When getting buy-in for their safety programs from leadership, one of the biggest roadblocks faced by EHS managers is demonstrating the true costs associated with workplace injuries. Everyone knows the direct costs associated with workplace injuries — lost wages, medical costs, fines, lawsuits, etc. — because they are immediately apparent and can be easily tied to a specific incident. Unfortunately, these direct costs are just the tip of the iceberg, as there are many other indirect costs that are less visible and less easily attributed to any specific injury or incident, but that nonetheless represent a huge drain on resources, at times even more so than the direct costs.
For safety initiatives to be taken seriously, EHS managers need to show decision-makers that spending money on a safety program isn’t a drain on resources — far from it, it’s a long-term investment. True across all industries involved in large construction, utilities and engineering projects, what you spend in safety programs to avoid incidents will always be less than what those incidents actually cost you. Let’s look at some of the hidden costs that make up the total price of workplace injuries.
Hiring costs. If a worker is injured and needs to remove themselves from active duty, you may have no choice but to hire a new person. Whether temporary or permanent, finding and hiring a replacement eats up the time of everyone involved in that process. And the more skills associated with the role of the injured person, the harder it will be to find the right hire, so the cost of obtaining a replacement will be higher.
Training costs. Whether you’re using someone already on your team or hiring a replacement for your injured worker, you still need to invest time from both a trainer and the worker to get them up to speed on the assigned task. The cost is likely to be higher if the skills needed in the injured person’s job are more specialized and/or if it’s a new hire, multiplying what you’ve already spent during the hiring process itself.
Overtime costs. When a worker is sidelined for a long period, someone else has to step up to take their place and get the job done. This often involves a hefty dose of overtime to make up for the lost work and time after the initial injury. So instead of paying the usual wage for someone to complete the task, you’re now paying out an overtime premium for the same work to be performed.
Lost productivity. Outside of the productivity lost to thoroughly investigate the incident — interrupting workers to get their insights, collecting incident data, and reporting the findings to leadership — it is unlikely that a replacement will have the same speed and accuracy as a specialized worker being replaced. Whether the replacement requires more training or continual oversight, stops more frequently to get the job right, or loses more time because of increased inspection and rework, productivity is potentially lost along several vectors.
Delays and unhappy clients. If companies don’t take safety seriously, then delays to the delivery schedule because of workplace injuries — with all the time spent hiring, training, and doing rework — become par for the course. When your company shrugs off injuries, not only are clients left frustrated and unhappy by delays, but it makes your organization appear unprofessional and untrustworthy. Those clients are much less likely to become repeat business or to recommend your company.
Increased EMR. The cost isn’t apparent immediately, but workplace injuries will likely increase your company’s ex-mod rating. With this comes, of course, higher insurance premiums that not only make operational costs higher each year, but also negatively affect your company’s ability to win future contracts; clients are more inclined to tender contracts to those who have demonstrably invested in an effective safety program that has kept their EMR lower.
Damage to reputation. Word travels fast and there is definitely such a thing as bad press when it comes to safety, especially now that online user reviews are visible to all. With a history of workplace injuries, your company will quickly develop a bad reputation. This can directly impact how potential employees, the surrounding industry, future clients and even shareholders come to view your company.
Convincing leadership that safety needs to be taken seriously is no easy task, and as long as many of these costs remain hidden, management won’t see a problem unless it is explicitly tied to the company’s bottom line. Until then, safety initiatives proposed by safety personnel may fall on deaf ears.
Being able to understand and communicate the hidden costs of workplace injuries is critical to getting the support you need from leadership to invest in a robust safety program.
With a no-code platform like Fulcrum, you can quickly build and deploy mobile apps to your teams to conduct safety inspections and collect and share on-site data that helps speed up hazard remediation to prevent injuries. Fulcrum enables you to create and customize digital checklists, collect and share rich data in real time, kick off automated workflows, and easily access documentation to show clients, insurers, and other stakeholders the steps you’re taking to protect your workforce.
Arming your mobile workforce with apps that enable them to easily identify and report workplace hazards, everyone can work together to prevent injuries from even happening in the first place.
Interested to learn more ways to reduce incidents and improve your reputation? Download the guide, 6 Ways to Lower Your EMR.