How can effective safety management actually save money?
Workplace safety has become a key concern for most organizations, and for good reason. For the worker, the benefits of working in a safe environment is obvious – workplace accidents or occupational accidents can lead to irreversible consequences that directly affect the worker’s quality of life. For the employer, effective safety management can be seen as an investment to increase productivity and reduce accidents and injuries. As an investment, savings are earned from the prevention of injuries and accidents. Having a strong safety culture not only promotes a healthy environment that helps motivate workers, but also saves money by avoiding preventable costs.
Work injury costs
Injuries are expensive, and the reality is that injuries can occur when occupational risks and hazards are not averted in the workplace. In 2017, the National Safety Council (NSC) estimates the total cost of work injuries to be $161.5 billion. Estimates provided are comprised of wage and productivity losses, medical expenses, administrative expenses, motor vehicle property damage, and employer costs. Further, the cost per medically consulted injury was estimated to be $39,000 while the cost per fatality was $1.15 million.
In terms of losses in operating time, the NSC estimates 70 million days lost due to injuries within the same year.
Savings through safety
Given an illustration of the expenses incurred by injuries, the importance of safety management and safety culture as an investment is highlighted. While returns are not always explicit, and might not be felt immediately, there are key areas where savings can be realized:
- Insurance premiums
Insurance premiums are greatly affected by the historical safety performance of an organization. More occurrences of injuries would translate to higher premiums.
- Worker replacement costs
Aside from the direct costs of the loss of a worker due to an injury, replacements and substitutes to cover for the loss would also incur costs. Additional training for replacements, and possibly overtime hours to cover the increased load would add to the expenses shouldered by the employer.
- Loss of productivity
Accidents and injuries cause downtime. It takes time to complete investigations and root cause analysis procedures at the event of a serious accident. This period of inactivity can translate to a halt in operations, and therefore a loss of productivity.