Internal vs. External EH&S: Considerations for Using Partners to Drive Greater Value
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The document outlines the challenges and advantages of utilizing external partners in Environmental Health and Safety (EH&S) operations, highlighting issues such as regulatory complexity and skill shortages. It discusses the benefits of specialization and provides case studies demonstrating the cost-effectiveness and operational efficiencies of partnership models. Additionally, it addresses common concerns regarding the use of consultants and emphasizes the importance of customized, flexible EH&S programs that improve compliance and reduce risks.
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Internal vs. External EH&S: Considerations for Using Partners to Drive Greater Value
- 1. Internal vs. External EH&S Considerations for Using Partners to Drive Greater Value
- 2. Agenda 2 Challenges with Delivering EH&S Operational Excellence The Use EH&S Partners: How Does It Work? The Pro’s & Con’s of External Partnerships Case Study & Final Thoughts Q&A
- 3. Challenges with Delivering EH&S Excellence 3 • Regulatory climate is growing in complexity • Skill sets and resources are more difficult to find and retain • Capabilities are not aligned with core operations • EH&S issues are often addressed reactively versus proactively • Lack of cost certainty and/or transparency
- 4. Long-Term Consequences 4 • Repeated incidences causing operational failures and shut downs • Failed inspections and fines • Uneven performance across operations • Compliance projects behind schedule • Employee concerns and fears
- 5. Survey Question 5 What aspect of your EH&S program do you struggle with the most?
- 6. Agenda 6 Challenges with Delivering EH&S Operational Excellence The Use EH&S Partners: How Does It Work? The Pro’s & Con’s of External Partnerships Case Study & Final Thoughts Q&A
- 7. Partnering with EH&S Expertise 7 • Works through the simple idea of specialization, and the segmentation and focus on tasks within a specific field or skill set. • This comparative advantage leads to enhancements and delivery efficiencies that can become a virtuous cycle; specialization leads to learning that can improve the delivery, costs and quality of tasks. • However, as most of us have experienced in the global customer support (e.g. call centers) realm, those benefits plateau quickly.
- 8. What do Good Partnerships Look Like? 8 • Expertise and experience • Strong process and metrics • Flexible and innovative solutions • Client engagement and knowledge via a consistent delivery team Compliant operations
- 9. Agenda 9 Challenges with Delivering EH&S Operational Excellence The Use EH&S Partners: How Does It Work? The Pro’s & Con’s of External Partnerships Case Study & Final Thoughts Q&A
- 10. What Do Good Partnerships Deliver? 10 Delivery Components Value Proposition
- 11. Delivery Components 11 • Policy and procedure development • Permitting, Registration, & Licensing • Equipment testing and maintenance • Safety protocols • Raw material inventory audits • Hazard material management and data inventory • Training – general and specific, regulatory and operational • Management oversight and reporting – internal and compliance • Emergency Response – spills and odors • Hazard waste oversight
- 12. Demonstrating Value 12 • Deliver a safe working environment - reduce risk and liability through subject matter expertise and best practices • Proactive response to regulatory changes • Communications and visibility both internally and externally • Reduce non-core or non-strategic management responsibilities • Consistency across multiple sites / divisions / operating groups • Tailored or a la carte solutions that are flexible
- 13. Survey Question 1 3 Which outcome is most important to you?
- 14. Common Concerns 14 1. Consultants are expensive There are hidden costs to full-time employees not normally considered: • 30% direct overhead to cover payroll costs of health care, employer insurance, short and long term disability and life insurance, 401k matching contribution, and incentive bonuses • 15% for vacations, sick days, and training • 5-10% for direct management oversight • 20% for indirect overhead of HR, Accounting, and Corporate • Additional costs, which will vary depending on the compliance level of the firm, representing monies spent on outside project consultants and potential fines that may occur
- 15. Common Concerns 15 2. We use consultants for project work only EH&S expertise will produce higher quality operational outcomes by: • Adherence to and execution of a rigorous compliance calendar • Strong process and ownership • Higher level of EH&S knowledge resident or ingrained in the workforce • Complete, accurate, and robust documentation and timely regulatory submissions • A drive toward reductions in incident frequency and magnitude
- 16. Common Concerns 16 Results matter over process: • Partner resources are professional, highly trained, committed and enthusiastic • A delivery model of having the same operational resources on site regularly address the need of having direct control and visibility • Deep expertise support available to the client, on an as needed basis without having a full- time cost • Personnel represent a stable workforce that are the enabler of the EH&S level sought as opposed to a barrier 3. Use of a third party sends the wrong message
- 17. Common Concerns 17 There are hidden costs to full time employees not normally considered • 30% direct overhead to cover payroll costs of health care, employer insurance, short and long term disability and life insurance, 401k matching contribution, and incentive bonuses. • 15% for vacations, sick days, and training. • 5 to 10% for direct management oversight. • 20% for indirect overhead of HR, Accounting, and Corporate. • Additional costs, which will vary depending on the compliance level of the firm, representing monies spent on outside project consultants and potential fines that may occur. 4. Control is lost EH&S is usually not a core capability of most firms; giving the responsibility to a set of experts will result in better outcomes: The partner firm is accountable to client management in a formal and structured process The third party partner has the objectivity, independence, perspective and clarity or singular vision to intervene and make corrections in influencing outcomes Internal resources will ultimately become complacent in their role by the larger group, be assimilated, and find themselves going with momentum Having an EH&S partner provides an external, objective audit while establishing a deep productive relationship
- 18. Common Concerns 18 5. We are forced into a singular, one size fits all program An effective EH&S program delivery will by definition be tailored and modified to: • Align with both the current and future state of client operations • Provide a flexible response to the workload through the fiscal cycle • Deliver different skill sets when needed
- 19. Common Concerns 19 This is the way we have always done it 6. Inertia
- 20. Agenda 20 Challenges with Delivering EH&S Operational Excellence The Use EH&S Partners: How Does It Work? The Pro’s & Con’s of External Partnerships Case Study & Final Thoughts Q&A
- 21. Case Study 22 TEI produces higher quality outcomes with fewer personnel due to: • Delivery of expertise and skill sets, unbundled from specific individuals • Use as needed Assumes 20 to 30% of client’s EH&S director and / or executive leadership to manage the team Holidays, vacation, training & sick days are not typically included in direct overhead Reduces redundant, duplicative, & low value efforts Fines and administration base amounts are industry norms: http://cfpub.epa.gov/enforcement/cases/ Cost Comparison of Direct Hire vs. TEI Supported EH&S Services (3 days) for X Chem Year 1 Labor Number Base Salary Total Number Base Salary Total Delta Environmental Manager 1 $100,000 $100,000 0.2 $400,000 $80,000 $200 0.6 $190,000 $114,000 $95 Total Direct Labor (Days) 5 $100,000 4 $194,000 ($94,000) Overhead Executive oversight $20,000 $4,000 $16,000 Direct 30% $30,000 $0 $30,000 Indirect 20% $20,000 $0 $20,000 Efficiency Gain 15% $15,000 $0 $15,000 Total Indirect Labor $85,000 $4,000 Total Labor $185,000 $198,000 ($13,000) Outside Consulting $20,000 $6,000 $14,000 OSHA Fines & Admin. $10,000 20% $2,000 $2,000 $666.67 $1,333 EPA Fines & Admin. $500,000 10% $50,000 $50,000 $20,000 $30,000 Total $257,000 $224,667 $32,333 12.6% In House Team Triumvirate Annual Savings Client Inputs
- 22. Case Study 22 Skill Sets & Expertise: Calcified & Narrow Evergreen, Greater Breadth & Depth thru CoE’s Risk: Surprise Events Long Range Visibility Costs: Hidden & Increasing Transparent, Stable & Predictable Energy: Reluctant & Unapproachable Professional & Enthusiastic Activity: Start/stop, reactive work Proactive, process driven work Engagement: High churn, barrier to goals Stable workforce, enabler to goals In House Team Triumvirate
- 23. Conclusions & Final Thoughts 23 The challenges of delivering world class EH&S results continue to increase A strong EH&S partner can be a terrific solution to ensure real time compliance, cost certainty, and flexibility Traditional concerns are mitigated
- 24. The Triumvirate Difference 24 • Lead expertise in all industries, and regulatory agencies (federal and local) • World-class employee training and qualifications • Delivers staff augmentation, projects, and rapid response • Broad experience levels • Vertically integrated • Client base that exceeds 1,000