How Safety Saves You Money
According to the Occupational Safety & Health Administration agency (OSHA), occupational injury and illness cost businesses $170 billion every year. However, those businesses who implement safety and health management systems are able to cut these expenses by 20 to 40 percent (OSHA, 2016). Some of the areas where the savings can be seen include profits, productivity, fines/fees, and the training of new and temporary workers.
To put these costs into perspective, this study by the Construction Safety Association of Ontario shows that 15 years ago the average cost of a lost-time injury was $35,000. The same study also found that workplace injuries accounted for 6-9% of a project’s cost whereas effective health and safety programs turned that into 2.5% of a project’s cost (CSAO, 2001).
We’ve previously discussed the benefits of an Ergonomics Program and how ergonomic injuries account for roughly “30% of workers compensation costs”. However, with an ergonomics program, businesses not only see improvements but savings as well. These savings are in productivity (5%), back-related absenteeism (50%), turnover (35%), and disability leave (40%)(Schneider, 1985).
As more businesses analyze the financial benefits of their safety programs the increasing numbers of success stories speak for themselves. One such example is Aetna Insurance; it was able to see a $98,500 cost benefit from redesigning workstations to have “adjustable ergonomic chairs, task lights, acoustical panels, and increased space”(WSDLI, 1996). The full breakdown of improvements is as follows:
Productivity increased 64% (10-15% due to physical changes, remainder due to organizational)
Absenteeism decreased 14%
Turnover rate decreased 86%
Additionally, the National Safety Council cited a survey of CFO’s, of which 60% claimed every $1 spent on safety returned $2 or more; and data obtained by the Construction Users Roundtable calculates the ratio of savings-to-safety health program costs (when using 8% reduction in losses) would be 3.2 to 1 (NSC, 2013).
There's a lot of talk about the health reasons for various safety measures, but it’s important to know that keeping your workers safe is an investment, not a cost. The ROI is quantifiable, and while we’d never claim to put a value on human health and safety, failing to protect those workers has very real costs.
If your business needs help analyzing, creating, implementing, or just updating a safety program, ORR Safety experts are here to help, every step of the way. They have years of experience and are happy to help you find the best solutions to any safety concerns. We welcome the opportunity to answer any questions you have, either by phone or the form on this page.
OSHA (2016) Safety and Health Add Value. Retrieved from https://www.osha.gov/Publications/safety-health-addvalue.html
CSAO: Construction Safety Association of Ontario (2001) Improving Safety Can Save You Money. Retrieved from http://elcosh.org/document/1452/d000505/improving-safety-can-save-you-money.html
NSC: National Safety Council (2013) Journey to Safety Excellence. Retrieved from http://www.nsc.org/JSEWorkplaceDocuments/Journey-to-Safety-Excellence-Safety-Business-Case-Executives.pdf
Schneider, Franz (1985) Ergonomics and Economics. Retrieved from http://www.allscan.ca/ergo/ergoecon.htm
WSDLI: Washington State Department of Labor & Industries (1996) Examples of Costs and Benefits of Ergonomics. Retrieved from http://www.pshfes.org/Resources/Documents/Ergonomics_cost_benefit_case_study_collection.pdf