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“Time is money, but the cost of lost-time injuries carry a high price tag.”
The average cost to a company for a lost-time injury in the workplace is $7,500. If you think that’s an overestimation, consider this: The cost doesn’t stop with a worker’s compensation claim or replacement of a broken piece of equipment. It can branch out to include many other costs, as well.
Indirect costs are difficult to predict and perhaps even more difficult to calculate. According to OSHA, the average cost of an eye injury on the job is $1,463. That includes costs directly related to the injury as well as far-reaching costs, such as the time invested in reworking the company’s safety program and retraining employees.
A comprehensive health and safety program can cut the risk of injury and the direct and indirect costs. For example, companies that participated in the agency’s Voluntary Protection Program saved a combined amount of approximately $130,000,000 in a single year. Although your industry might have fewer safety risks and a lower occurrence of lost-time injury than others, a focus on prevention is always worth the effort. It can save lives, and it can also help reduce the damaging effect on the company’s budget.
Paying out an indemnity claim after a workplace accident can hit a company hard. The costs might run well into the thousands depending on the nature of the incident. But direct costs of a lost-time injury are only just the beginning. Indirect costs can total much more.
Business Case for Safety and Health states that employers pay out an estimated $1 billion every week just in worker’s compensation claims. That’s a staggering number, especially once it’s added to other common direct costs, such as legal services and medical expenses. And the tally is really just getting started at that level.
Indirect costs, on the other hand, are like the layers of an onion. When you peel back one layer, you’ll usually find more and more underneath. For example, an injury might damage an expensive piece of equipment. Its replacement or repair then becomes an indirect cost, and so does the time that it takes to procure the replacement or schedule the repair.
Another possible indirect cost is the loss of production while equipment is out of commission, which can trickle down and affect other departments. If repair isn’t feasible and new equipment is required, workers might also need training. And that equals more lost time.
Even a drop in worker morale, which can easily happen after an accident or injury, especially if it’s a serious one, can return severe financial effects on the company. Layers and layers of indirect costs can accompany even the slightest work-related injury. When it’s a lost-time injury, the costs are usually much greater.
“Everyone from the safety director to the employees is responsible for safety.”
Unfortunately, the cost and time involved with developing and implementing a sophisticated health and safety program could turn off some employers. There might not seem to be enough hours in a day or dollars in the budget for such an undertaking, especially when there’s already a safety plan in effect. But if the cost of lost-time injuries are racking up, the plan isn’t saving money; it’s a liability.
According to OSHA’s “$afety Pays” initiative, a comprehensive health and safety program in the workplace can return as much as $6 for every $1 invested. Part of the reasoning behind the savings is a similar layered onion effect, just in reverse.
For example, your worker’s compensation costs decrease when there’s a solid plan. Morale can also benefit from a good safety program, and medical costs will almost certainly go down.
But proving the financial benefit of workplace safety still might take some effort. It’s easy to explain the importance of safety, but the financial burden of improvement might outweigh the healthy worker benefit. Unfortunately, that only lasts until there are lost-time injuries.
Eliminating a workplace hazard might seem too costly when workers can be trained in better safety habits. But when a worker is injured and the injury was preventable, all of the direct and indirect costs could add up to much more than a better safety program. And if the hazard and injury result in an OSHA citation and fine, better safety on the front end would seem like a minor investment by comparison.
Maybe you think that a new safety program sounds great, if only you could afford it. If so, you should know that there are numerous tools that help you design a program and maintain it in-house — your insurance company may even have a program that can help.
Areas of program focus should include:
You’ll probably think of additional points to cover, such as lockout/tagout procedures and the administration of first aid in case of injury. The important thing isn’t creating the perfect safety program out of the gate. Workplace health and safety should be an ongoing effort. So the program you design will naturally evolve and improve year to year.
Lost-time injuries affect so much more than the workers who file a report or claim. The ripple effect can send aftershocks in the form of indirect costs that hurt the company’s profitability now and for years to come. A solid health and safety program is the answer.
Even a small injury, such as a minor cut, can stop a production line, create a slipping hazard and even damage customer relationships if a deadline isn’t met. In that case, investing in safer, cut-resistant work glove would be worth it. And so would the time and effort devoted to creating a health and safety program that protects the workers as well as the company day in and day out.
If lost-time injuries plague your workplace or you just want to improve on your existing plan, personal protective equipment can help meet the company’s goals.
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Hand Injury Rates are Reduced by 60% when using the right gloves.