Building the Case for Safety: Economic Benefits
Ideally, improving workplace safety should be its own reward, but for many businesses, particularly those that are struggling, it may seem like a secondary consideration after meeting the bottom line. However, this perception is shortsighted. Workplace health and safety is, in fact, a shrewd investment that affects nearly every aspect of your business. Safety return on investment (ROI) can be difficult to calculate because there’s not a single, standard formula to apply – and some of the factors tend to be abstract or intangible. Nevertheless, there’s solid evidence to show that you can reap more economic benefits in the long term if you invest in improving your company’s safety program.
To understand how improving safety could be good for your bottom line, it may be helpful to start with concrete benefits. It’s a simple concept, but there tend to be fewer incidents of injuries in workplaces that continuously strive to improve safety. Fewer injuries means fewer upfront costs, such as medical expenses for injured workers. It also means fewer subsequent costs, such as legal fees or increased workers' compensation insurance premiums.
An injured worker typically has to take time away from work, sometimes for a few hours to receive medical treatment and sometimes for days at a time to ensure adequate recovery. In either case, time away from work amounts to a disruption to your business. Better safety means fewer disruptions, and therefore more efficiency and improved productivity.
Employees are the most valuable resource to a business, and improved safety helps with both hiring and retention. Promoting worker wellbeing is a good way to attract new employees because, all else being equal, workers would prefer to work for a company that makes them a priority. Similarly, showing concern for workers' safety tends to improve morale, which helps people do their work better. By contrast, when injuries prevent employees from working, you not only have to pay lost wages but you incur the cost of training replacements.
One of the most valuable assets to your business, though also one of the most intangible, is your reputation. Serious accidents and violations in your workplace can harm your standing with shareholders, prospective hires, and customers due to subsequent negative publicity. When you improve workplace safety, you reduce the risk of accidents and thereby help to safeguard your reputation and bottom line.
Calculating your return on investment for safety improvements can be tricky. A safety measurement system can provide data regarding the costs related to workplace accidents. However, the numbers are not always straightforward. For example, in 2012, the National Safety Council (NSC) estimated the total cost of workplace injuries and deaths to society as a whole at $198.2 billion annually. By 2016, that figure was $151.1 billion, which seems to represent a significant drop. However, the NSC is quick to inform that year-to-year cost estimates are not comparable. Between 2012 and 2016, the procedures and benchmarks that the NSC used for estimation purposes had undergone a revision.
More valuable to you when estimating safety ROI is the individual cost of each injury. To accomplish this successfully, you must consider not only the direct costs, such as workers' compensation, but also the indirect costs, including the following:
- Repairing damaged property/equipment
- Implementing corrective measures
- Investigating the incident
- Training replacement employees
While this figure can vary based on the cause and nature of the injury, the estimated cost for every workplace injury is $32,000. This includes employer costs and administrative expenses in addition to medical bills and lost wages. The cost per fatal accident is even higher: approximately $1.5 million.
There are many mathematical formulas used to calculate safety ROI, some quite complicated. However, the NSC has compiled various studies showing that you stand to gain between two and six dollars for every one dollar that you invest in injury prevention, although it could take several years before you see that return.
Your investment in injury prevention is likely to go further if you implement safety measures proven to produce results. That includes initiatives like motor vehicle safety, fall prevention, respirator use and lifting ergonomics.
However, the particular measures you adopt need to be adapted to your business and the relevant hazards at hand. This is where keeping current on OSHA regulations, as well as a thorough assessment of the risks in your workplace is key.
While it may seem daunting to implement a well-rounded approach to occupational health and safety (OH&S) specific to your workplace, looking to management system standards, such as ISO 45001, can be helpful in guiding your structure.
As part of an OH&S management systems approach to safety, the ability to accurately communicate residual risks to workers, subcontractors and guests is critically important. Here, safety signs are an important part of your risk communication and risk reduction strategy. Accident prevention signs and standards compliant, ANSI safety labels can help inform and remind employees of proper procedures. Safety signs can also delineate areas in your facility where certain precautions need to be taken, such as requirements for personal protective equipment.
Investing in Safety
In the long term, companies that implement a comprehensive safety program show better overall performance, more productivity, greater cost savings — and, most importantly, can rest assured knowing that they’re prioritizing employee well-being. With our experience designing safety visuals for clients in nearly all industries, we’re ready to help you develop a system that improves safety and reduces your liability risk. Get in touch with our team so we can get started!