Selling upper management on increased budgets (or even just budgets that hold the line) for safety and health programs can be tough—especially in difficult economic times. Here’s some ammunition.
It’s a documented fact: Employers that implement effective safety and health management systems can expect to significantly reduce work-related injuries and illnesses and the associated costs, including workers’ comp, medical expenses, and lost productivity.
To help you make the case for investing in your safety management system, OSHA offers the following items as evidence why investment in workplace safety can improve an organization’s financial performance.
- The most disabling work-related injuries cost this country $53 billion in direct workers’ compensation costs in 2008, averaging more than one billion dollars per week. Source: 2010 Liberty Mutual Workplace Safety Index
- Businesses spend $170 billion a year on costs associated with occupational injuries and illnesses—expenditures that come straight out of company profits. However, workplaces that establish safety and health management systems can reduce their injury and illness costs by 20 to 40 percent. In today’s business environment, these costs can be the difference between operating in the black and running in the red. Source: Safety and Health Add Value, OSHA publication.
- There is a direct positive correlation between investment in safety, health, and environmental performance and its subsequent return on investment. Source: White Paper on Return on Safety investment, ASSE.
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- Injuries and illnesses increase workers’ compensation and retraining costs, absenteeism, and faulty product. They also decrease productivity, morale, and profits. Businesses operate more efficiently when they implement effective safety and health management systems. For example, a plant with 50 employees decreased production of faulty product and saved more than $265,000 with a strong safety and health program. Source: Safety and Health Add Value, OSHA publication.
- A forest products company saved over $1 million in workers’ compensation and other costs from 2001 to 2006 by investing approximately $50,000 in safety improvements and employee training costs. The company has participated in OSHA’s Safety and Health Achievement Recognition Program (SHARP) since 1998. Source: OSHA Small Business Success Stories.
- The average worksite in OSHA’s Voluntary Protection Programs (VPP) has a Days Away Restricted or Transferred (DART) case rate of 52% below the average for its industry. Fewer injuries and illnesses mean greater profits as workers’ compensation premiums and other costs plummet. Entire industries benefit as VPP sites evolve into models of excellence and influence practices industry-wide. Source: OSHA VPP
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Bottom Line
According to OSHA, all the research and best evidence points to one conclusion:
“Employers that invest in workplace safety and health can expect to reduce fatalities, injuries, and illnesses. This will result in cost savings in a variety of areas, such as lowering workers’ compensation costs and medical expenses, avoiding OSHA penalties, and reducing costs to train replacement employees and conduct accident investigations. In addition, employers often find that changes made to improve workplace safety and health can result in significant improvements to their organization’s productivity and financial performance.”
Tomorrow, we’ll review OSHA’s $afetyPays program, which can help you estimate the costs of occupational injuries and illnesses and the impact on your company’s profitability. Armed with this data, you can talk real dollar benefits the next time you have to defend your safety budget.