Q: What costs go into a safe work environment, and how important is it, really?
A: Of course it's important, and it's never a place to cut corners, no matter how easy you think that might be. I believe we have a moral obligation to send our employees home as healthy as they were when they arrived. But beyond that, you will enjoy significant cost savings in the long run by playing it safe. Here, I've spelled out some of the biggest reasons why you should invest in a safer workplace.
You'll reduce costs from injuries. Employee injuries cost more than you'd believe. For example, an amputation might easily cost $60,000 in direct medical costs and an additional $60,000 in indirect costs. To recover the total cost of $120,000, a business with a 3 percent bottom-line profit would have to immediately generate an additional $4 million in sales to cover the cost of the accident.
How to Build a Security Blanket Visit the website of the Occupational Safety and Health Administration and peruse the safety rules, tips and protocols by industry. Then hit up your insurance company for an inspection. They'll advise you on changes you can make to your business that should establish a safer environment and reduce your rates. Put your safety policies and procedures in writing, and make sure every employee reads and understands them. Even better, ask your staff to help write them--they know firsthand where accidents can occur. Finally, lead by example. As the business owner, follow your own safety procedures to the letter, and enforce them with employees--even if it means firing an otherwise good person when necessary.
You'll reduce costs from workers' compensation insurance. In one company where I was the CFO, our workers' comp premiums dropped 75 percent after we were able to keep our injury rate at zero for three years.
You'll reduce costs associated with vehicles. You will substantially cut your car insurance premiums if your drivers don't get into accidents. What's more, when they have clean driving records, you zero out the risk of legal costs. Lawyers love the smell of an accident involving a company vehicle (or one that happens in the workplace)--they're like sharks drawn to blood.
You'll boost productivity. Workers who are healthy and safe feel more motivated and have higher productivity. A $10 million business with a 30 percent gross margin that experiences a 5 percent increase in productivity will add as much as $150,000 to its coffers.you'll be making a good investment. Money spent on safety programs goes directly to the bottom line. The Liberty Mutual Research Institute for Safety cites an average payback of more than $4 for every $1 spent on safety programs. Good luck finding any other investment that generates that kind of return.
You'll protect your reputation. A good reputation takes years to build, but it can be destroyed in a heartbeat. Do you want to turn on the evening news and see an employee being taken away from your building in an ambulance or, worse, a hearse? You may eventually overcome a damaged reputation, but the value of your business will be damaged for years, if not forever.