Don't Forego Safety Program Investments

Work-related injuries, illnesses and deaths are costly to everyone. A safe and healthy work environment pays, in more ways than one. The National Safety Council estimates the average cost of a lost-time injury to be around $43,000*.
Source: Injury Facts 2009 Ed.

Employers can save $4.00 to $6.00 for every dollar spent on a safety and health program.

Source: Liberty Mutual's Research Institute for Safety 2008 Report

Workplaces with successful safety and health management systems reduce injury and illness costs 20%-40%.

Source: OSHA.gov

“Workplace safety processes must be in place at all times. They are even more critical during business downturns. If companies believe they will save money by reducing or ignoring safety for their workers, customers and communities they do business in, they are mistaken. The ongoing positive results are in and have been for companies that have a strong safety culture and continually invest in and implement effective safety processes. Not only does their bottom line benefit positively, but their company reputation stays intact, employees stay safe and healthy reducing health care, workers comp, training and turnover costs not to mention keeping customers, the communities they do business in, vendors and employees happy. Safety is good business.”

Source: American Society of Safety Engineers, President Warren K. Brown, December 2008.

In order to remain viable long-term, a company must maintain a solid safety process even through difficult times. The most successful companies in the long-term also have the strongest safety performance.

For some companies, one injury can mean financial disaster.

The cost of workplace injuries, illnesses and deaths is much greater than the cost of workers' compensation insurance alone. Insurance is just the tip of the iceberg when it comes to these costs.

Injury costs to a business can include:

• Production losses
• Wages for work not performed
• Increased workers' compensation insurance costs
• Damage to equipment or machinery
• Hiring and/or training new employees
• Decline in product quality
• Decline in worker morale
• High turnover and lost work time

Safety Pays for Everyone

The cost of injury prevention is far less than the cost of an injury. A safe and healthy workplace attracts and retains quality employees. It's an asset to a community, operates more efficiently and enjoys a healthy bottom line. The business and the workers thrive in a safe, healthy, respectful and caring environment.

What Can Safety Professionals Do?

According to the U.S. Small Business Association, 82% of businesses fail due to poor cash flow. One good way to sell your safety program to management is to tie it into your cash flow. Show how accidents impact your bottom line.

1. Insurance Costs
2. Lost Productivity
3. Replacement Costs
4. Reputation
5. Absence – pay to cover hurt employee
6. Citations & Fines

1. Insurance costs

• Obviously, the more injuries and property damage losses you have, the greater the cost of your insurance.
• If companies are self insured, the costs will depend on the frequency and severity of the loss.
• The more frequent and severe the losses the more cash flow your company will lose.

2. Lost Productivity

• If your company can't produce, you can't sell
• If you can't sell you lose revenue – resulting in decreased cash flow
• Even if you produce and sell, what is the increased required sale to make up for the cost of the accident? –Need to tie losses into your production. (for example): Cubic feet of gas, KW of electricity or product orders.

3. Reputation: A reputation of being unsafe can cost your business in many ways:

• Loss of contracts due to safety record
• Loss of sales due to safety record
• Inability to hire good employees

4. Absence : What is the cash flow impact on:

• Absence from lost time or restricted duty injuries?
• Over time for others to pick up the slack
• Contractor costs to pick up the slack
• No productivity? No sales?

Example of Cash Flow Impact

• Over a month, 3 employees are injured and cannot work:
• Hire 3 contract employees @ $20.00 per hour to fill in gap
• 20 days in the month x 3 = 60 days x 8 hours per day = 480 hours
• 480 hours x $20 = $9,600
• This $9,600 comes directly off the bottom line or is subtracted from cash flow

Then you could go to your management and explain:

• Monthly cash flow was $150,000
• 3 injuries cost us $9,600 dollars to hire temporary help
• Cash flow for the month is now $140,400 (6.4% less than projected)

5. Citations and Fines: Some safety fines are very significant!

Safety needs to be seen as an investment rather than a cost.

Today's business climate makes operating without a safety program a business venture of high risk. You can greatly minimize that risk by continuing or initiating a membership affiliation with the National Safety Council/Safety & Health Council of Northern New England. Click here for details on becoming a member or utilizing your membership benefits.