The Occupational Safety and Health Administration (OSHA) data demonstrates how effective workplace safety and health programs can significantly reduce injury and illness costs, helping maintain profitability amid rising inflation. Consider these statistics:

• U.S. employers spend $1 billion weekly for direct workers’ compensation costs.
• Injuries and illnesses drive up workers’ compensation and retraining expenses.
• Lost productivity from injuries and illnesses cost companies roughly $63 billion annually.

Learn how safety programs can help offset inflation’s impact on your bottom line.

Why You Should Invest in a Safety Program

Organizations investing in occupational safety and health programs can see a positive return on investment (ROI) through various benefits:

• Increased operational efficiency: prioritizing health and safety enhances productivity
• Improved employee morale & recruitment: a robust program attracts new talent and demonstrates commitment to current staff.
• Positive image: A reputation for being safety-minded and health-conscious can drive revenue
• Regulatory & legal compliance: Avoid costly fines and reputational damage.
• Financial savings: Reducing worker injuries lowers medical and legal costs.

Return on Investment (ROI) of Safety Programs

OSHA studies indicate that for every $1 invested in an effective safety program, you can save up to $6 in occupational illnesses and injuries. Establishing measurable benchmarks over time demonstrates your value of safety. Remember that your total cost of safety is only part of your overall cost of risk management. When safety is controlled and monitored, it can also help drive down your overall cost of risk.

Proving the Value of Safety

Measuring the ROI of safety programs can be challenging, but essential.  By evaluating safety investments against expected returns, companies can adopt various approaches to measure safety costs effectively. A Stanford study places safety costs at 2.5% of overall costs, while an Economist Intelligence Unit (EIU) report estimates general safety costs at 8% of payroll.

Categorizing Safety Cost

Accurate tracking of safety costs is crucial for understanding profitability. Safety costs are divided into:

• Direct Costs: Employee wage benefits, medical payments, vocational rehabilitation, death/dependent benefits, legal fees and claims investigation.
• Indirect Costs: Administrative expenses, in-house claim investigation, hazard mitigation, training expenses, OSHA fines, insurance premiums, repairs, workplace culture concerns and reputational struggles.

Calculating indirect costs reveals that minor accident costs are four times greater than direct costs, while serious accidents can be 10 to 15 times more costly, especially with OSHA fines or litigation.

The Cost of Workplace Injuries

Understanding injury-related expenses helps quantify the ROI of health and safety efforts. Cost-saving areas include:

• Property & Equipment: Repairing and purchasing equipment, workplace modifications.
• Administrative: Incident management, investigation, recruiting/training replacements.
• Employee: Absenteeism, turnover, overtime wages, wage enhancements, employee replacement.
• Insurance & Compliance: Higher premiums, legal expenses, OSHA fines.

Safety as a Business Strategy

Companies that prioritize safety as a core strategy benefit significantly.  Consider the following:

• A West Virginia coal mining company reduced its workers’ compensation rate to $1.28 per $100 payroll compared to its competitor’s $13.78.
• An OSHA consulting program reduced a forklift manufacturer’s annual losses from $70,000 to $7,000.
• Implementing a fall protection program reduced an employer’s fall accident costs by 96% or $4.25 to $0.18 per person per hour.

Where to Find Safety Program ROI

Implementing a health and safety program as part of an overall culture of safety offers multiple ROI opportunities, such as:

• Injuries: Lower injury counts translate to cost savings.
• Productivity & Time Lost: A safe workplace promotes employee engagement and productivity.
• Compliance Costs: Avoiding OSHA citations and fines prevents costly penalties.
• Insurance Expenses: Reduced claims and improved safety can lower insurance premiums.
• Employee Turnover: Lower turnover rates due to a safe work environment save recruitment and training costs.

We’re Here to Help Save Money With Safety Programs

There is a clear link between safety and profitability. We’re committed to helping you establish a strong safety and health program that protects your workers and bottom line. Connect with a member of our team to learn more about our value-added services.