OSHA Tip Tuesday- The Cost of Workplace Injuries

Safety managers are frequently asked to look at the bottom line when it comes to introducing new safety programs or creating an annual safety budget. Rather than struggle with the powers that be each year when budget time comes, get management on your side once and for all.

In order to do this it is important to present meaningful data that will help make your case, and OSHA has a tool to help you with that. There is a true, tangible cost for workplace injury and illness that hits the bottom line just like any other expense. Reducing accidents at work has both tangible and intangible cost benefits. Reducing the cost of workplace injury happens only through effective health and safety programs (HASPs) and safety training. Consistency and frequency are key. Safety simply cannot be pushed to the back burner or the HASP will fail. When the HASP fails, injuries happens, days of work are missed due to either injury or illness, and the bottom line suffers.

Let’s talk about the intangible first. What is the ROI of a happy, healthy workplace? What is the price that you can put on a worker arriving home safely every evening? There is an intangible benefit to knowing that your company cares about you. It is true that workers whose values mesh with their company’s values are likely to stick around, sometimes even when a better monetary offer comes along.  Smart workers know you can’t put a price on being valued, so when a company’s ethos includes the well-being of its workers they in turn will value the company.  You can quantify this through reduction of turn over, missed days of work, all of which are valid quantifications and we’ll get to that in a minute. First, just imagine the difference between the productivity of a worker who knows that they are valued, and the effort put forth by a worker who knows that their personal health and safety is secondary to making budget numbers. If you can imagine yourself in each scenario you’ll start to get a pretty clear picture of what that means in terms of productivity.

While important, the intangible can be less convincing to management when you are looking to implement a new safety training program, installing new machine guards, or upgrading some other piece of safety equipment. Management wants quantifiable data. That’s where OSHA has really come through for safety managers with budget issues. OSHA’s $afety Pays Program has all the data you need on the cost of workplace injury and illnesses. Simply input the workplace injury or illness that you are looking to eradicate from your workplace and the $afety Pays program will ask you a few questions like how many accidents per year are you seeing, and what your profit margin is. Depending on the size of your company, profit margins may not be information that safety managers have ready access to, in which case they will have to enlist the help of someone in the finance department, or enter the standard 3%. Once the specifying information has been entered the OSHA $afety Pays Program will output a report showing the cost of the injuries and the number of sales that it would take to recover that cost. In order to get the full benefit of the OSHA $afety Pays Program make sure you read the “Background of Estimate Costs”, so you know how they are arriving at their numbers. This will be important information to present to management as well.

The numbers are truly astounding. For six (6) sprain injuries a year at a minimal 3% profit margin here are my totals:

    Direct Cost (Worker’s compensation claims; which vary based on your policy) : $ 170,028

    Indirect Cost (lost time, overtime, administrative time, repair or clean-up, etc.): $187,026

    Additional Sales: $6,234,360

As you can see the numbers add up quickly. I really appreciate the sales numbers. When you start to see a $6M difference in an annual sales budget for 6 fairly minor injuries such as a sprain, you’ve begun to uncover the true cost of workplace injuries.