Ensuring workplace safety can require a significant financial investment for any business, but even more so for those in the construction industry. Given the inherent nature of construction, hazard mitigation on the jobsite can be a time-consuming and costly venture.
While it may be tempting to scale back on your safety investment during challenging economic times, doing so can cost far more than you save. A 2005 study by the National Safety Council reports the average work-related injury results in a direct cost (ambulance fees, medical expenses, etc.) of $38,000. Indirect costs (i.e., equipment downtime, lost productivity, legal actions, etc.) are exponentially higher. They are estimated to range between four to 10 times the direct costs.
To put this into perspective, the Safety Management Group hosts a "true cost of injuries calculator" at www.safetymanagementgroup.com. If you plug in $38,000 in direct costs, the calculator multiplies this by four to give you indirect costs of $152,000, with a total net cost of $190,000. The calculator uses this to determine the potential impact to your bottom line. For example, assuming an 8% profit margin, you would need $2,375,000 in revenue to offset the loss from a single work-related injury. Calculate the costs of multiple injuries - or worse yet, fatalities - and it won't take long to justify every safety dollar you spend.
It may help if you think of safety as a profit center, rather than an expense. Following are just a few potential profit areas:
Insurance premiums - If you keep workers comp and other insurance claims under control -thus lowering your experience modification rating (EMR) - insurance companies will perceive your company as a lower risk. Consequently, you may be eligible for reduced premium rates.
Regulatory compliance - Failure to adhere to OSHA-mandated safety requirements can result in substantial penalties. Having an effective safety program in place can help you to avoid fines, or may help to reduce the severity of fines should a violation occur.
Higher caliber workforce - A well-trained workforce with proper safety training is an invaluable resource for any company. Not only will employees be more productive, they will be able to help identify unsafe conditions and/or operating practices, as well as situations where jobs might be done more safely and effectively.
Company safety culture - Promoting a safe work environment improves employee morale, a much-needed commodity in tough financial times. And while it may sound hokie, if employees believe the company cares about their well being, they in turn will care about the well being of the company. The result can be greater productivity and employee loyalty.
They say that "safety is an attitude." This holds true, regardless of economic conditions. If you see safety as just another expense, it will be reflected in your EMR and your bottom line. But if you see it as a means to save both lives and dollars, the ROI will follow quickly.