Why It’s Worth it to Determine the Cost of Safety
If you think the cost of creating a solid safety program is expensive; think again.
Not only does a well running safety program protect lives, it can also save your company money — now and in the long run.
Find a Solution That Fits Your Company.
You don’t necessarily have to spend a lot of money when implementing and maintaining safety standards.
Larger businesses may find it beneficial to hire an outside company to improve their safety program. Especially if there are a lot of employees and departments that need to be considered.
But not every company needs to hire consultance to rework a safety plan or develop a new one.
Whichever way you do it, it’s possible to strike a balance that fits your company’s budget and keeps your workers safe.
It’s all about determining the cost versus the value for your team and fine-tuning it to meet your company’s goals.
Evaluate Cost Versus Value:
Bringing your management team on board with the program you find most effective is essential.
It’s critical to drill down to the real cost versus value of the programs you’re considering. You can’t present a plan or defend it effectively without knowing how the cost will factor into enhanced safety.
The more you know at the program’s outset, the more you’ll be able to measure effectiveness and value in the weeks, months, and years to come.
While the costs of a safety program aren’t carved in stone, some of them are relatively easy to quantify. For example, you probably know the cost of PPE used by your workers. But some costs aren’t straightforward.
International Risk Management Institute, Inc. recommends separating costs into safety and non-safety categories.
“Keeping these two principle costs components separate helps organizations track how they change over time and helps to show how investments in safety can actually reduce the cost of non-safety.”
Safety costs are expenses related to improving workplace safety. Non-safety costs include any expense from a lack of safety in the workplace, like accidents, incidents, or lawsuits.
The value of your program is determined by how much non-safety costs improve as a direct response to safety expenditures.
This is your return on investment. Every company will have a slightly different gauge.
Identify the Direct Costs
The direct costs of a safety program will vary by company and industry, but it includes:
- Worker’s compensation premiums
- Safety-related wages
- Safety training program development
- Training implementation
- Hazard research and identification
- Personal Protective Equipment costs
- OSHA or CCOHS fines for noncompliance
- Attorney fees
Direct costs are easier to identify and back-up in writing. They’ll also stay relevant as your safety program matures.
When the number of workplace injuries goes down, some of your direct costs will follow suit.
A company with a higher incidence of accidents and injuries might have higher attorney fees and spend a lot more time in research and training to correct the issues.
Now Look at Indirect Costs
Some indirect costs will be the same no matter your business, others will be more industry specific. For example:
- Poor morale and reduced productivity, particularly after an accident or incident
- Poor employee retention, new hires, on-boarding, and training
- Employee sick time based on number of injuries/illnesses
Your company’s reputation is another important indirect cost that can affect profits.
When employees aren’t comfortable at work, they’re more likely to move on to a new job. This results in a company that is less competitive because the best workers won’t want to work there.
Safety Program Affordability
Don’t trust anyone who says that a safety program is not affordable. Especially in smaller companies.
A solid program and good, conscientious practices don’t have to come with a steep price tag — we even outline the steps to create a PPE Program.
Don’t Be Shortsighted
Some companies still cut back on safety because it’s considered too expensive. New PPE might not be in the budget, or there could be too much happening at work to stop production and squeeze in safety training.
But that’s shortsighted.
An accident can have much steeper costs, and a smaller company might have an even harder time recovering from the damage.
CCOHS explains that even small companies with a good safety track record can fall prey to unexpected costs that ironically stem from efforts to save money.
“They often don’t have the extra resources needed to help them through the aftermath of an accident. Plus, you do not need to have an accident to incur lack-of-safety expenses.”
Citations and fines for noncompliance are expensive and Since they’re considered penalties and not operating expenses, OSHA and OSH fines are not tax deductible.
The true cost of safety is something you can only quantify after you learn how much non-safety items affect the bottom line. You’ll incur expenses with practically every safety program, even if it’s just the time invested in development and training. But when that program reduces non-safety costs, you’ll likely come out ahead in many different ways, both direct and indirect, and both tangible and intangible.
Spending a bit of money today to save a lot of money in the future make sense for your business and the safety of your workers.
Want More Safety Tips?
Read our post “Why Safety Culture Reduces Worker Injury.”