Is Investing in Safety a Sound Business Strategy?

In many businesses the only thing most employers are aware of is that they have to spend money to have an effective safety program.  Successful companies, however, maintain very effective safety programs and continue to pay the expenses involved even when business is slow and times are tough.  Unfortunately, however, the cost of effective safety measures are all too often deemed an “unnecessary” expense. When business is slow, what is the first expense to get to get cut? You already know: the safety program. Normally the responsibility gets transferred to the HR manager, and training and other expenses are cut, which typically leads to disaster, especially for the new employee you just hired or the long term employee, who thinks he can cut safety to increase productivity. If you are not motivated to have an effective safety program by either OSHA, the threat of fines or care for your employees, one thing that will motivate you is the actual cost of a workplace injury to your business. How much do you think it costs?

Statistics and Costs

Every year in the United States there are over 6,000 workplace fatalities. The majority of these fatalities are men ages twenty-five to forty-four.  This does not include deaths related to occupational illness. Another 50,000 workers die every year in the United States from occupational illnesses. In addition to deaths, there are over 6 million U.S. workers that suffer non-fatal workplace injuries with an estimated cost to U.S. businesses of around $128 billion annually. A person’s life or health is obviously priceless, but incidents and injuries carry a tangible cost to business, one quarter of each dollar of pre-tax corporate profits, to be exact.

The actual cost of a workplace accident or illness to your organization depends on a few different variables. Costs depend on the number of employees you have, the numbers of incidents you have and the type of work you do. For any company experiencing a tough time financially, all losses are serious. For a large employer, losing a skilled worker on a job, for even a few days, can have a larger impact on profits than the actual direct costs might suggest. With smaller businesses this is magnified because they often have very little buffer when it comes to accidental losses. A serious incident could not just make it difficult to get by, but put them out of business.

Why should we do anything, our Workers Compensation Insurance pays our claims?

Insurance only covers what is detailed in the policy, and it usually only pays for the direct costs associated with an injury. Most of the costs that are not covered by insurance include lost time, sick pay, damage or loss of product and materials, lost time and failure to keep schedule, extra wages for overtime and temporary labor, investigation time and expenses, OSHA fines, loss of contracts, legal costs and loss of company reputation, just to name a few.

The uninsured costs differ between businesses, the type of work being done, insurance and type injury. No matter how you look at it, though, the uninsured costs are many times greater than the insured costs.  As a general rule of thumb un-insurable expenses often run up to as much as 4 times more than the actual costs covered by insurance.

Hire a third party safety professional to ramp up your program quickly

An investment into an effective safety and health program and/or professional for your business is just that, an investment. Not only is it unethical to risk an employee’s health or safety to save money and cut costs, but in reality, it does just the opposite. It creates unnecessary risks, costs and headaches. A safe company with limited incidents and injuries will not only have an increased profit margin, but will be more appealing to potential clients and good employees. Successful businesses plan for the future, for growth and for potential risks. Safety should play a key role in your strategy and is the reason long-term successful businesses invest so much into their safety and health programs, because as I am sure some of you know, gambling isn’t a good long term, or short term investment. As they say in Vegas, “in the end the house always wins”.  Why wait?  Get started today and implement your safety & health program.