Workplace safety doesn’t just improve employees’ lives – it boosts your bottom line! Employers who invest in workplace safety and health can dramatically reduce, illnesses, injuries and fatalities, which leads to far fewer compensation costs, OSHA penalties and costly lawsuits. In fact, a report by the Journal of Occupational and Environmental Medicine found that among companies who won the ACOEM’s Corporate Health Achievement Award, stock rose by an average of 97.26 percent from 1999 to 2012. What’s more, this was during an economically trying time when the S&P 500 actually lost nearly a percent!
Overall, there are clear parallels between safety and financial performance. Here are a few of the specific ways that improving worker safety can make your company more productive and profitable.
Injuries and longevity
Workers are the lifeblood of any industry, and even “unskilled” jobs are best performed by experienced, tenured employees. Of course, the only way a worker will rack up several years of experience with a single employer is to stay healthy and well taken care of. A study titled, “Injury Rates as an Indicator of Business Success” found a clear correlation between workplace safety and the survival of small businesses. Companies that failed within one to two years of start-up averaged 9.71 injuries in their first year of business, while those that survived more than five years averaged just 3.89.
Return on investment (ROI)
According to a Liberty Mutual poll of executives, for every dollar spent on the direct costs of an accident, there are another three to five dollars spent on indirect costs. Given that medical and workers’ compensation costs average about $15,000 per incident, the overall costs are somewhere between $45,000 and $75,000! On the other hand, the same poll showed that for every dollar those executives spent on workplace safety, they saved at least three dollars.
OSHA’s Office of Regulatory Analysis has even stated that companies that implement effective safety policies can expect reductions of 20 percent or more on their injury and illness rates, as well as a return of four to six dollars for every dollar invested. Overall, the data is clear – Investing in safety upfront can save companies massive amounts of money in the long run!
Assessing the impact
Still want to know just how much your company stands to save by avoiding specific incidents? Not every group of workers faces the same risks, and there will of course be some variance in the ROI of safety procedures across different industries. To help executives and safety personnel understand their true financial risks, OSHA has created a “$afety Pays” program, which allows users to analyze financial liabilities based on specific injury types. Users select injury types or directly enter their per-worker compensation costs, enter a variety of related information and view the results in terms of costs and sales needed to cover those costs.
The result for most users? It’s just not worth it to subject workers to avoidable risks. The idea that companies can save money by cutting corners with safety isn’t true after all. Fortunately, that means the solution is a win-win for everyone involved! An effective, well-planned safety program will keep your employees safe, happy and productive, and it will improve your company’s revenues and profit margins.
One of the best ways to improve workplace safety is to track the incidents that do occur and change policy to address those specific hazards. To efficiently and effectively monitor your incidents and act accordingly, you’ll need an electronic documentation system.