Generating ROI from a safety program
By Jim Stanley
To state the obvious, employers are in business to make money. But when it comes to safety, many companies understandably justify their programs on other grounds - a sincere desire to protect workers or an understandable need to keep OSHA at bay.
While both those motivations make excellent sense and should always be front and center, it's also important to focus on another reason: A good safety program adds to the bottom line.
I'll repeat: A good safety program adds to the bottom line.
Who says? The people who should know best: CFOs.
231 corporate financial officers at medium and large companies were asked their perceptions of how much money their organizations saved for every $1 spent on safety. The average answer? $4.41.
Here were the main areas of savings:
- Improved productivity
- Less workplace disruption and downtime
- Reduced costs of training new employees
- Lower insurance premiums
When asked to name the top benefits of an effective workplace safety program here were the answers:
- Increased productivity (42.5 percent)
- Reduced costs (28.3 percent)
- Improved employee retention (7.1 percent)
- Better employee morale and job satisfaction (5.8 percent)
The 2011 Liberty Mutual Workplace Safety Index provides a different view, estimating that the most disabling workplace injuries cost industry $50 billion a year in direct workers compensation costs.
What does this all add up to? It demonstrates that it makes good sense for organizations to take a proactive approach to safety and install a strong program without waiting for a negative OSHA inspection to force the issue.
For some tips on how to build such a program, take a look at my article, "Building a culture of safety at construction companies."
While the article uses construction companies as an example, the principles involved apply to all companies.
And with all the talk about financial benefits, it is important to keep the true bottom line in mind: A strong safety program protects your most precious asset - your people.
Jim Stanley is former Deputy Assistant Secretary of Labor for OSHA. Subscribe to his OSHA blog or contact him at firstname.lastname@example.org or 513-317-5644.