The safety payoff

How a smart safety program can bolster your company's  bottom line.

by Julie Copeland

Work-related injuries cost American business in excess of $131.2 billion a year, according to the National Safety Council.

Any way you look at it, that’s a serious number. This is exactly why companies should be serious about having a comprehensive safety program in place. 

If the first question or concern that comes to mind is the cost of implementing a comprehensive program, maybe it’s time to step back and really think about the cost benefits of a smart safety program and how it can bolster a company’s bottom line. Instead of thinking about how much a safety program will cost a company, evaluate how much the company can save when workplace injuries are reduced. Consider the following:

A three-to-one return: In Liberty Mutual’s latest Executive Survey of Workplace Safety, released in August 2001, 61 percent of executives reported at least $3 saved for each $1 invested in safety. According to this survey, 95 percent of business executives reported that workplace safety has a positive impact on a company’s financial performance.

The numbers tell the story: The Occupational Safety and Health Administration reports in its April 2002 online newsletter that when Igloo Products Corporation spent $1 million implementing policies and procedures to bump up safety, company-wide injuries plunged 40 percent and medical costs shrank 60 percent in the first year alone.

Safety equals staying competitive: Safety programs have a real effect on workers’ compensation costs, which for many industries are the largest line item on the books. Spiraling insurance costs can stand in the way of a competitive edge, something nobody can afford to lose in today’s economy.

Most business owners implement safety programs for three reasons: to address safety concerns for employees’ well-being; ensure OSHA compliance (and avoid costly fines); and contain workers’ compensation and medical costs. There is a clear link between workplace safety and a company’s performance. A high level of safety performance reduces employee pain and suffering, avoids the direct costs of workplace injuries, and prevents the indirect costs of these accidents, from lower employee morale and lost productivity to the high costs of hiring and training replacement workers.

Employee satisfaction and retention
For most companies, employees are the greatest asset. So, why not protect your most valuable asset with a comprehensive safety program?

Employees today rank workplace safety as an important factor in choosing their place of employment. According to a 2001 survey conducted by recruiting source CareerBuilder, 82 percent of U.S. employees surveyed chose safety as a significant job component. In fact, safety has surpassed perks such as bonuses, corporate leadership, job titles, stock options and opportunities for travel as one of employees’ top priorities. Workplace safety can help your company attract and retain good employees.

OSHA compliance
Viewing safety programs and personal protective equipment (PPE) as a necessary evil mandated by OSHA is plain and simply shortsighted. Overall costs, not initial purchase price, should be the most important economic consideration. A successful safety effort can prevent OSHA citations and injuries and illnesses, as well as provide less quantifiable benefits like enhanced teamwork and employee morale, better attendance rates and general employee health, productivity and quality.

Direct and indirect injury-related costs
According to the National Safety Council, 80 million workdays were lost in 2000 due to injuries, and employers paid $28,000 per disabling injury (including estimates of wage losses, medical expenses, administrative expenses and employer costs).

Figuring out the direct costs in medical and workers’ compensation for a work-related injury is one thing, but tallying the indirect costs that a lapse in safety can result in can be a real eye opener. These costs are frequently overlooked, but must be considered when estimating the total costs of workplace injuries and illnesses. Once management takes these costs into consideration, it will be clear that a less-than-adequate safety program is something they just can’t afford. A few examples of these costs include:

• Cost of lost time of the injured person, including time spent seeking medical treatment.
• Cost of “sympathy” time by other employees, who stop to help, watch what’s going on, comfort the person or each other, etc.
• Cost of time lost by supervisors who are helping the injured party, investigating the incident, making arrangements for work to continue or training a replacement employee.
• Cost of OSHA inspection and/or fines.
• Cost of damaged tools, products and equipment.
• Costs of continuing wages when the injured employee returns and is only able to perform “light duty.”
• Cost of weakened morale resulting from employees’ complaints about a poor safety program being in place.

These costs add up. When you consider the big picture, it’s clear that investing in company safety is not only the right thing to do, it’s good for business. With today’s economic pressures on companies, safety programs can suffer if top management is not aware that an investment in safety can actually improve the bottom line.

Julie Copeland is vice president of sales for Arbill Glove and Safety Products, a manufacturer and supplier of safety products and services. She can be contacted at . For more information, visit www.arbill.com.

This article appeared in the June/July 2002 issue of MRO Today magazine. Copyright, 2002.

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