The cost of safety – is it real? How can it be measured? While witnessing the benefits of safety programs aren’t always tangibly seen, the impact they have on your bottom line can not only save you a considerable amount of money in unexpected costs but can also positively impact productivity and employee morale.
In fact, OSHA studies have concluded that workplaces who establish safety and health management systems have the potential to reduce their injury and illness costs by 20 – 40%. Significant! Taken a step further, safe environments have been proven to improve employee morale, which can also positively spin productively and service.
In today’s hectic business environment, safety-related costs can be the difference between finishing the year in the black…or the red.
Measuring the Cost of Safety
A Stanford study suggested that the average safety costs for a business can be up to 2.5% of your overall and 8% of your payroll alone. With that in mind, trying to divide up your “hard” and “soft” costs to better understand which are affecting you can be paramount to proper cost measurement. We break them into two major categories:
Direct (hard) Costs:
- Safety Wages
- Operational Costs
- Insurance Premiums/Attorney Fees
- Accidents & Incidents
- Fines & Penalties
Indirect (soft) Costs:
- Accident Investigation
- Administrative Expenses
- Worker Stress
- Training & Compensating Replacement Workers
- Declining Reputation
For every $1 invested in the safety of your business, you can expect savings of $5 or more as a result of declining incident numbers. With a solid program in place, your costs will naturally decline in time. Take time to measure and establish goals for these cost variables over time to ensure your greatest return.
Remember, when you manage risk responsibly and effectively, your bottom line stands to benefit the most from your diligence. Let one of our team members get a loss control program started for you!