payrolls. The EHS professionals hit the hardest are those who specialize in a narrow area of EHS (e.g., solely industrial hygiene or air compliance or hazardous waste, etc.). EHS professionals who have fared the best over the last three years are those with highly diverse EHS backgrounds, are not overly specialized, and can perform a variety of EHS, and depending on the size of the firm, other (e.g., security, facilities, etc.) support functions for their employers. Thus the term: EHS Survival of the Fittest—the diversity of their skill set enhances their value to the company. I predict that in the short term, this trend will continue with no turning back (over the next three to five years). So my guidance is: diversify.
Return to Profitability—Trends to Watch For
Today as the economy continues its recovery, the question is, how will companies react to becoming profitable again in regard to EHS? When profitability returns, companies usually start investing first in R&D and then in sales and marketing. Investment in other areas of their infrastructure often lags, despite the positive forecast. Let’s see how this affects EHS.
As EORM is a supplier of part-time and full-time EHS professionals
to many of our customers (e.g., outsourcing), I've observed a few
recent trends in the way companies outsource this work. The first
trend is that even for companies that cut back too much, they aren’t
sure if full-time outsourcing help is affordable. While they are
deciding how strong their business will be in the coming months
and what they absolutely must have done now, they are hesitant to
hire full-time outsourcing support. EORM sees a lot of demand for
part-time EHS outsourcing support. I believe that this trend will
continue for several years.
The second trend is that although full-time outsourcing support
has been hired, companies are not making these positions permanent.
For many companies, it’s better to have the flexibility of
being able to ramp up or ramp down by continuing
to outsource the position. In industries that are more cyclical,
this may be a lasting trend. For those less cyclical, the trend
may be starting to reverse itself. Companies may soon begin to hire
permanent positions again, making more investments in their people.
This is especially true in process intensive companies.
Another trend I’ve been noticing is that employee training
(including EHS training), which was deferred over the last several
years, is now in catch-up mode in many companies. When money was
scarce, more general training was offered to employees. Now that
training dollars are more available to managers, and companies are
beginning to replenish their infrastructure, more specialized training
is taking high priority. For example, I am seeing catch-up efforts
in basic compliance training such as ERT, Hazard Communications,
Hearing Conservation, lockout/tagout, respiratory protection, etc.
Finally, there is one last trend that blends with those previously
mentioned, and could very well be more long-lasting than the others.
Companies are starting to rely much more heavily on management consultants
(like EORM and others) to help them create a sustainable EHS Return
on Investment (ROI) model. Examples of ROI models include initiatives,
such as: integrating ergonomics into Lean Manufacturing, EHS with
Six Sigma Manufacturing and Corporate Social Responsibility, and
combining Business Continuity Planning (BCP) into the Risk Management
function. Many corporations are deciding that they will run best
by continuing to sustain a lean infrastructure. These companies
use a more risk-prioritized approach for their EHS programs and
may not manage to 100% regulatory compliance with pertinent EHS
laws. The question some companies ask is: how much compliance can
we really afford? Corporations with high visibility and concerns
about corporate transparency may not be willing to take on this
type of regulatory compliance. Less lean companies are crossing
their T’s and dotting their I’s, taking little
chance in being out of compliance.
And the Answer is…
What do these trends mean for both the individual EHS professional
and the overall EHS department or function within an enterprise?
If training money has indeed loosened up in your company, utilize
it now, before any talk of the next downturn tightens it up again.
If outsourcing trends continue, make sure the communication lines
are open to your outsourced personnel, that your expectations and
requirements are well defined, and the scope of the work clearly
creates a win-win scenario for both of you. Continue leveraging
your supply chain. It can be your best barometer in assisting with
EHS objectives. Make sure that you regularly pulse your
key customers expectations so that the EHS function is constantly
viewed as an enabler to the business. Lastly, as ROI becomes
a more powerful tool in your toolbox, continue finding ways to use
it not only for the bottom line benefit to your organization but
also to build your credibility and reputation within it.
As EHS issues, and in a broader context now, business issues in
general, are my life-long passion, I’m always interested in
discussing how business and EHS trends are evolving. Please feel
free to contact me anytime (fishlerg@eorm.com)
with your ideas and observations.
EORM contributors to this article include: Andy McIntyre, CIH, Executive Vice President, National Accounts, Managing Principal.
More Information:
- Contact an EORM consultant to learn how our services will benefit your company.
- View the current issue of Priority Press.
- View previous issues of Priority Press.
- Subscribe to Priority Press.
- Send us your comments or suggestions.