Safety officers often have to justify their safety and health proposals to their employers. In an ideal world, keeping the workplace safe should be enough. However, at many companies, management will only approve expenditure by the economic benefits the proposals will bring. Fortunately, as a safety officer, there are several strategies you can use to win over management and backup your case.
The cost of workplace injuries
You are probably familiar with Return of Investment (ROI) as a way of measuring and evaluating the efficiency of an investment. This principle can also help convince reluctant employers that spending on workplace safety will benefit them – financially.
Although there is no widely acceptable ROI formula for safety investments, safety professionals can still present the economic benefits of adopting safety procedures and equipment. You can start by presenting how much a work-related injury will cost the company.
In 2016, workplace injuries in the United States cost its economy around $151 billion according to the National Safety Council (NSC). US economic costs and losses break down by:
- Salary and productivity losses – $50 billion
- Medical expenses – $34 billion
- Administrative expenses – $49 billion
- Motor vehicle loss or damages – $5 billion
- Employer’s costs (uninsured) – $12 billion
- Fire losses – $2.7 billion
The same statistics also show that every medically consulted workplace injury costs American taxpayers around $32,000. Meanwhile, in the UK, according to PrincipalPeople.co.uk, the cost of self-reported workplace injuries 2016/17 reached £15 billion.
While many employers only consider direct costs such as workers’ compensation, medical and legal expenses, there are also indirect costs that include:
- Lost productivity – Based on NSC statistics, each worker needs to produce an additional $1,000 to compensate for the work injury costs
- Training of replacement employees
- Incident investigations
- Implementation of corrective or remedial measures
- Repairs of damaged property and equipment
There are also other cost computation models like the one used by the Center for Disease Control and Prevention (CDCP). However, bear in mind that some of these calculations only account for direct and not ‘indirect’ costs.
How to quantify your safety proposal
Many safety experts agree that keeping the workplace safe is good for business but you still have to present a credible argument. The only way to convince company leaders is by presenting quantifiable costs and benefits.
Safety managers or engineers can use an ‘internal benchmark for workplace injuries’, which will require:
- Listing the typical injuries that occur within the company (3-5 types will be sufficient)
- Consulting with purchasing, accounting and any related company departments or divisions to compute and add all direct company costs for that particular injury
- Including all indirect costs
You can then present that benchmark along with costs. Using data from the organization itself will help your proposal to the company’s board to be more persuasive.
Business organizations by nature will tend to embrace cost-saving ideas. When looking at your benchmark report, draw attention to:
- Lower workers’ compensation
- Minimal medical costs
- Avoiding possible penalties
Specify the benefits of safety to profitability
It’s important to remember not to picture safety as something that will prevent things from happening. Instead, show how your program will help the company continue its operations. Also, safety proposals should always include specific benefits to the company. So remain focussed and explain:
- The purpose or goal of the safety program, procedure or equipment
- How it can be quantified
- How to know if it’s successful
If the safety proposal, program or equipment doesn’t work based on the set criteria, management will have some basis to discontinue, modify or change it.
Today, many companies implement various safety programs and measures to reduce workplace injuries, and costs such as:
- Alcohol and Substance abuse prevention programs
- Fall or accident prevention training
- Motor vehicle safety initiatives (eg, always and properly wearing a seat belt)
- Lower back and lifting training
- Proper use of respirators in hazardous working environments
- Lockout or tagout
Programs or training cost money, which is why safety officers need to prove the financial worth of their safety proposal. They could take into account:
- The number of workplace injuries that have occurred for the past several years.
- The calculation of direct cost and related indirect cost of the injuries
- The estimated costs that the company can ‘save’ once the safety program, protocol or equipment are put in place.
Evidence of the link between safety and profitability
Several studies have confirmed the direct correlation between a safe working environment and increased profit. Recently, the Journal of Occupational and Environmental Medicine report showed that 11 out of 19 company-driven safety or health interventions were successful in driving down costs. Meanwhile, most of the unsuccessful interventions focused on the individual, not the organization. Also, a European study declared that many small and medium-sized companies could enjoy positive ROI from safety investments in less than five years.
San Francisco safety case
In one case, San Francisco city employees work in a building that many experts think is unsafe despite official reassurances. The safety and health concerns range from contaminated water to the possible presence of radioactive substances.
In this scenario, if the concern becomes a reality, the city will have to deal with:
- Taking care of the sick employees in the city
- Finding replacements for them
- Possible lawsuits for letting employees work in an unsafe environment
Safety officers can quantify these factors when presenting them to city hall, by comparing the transfer cost with the potential total costs of the employees getting sick. In this scenario, local officials would rather transfer their employees than risk paying medical costs and lawsuits. These circumstances can also slow down city hall operations.
Companies are beginning to understand that creating safe working environments bring various benefits aside from protecting profits. By implementing safety measures they can also boost employee morale, reduce absenteeism and turnovers. While some safety programs or procedures can cause work to slow down slightly, the resulting benefits such as reduced injuries and costs can certainly compensate for it.