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How to Realize an ROI on Safety

With the growing realization that health and safety management is no longer an afterthought, and that robust programs and technologies should be introduced to prevent incidents rather than simply address past issues, business owners’ thoughts often want to know how implementing these initiatives may impact their bottom line and profitability.

 

The fact of the matter is that business owners can expect to see significant  cost savings from the introduction of proper workplace safety measures. In fact, the ROI of safety may be more beneficial than you might think. Through risk mitigation, improved operational efficiency and a strong reputation for the wellbeing of workers, our clients consistently see a broad range of benefits that enhance both daily operations and, ultimately, their bottom line.

 

In this article, we look at how you can realize an ROI on safety, the kinds of metrics you must understand, and some of the challenges behind introducing an effective health and safety program. Read on to learn more.

 

Important Metrics and KPIs

 

Understanding the costs of poor workplace safety is an important place to begin when calculating the benefits of any type of safety program or technology. To do this, you should consider these metrics, recording them over time.  

 

  • Incident Rates — Incidents are any safety or health event with unwanted consequences, which includes the number of actual workplace accidents. Total incidents that happen within your business or organization is a crucial metric to understand. This should be measured over a period of time such as total work hours per employee over a month, for example.

 

  • LTI Rates — Lost Time Injury Frequency Rates (LTIFR) are the illnesses or injuries that lead to lost working days. Again, these should be calculated per employee over a predefined period as total working hours lost.

 

  • Near Miss Reporting — Designed to highlight the effectiveness of your business’ safety culture and its reporting mechanisms, near-miss reporting should be encouraged for all workplace accidents and other incidents.

 

  • TRIR Rates — The Total Recordable Incident Rate (TRIR) measures all incidents, workplace injuries, fatalities, and near misses reported, providing a comprehensive view of your health and safety programs.

 

  • Severity Rates — Depending on your industry or types of worksite, the severity rate of occupational injuries may be an important metric to measure. In essence, this looks at the impact of injuries and the amount of lost working days.

 

 

How to Calculate Overall Safety ROI

 

The most basic way to calculate your overall safety ROI is with the following formula:

 

ROI = (Benefits—Costs/Costs) x 100

 

So, for example, let’s say that your company invests a total cost of $50,000 in implementing a comprehensive safety program. Over the next year, the benefits of the program include reduced direct costs of $60,000 in comp claims and medical expenses, and $25,000 in reduced indirect costs thanks to lower insurance premiums and improved productivity.

 

This equates to:

  1. ROI = ($60,000 + $25,000 — $50,000) / ($50,000) x 100
  2. ROI = ($35,000/$50,000) x 100
  3. ROI = 0.7 x 100
  4. ROI = 70%

 

There are a number of other consequential and intangible benefits that are part of your ROI. They are more difficult to quantify, but should be taken into account when measuring the impact of any safety program.

The Cost of Injuries and a Bad Safety Record

 

There are many costs associated with injuries and poor safety records, and we have touched upon a few within the relevant KPIs—both direct and indirect. However, other costs you may have to consider include:

  • Medical expenses and higher medical insurance costs.
  • Workers comp claims and higher insurance costs.
  • Legal fees associated with negligence.
  • Loss of productivity and lower employee morale.
  • High employee turnover.
  • Training and employee replacement costs including temp replacements.  
  • Regulatory fines and increased compliance costs of workplace injuries.

  

Challenges in Implementing Safety Programs

 

While envisioning a healthy ROI on your safety programs, challenges remain in its effective implementation and maintenance. These may include:

 

  • Resistance to Change — Both employees and management may see health and safety programs in a negative light to begin with, resisting new safety practices or responsibilities. To overcome these issues your company should clearly communicate the reasons for any changes, involve employees in the decision-making process, and practice positive reinforcement by recognizing and rewarding teams and individuals.

 

  • Cost-Benefit Concerns — The issue remains that many companies, particularly smaller businesses and startups, are skeptical of how benefits will outweigh costs. A thorough financial analysis using the ROI metrics we have covered can help, as well as phased implementation and benchmarking to show how benefits are stacking up.

 

  • Inadequate Safety Training — Training, for both employees and managers, on new safety protocols and technologies such as wireless panic buttons is critical, as poor education undermines the effectiveness of your new programs. Continuous learning and hands-on examples covering all aspects of safety, including hazard recognition and emergency response are vital. In addition, regular safety audits, including known safety issues, should feedback into your training sessions.

 

  • Protocol Complexity — At the end of the day, your health and safety programs should be simple enough for all stakeholders to comprehend in an emergency. Overly complex technologies or protocols can be damaging, so your company should look to simplify procedures, involve employees, and practice continuous improvement to your safety plans.

 

Conclusion

 

The return of safety planning as a core element of business operations can no longer be an afterthought for owners, managers, and employees. In fact, with employee wellbeing at the forefront of your business planning, you can build healthier, happier, and more productive workplaces that operate more efficiently and deliver a return on investment that cannot be ignored.

 

For more information about the hidden costs of workplace violence on business, here’s additional data.  To learn how ROAR can help you integrate the latest wireless panic button technology into your health and safety programs, contact us today and explore our resource section.  

About Author

Yasmine Mustafa

Yasmine Mustafa believes ROAR found her, not the other way around. A former refugee and undocumented immigrant, she draws upon her unique life experiences to lead ROAR in its mission to empower and protect workers across all industries. Her journey is a testament to resilience and unwavering commitment. With over 15 years of leadership in the tech industry, including the successful sale of her first company, 123LinkIt, to a firm in Silicon Valley in 2009, Yasmine is a driving force for positive change, balancing profits with purpose. Yasmine’s workplace safety advocacy and leadership have earned recognition from the BBC, CNBC’s Upstart 100 and the City of Philadelphia. Yasmine is a highly sought-after conference speaker. A two-time TEDx speaker, Yasmine has also presented at the prestigious SXSW and CES conferences, sharing her deep passion for harnessing technology for positive change. Beyond her professional life, Yasmine enjoys time spent with friends and family, exploring the outdoors, biking, and hiking. She also dedicates her time to the boards of Coded by Kids, Leadership Philadelphia, and the Philadelphia Alliance for Capital and Technologies.

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