True Costs of Injuries Serve as Best Workplace Safety Motivator

OSHA rules, regulations and enforcement actions are one way to get businesses to improve safety at the workplace. But improving safety goes far beyond government regulation and enforcement of the law. Some say an examination of the true cost of safety losses is the best way to get businesses and management to improve safety in the workplace.

Rebecca Shafer, an attorney and risk consultant specializing in workers’ comp cost containment, says that safety in the workplace begins at the management level.

“Safety is a process that requires complete management support and buy-in,” Shafer says. “That’s really where you have to start within an organization because if management doesn’t get it, you really won’t get anywhere, and you’re certainly not going to get a good safety program.”

For Shafer, one of the best ways to get employers to adopt better safety practices is to show them the true cost of an injury and a resulting workers’ comp claim.

“The best place to start is with communication, and explaining to management what the real costs are of injuries” she says. To do this, Shafer uses the “Sales to Pay for Accidents” calculator located on her website at www.lowerwc.com.

For a company with a modest 5 percent profit margin, the cost of a loss of just $15,000 ends up costing the company $300,000 in sales, she says.

“A $15,000 loss is going to take them $300,000 to replace the $15,000 on their bottom line, assuming a 5 percent profit margin,” Shafer says. “They might go, ‘Oh, $15,000’ and just write it off. ‘It’s not that important.’ But when you point out it’s going to take them $300,000, really, to cover that cost — that is an eye-opener.”

Even without a loss, an employer is still at risk for added costs — sometimes huge costs — when operating a workplace in violation of safety requirements.

A relatively small OSHA violation and enforcement of just $5,000 would cost the employer much more when looking at the true costs, Shafer says.

As an example, Shafer recalled a business that received a $147,000 OSHA fine.

“At a 6 percent profit margin that (fine) really cost them $2,450,000,” Shafer says. In other words, that business will have to sell an extra $2,450,000 worth of product to pay for that enforcement action, she explained.

Shafer says when employers see the true cost of OSHA enforcement action losses and workers’ comp claims, they comprehend the importance and value of hiring dedicated safety professionals.

Having a full-time, dedicated safety director rather than using the general manager to do the job, might be less in the end.

“You really have to show them, ‘OK, here’s what you can do. You can have a safety director, and you might not even need a full-time one. You can have somebody who’s knowledgeable and experienced, and they could be part-time. You can use a contracted safety director, or you might share one with another operation.'”

Enforcement actions are often not enough to prompt action when it comes to safety, Shafer says.

“Usually what happens is the company gets an enforcement action, they pay a big fine, and they still don’t know what to do,” Shafer says. “You just have to show them.”