By: Carl E. Habekost, Esq. Build A Safety Culture to Mitigate the Risk of Workplace Injuries.pdf
Safety is a concept that should be familiar to everyone. For example, we read safety reports when we buy a car, we instruct our children to wear helmets when riding bicycles, and we even read safety labels on household items. But how often do we talk about safety in the workplace, the place where we spend 1/3 of our adult lives?
The answer to this question is probably not often enough. Effective management of safety programs reduces the extent and severity of work related injuries and illnesses. It improves employee morale and productivity while reducing workers’ compensation costs. The program goes beyond specific legal requirements to address all hazards in the workplace. At its core, an effective safety program is simply the result of the company’s culture of safety. Outstanding organizations create an environment in which safety is more than just a box to be checked. Rather, safety is the foundation and philosophy of the company from frontline workers to senior management.
In stressful economic times, many companies are reluctant to invest the time, effort and money necessary to develop a culture of safety. These companies are likely unaware of studies which establish returns up to $4 for every $1 spent on safety. A typical formula for estimating the detrimental impact of workplace accidents on profits and sales includes both direct costs and indirect costs of the injury. Direct costs are medical bills and indemnity payments directly related to the injury. Indirect costs involve, among other things, time and money spent on training a replacement worker, time lost by supervisors in analyzing and investigating the accident, damaged tools and equipment, loss of efficiency by the breakup of a work crew, and lost time by fellow workers talking about the accident. One common method to calculate the indirect costs utilizes a multiplier of 1.1 times the direct costs of the accident. For example, assume the direct cost of an accident is $12,000. The direct cost times the multiplier of 1.1 reveals indirect costs of $13,200. Therefore, the total cost of the accident would be $25,200 from adding $12,000 (direct costs) plus $13,200 (indirect costs). So how does this affect the bottom line? If we assume that the company operates on a healthy 10% profit margin, the total costs of the accident of $25,200 divided by the profit margin of 10% reveals that the company will need to generate an additional $252,000 in sales to pay for the injury.
As noted by the above example, any workplace accident is detrimental to the company for a variety of reasons. This is especially true if the accident was avoidable but for the lack of appropriate safety measures. Therefore, the investment of time, effort and money in building a safety culture to mitigate risk of workplace injuries is healthy for the bottom line. Safety pays!