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The hidden costs of workplace injuries

June 1, 2021

Any company can pay lip service to safety, but the ones that actually prioritize it are rewarded with stellar safety records, great reputations and low experience modification rates (EMR). So how do you make the jump from lip service to a robust safety program that can reduce workplace injuries?

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.

How workplace injuries affect your bottom line

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, another employee must step in to complete their tasks. This transition usually requires a significant increase in overtime to compensate for lost time and work. Consequently, employers face the added cost of paying an overtime premium instead of the standard wage. Essentially, the same job now incurs higher expenses due to the need for overtime pay.

Lost productivity

Investigating an incident significantly interrupts productivity by pulling workers away to gather their insights and collect data. This process, which includes reporting findings to leadership, often means a replacement worker cannot match the original’s speed and accuracy. Typically, a new worker requires additional training or constant oversight. They might also stop more frequently to ensure accuracy, or lose time to increased inspection and rework. As a result, productivity suffers across several areas when a specialized worker is replaced.

Delays and unhappy clients

If companies overlook safety, delays in delivery schedules due to workplace injuries become common. This includes time lost to hiring, training, and rework. Such negligence leads to client frustration and dissatisfaction with delays. Moreover, it tarnishes the organization’s reputation, making it seem unprofessional and unreliable. Those clients are much less likely to become repeat business or to recommend your company.

Increased EMR

The impact of workplace injuries on costs emerges over time, notably raising the company’s ex-mod rating. Higher ex-mod ratings lead to increased insurance premiums, elevating annual operational costs. This also negatively influences the company’s ability to secure future contracts. Clients tend to favor businesses with lower EMRs, indicating a strong commitment to safety.

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.

Reduce workplace injury and the associated costs

Persuading leadership to prioritize safety is challenging, especially when many costs are not immediately apparent. Management often remains unconcerned until these costs directly impact the company’s bottom line. Only then does the issue of safety gain the attention it warrants.

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 Fulcrum, 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.