Joe Mlynek: Investing in Safety - Every Dollar Spent Saves Company $3 to $5

What if someone told you that an investment could improve productivity, increase worker morale, attract better employees, improve the company’s image in the community, and save money?

You may be extremely interested or think this is the latest investment scam.

There is an investment that can guarantee nearly all of these things.

Investing in workplace safety can reduce or even eliminate the direct and indirect costs associated with injuries while improving productivity, morale, employee retention and attraction, and an organization’s image.

Direct costs of injuries $171 billion

The direct costs of injuries include dollars spent on worker compensation, medical expenses, civil liability, and property loss.

The National Safety Council (NSC) estimates that the total cost of workplace injuries in 2019 was a staggering $171 billion (2020 statistics unavailable at the time of writing).

This figure includes wage and productivity losses of $53.9 billion, medical expenses of $35.5 billion, administrative expenses of $59.7 billion, uninsured costs of $13.3 billion, the value of time lost by workers other than those with disabling injuries, and the cost of the time required to investigate injuries, prepare injury reports, etc.

The total also includes damage to motor vehicles involved, work-related injuries at $5 billion, and fire-related losses of $3.7 billion.

The average cost per medically consulted injury in 2019 was $42,000. A single work-related death cost $1.22 million.

These figures include estimates of wage losses, medical expenses, administrative expenses, and employer costs.

Direct costs are just the tip of the iceberg when compared to the indirect costs associated with workplace injuries and fatalities.

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Indirect costs often more expensive

Indirect costs are often much more expensive than direct costs. The NSC estimates that the indirect costs can be double the amount of direct costs.

Indirect costs include workplace disruptions, loss of productivity, worker replacement, training of replacements, retraining of existing workers, increased insurance premiums, attorney fees, consultant fees, and possible Occupational Safety and Health Administration (OSHA) penalties, not to mention the negative impact injuries and fatalities have on marketing and sales, human resources, and operations.

Consider the potential impact on marketing. Companies that have serious injuries and fatalities are often targets of the media who often see bad news as good news.

Word of these incidents travels quickly throughout the community and the industry. It can take years to reverse the negative image associated with employee injuries, fatalities, fires, explosions, etc.

The human resource function of the business also is affected. Employees are a company’s best recruiters.

If they work for an organization committed to workplace safety, they will recruit their friends, neighbors, and relatives. The opposite also is true.

If employees feel that their workplace is unsafe and are concerned about their safety and the safety of others, they will not recruit friends, neighbors, and relatives and more than likely terminate their employment and go elsewhere.

Injuries and fatalities negatively impact the operational side of the business as well.

Operations is where the work is performed and morale is determined. If workers are injured or killed, morale takes a nosedive.

Low morale often is associated with decreased productivity, poor customer service, infighting, distrust, and employees looking for other job opportunities. c

Investing in safety saves money

Investing in safety-related projects, such as hazard monitoring equipment, railcar fall protection, online safety management and training systems, etc., can be challenging for many leaders.

It is not as easy to justify as typical return-on-investment calculations for equipment-related projects.

For example, investing $60,000 in a new piece of equipment that will save $25,000 a year is an easy decision.

The return on safety investment for safety often is justified by past results, such as the direct cost of injuries.

But what if the company does not have a loss history with injuries, property, etc.?

A recent poll of company executives conducted by Liberty Mutual Insurance indicated that for every dollar a company invested in safety, they save somewhere between $3 to $5.

There also may be opportunities where safety improvements, such as equipment replacement, also increase efficiency and savings in addition to preventing injuries and property loss.

Justifying safety investment

Justifying safety investment requires creativity and careful consideration of both the direct and indirect costs discussed throughout this article.

When considering the desired return remember to consider the impact of the investment on an organization’s greatest asset, its employees.


Work Injury Costs,

Making Safety Investments Happen

  • The finest environmental, health, and safety program in creation does nobody any good if it stays on a wish list.
  • Being a safety leader requires more than knowledge of compliance and best practices; you have to sell it.
  • Preparation is everything.
  • Define the problem, decide on solution, develop justification, and present your case.
  • Don’t give up!

Joe Mlynek is president and safety and loss control consultant for Progressive Safety Services LLC, Port Clinton, OH; 216-403-9669; and content creation expert for Safety Made Simple, Olathe, KS.

- From the March/April 2021 GRAIN JOURNAL