But allocating portions of a budget to the unknown 'what ifs' of the world can seem difficult or even risky on paper. Industry safety falls squarely into the category of mitigating the unknown possibilities.
Business spend $170 billion a year on costs associated with occupational injuries and illnesses, according to OSHA. Obviously, dollar signs should not be the deciding factor when it comes to workplace safety, but knowing and understanding the numbers can assist in risk analysis cost scenarios.
The National Safety Council has made a strong case for investing in prevention of on-the-job injuries in order to stave off the often higher costs of dealing with the injury. An article titled “The ROI of Safety” in the NSC Congress & Expo magazine Safety + Health laid out the price tags for workplace injuries and fatalities.
Read the full article here.
The article estimates that a single non-fatal accident costs a company $39,000 on average. This total includes wages losses, medical expenses, administrative expenses, and employer costs. When a fatality occurs, that number skyrockets to $1.4 million.
Although those numbers are high enough to give pause, they only account for the direct costs per incident. Direct costs are easy to calculate and only include items such as medical bills and workers’ compensation.
Indirect costs, like loss of productivity and higher insurance premiums, are estimated at $2.12 for every $1 of direct cost. Adding the tangible sum of direct cost to the indirect cost raises the $1.4 million mentioned above to $3 million.
But this is an average across all industries. Construction accidents and injuries tend to accrue even higher indirect costs -- up to 17 times amount of the direct costs. And across the nation, lost productivity from injuries and illnesses costs companies $60 billion each year.
When a company is committed to long-term success, it makes sense to be proactive about safety. Simply adhering to OSHA standards isn't always enough, as more project owners are requiring stricter safety standards.
Many companies are seeing savings and profit grow annually by taking immediate steps to provide a safer working environment. In a five-year period, investing in and committing to safety led to a 15 percent increase in sales for aluminum manufacturing company Alcoa. At the same time their sales rose, they reported their earnings per share skyrocketed from $0.20 to $1.41.
Workplaces that establish health and safety management systems can reduce their injury and illness costs by 20 to 40 percent. What could an change like that look like for your company?
Here are a few ways that investing in safety could save you money in the long run:
Want to know more about how safety can equal savings for your construction company?