With help from safety programs, you can save your company money, improve productivity, and increase employee morale on the road.
According to OSHA, workplaces that establish safety and health management systems can reduce their injury and illness costs by 20 to 40 percent. Safe environments also improve employee morale, which positively impacts productivity and service.
When it comes to the costs associated with safety, consider the following statistics from OSHA:
- Employers pay almost $1 billion per week for direct workers compensation costs alone, which comes straight out of company profits
- Injuries and illnesses increase workers’ compensation and retraining costs
- Lost productivity from injuries and illnesses costs companies roughly $63 billion each year
In today’s business environment, these safety-related costs can be the difference between reporting a profit or a loss.
The Cost of Safety
Demonstrating the value of safety to management is often a challenge because the return on investment can be cumbersome to measure. Your goal in measuring safety is to balance your investment vs. the return expected.
There are many different approaches to measuring the cost of safety, and the way you do so depends on your goal. Defining your goal helps you to determine what costs to track and how complex your tracking will be.
For example, you may want to capture certain data simply to determine what costs to build into the price of your service, or you may want to track your company’s total cost of safety to show increased profitability, which would include more specific data collection like safety wages and benefits, operational costs, and insurance costs.
So, if your organization needs to measure safety as it relates to profitability, more accurate tracking should be done.
For measuring data, safety costs can be divided into two categories:
- Direct costs, which include the following:
- Safety wages
- Operational costs
- Insurance premiums and/or attorney’s fees
- Accidents and incidents
- Fines and/or penalties
- Indirect costs, which go beyond those recorded on paper, such as the following:
- Accident investigation
- Repairing damaged property
- Administrative expenses
- Worker stress in the aftermath of an accident resulting in lost productivity, low employee morale, and increased absenteeism
- Training and compensating replacement workers
- Poor reputation, which translates to difficulty attracting skilled workers and lost business share
When calculating indirect costs, minor accident costs are about four times greater than direct costs, and serious accidents are about 10 to 15 times greater, especially if the accident generates OSHA fines or litigation costs.
According to the International Risk Management Institute, just the act of measuring costs will drive improvement. In theory, those providing the data become more aware of the costs and begin managing them. This supports the common business belief that what gets measured gets managed. And, as costs go down, what gets rewarded gets repeated.
The Importance of Safety Programs
OSHA studies indicate that for every $1 invested in effective safety programs, you can save $4 to $6 as illnesses, injuries, and fatalities decline. With a good safety program in place, your costs will naturally decrease. It’s important to determine what costs to measure to establish benchmarks, which can then be used to demonstrate the value of safety over time.
Also, keep in mind that your total cost of safety is just one part of managing your total cost of risk. When safety is managed and monitored, it can also help drive down your total cost of risk.
Considering the statistics, safety professionals believe that there is a direct correlation between safety and a company’s profit. Our team is committed to helping you establish a strong safety and environmental program that protects both your workers and your bottom line.
Bottom Line
As previously stated, it’s crucial to make sure that you have adequate truck insurance in place. Our agents can assist you with this. First things first, fill out our online form, call us, or message us on LiveChat to get started with your truck insurance quotes. Our transportation team is eager to assist you with your insurance needs!
For more information on the cost of commercial truck insurance, refer to our recent blog or give InsuranceHub a call.
