Inside the Importance of Workplace Safety: Financial Loss

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Injured employees are an expensive proposition. You can find yourself dealing with anything from lost man-hours while the employee gets treatment to having a job site shut down completely. It gets even worse if it turns out that a legitimate accident didn’t cause the injury, but as a product of poor workplace safety. So let’s dig into some of the potential financial losses you can face if workplace safety takes a back burner.


1. Direct costs

There are several direct costs associated with employee injuries from poor workplace safety. The main ones you face are medical, legal, and compensation costs. The costs can add up quickly. Estimates place the direct cost for US employee injuries at $1 billion per week. A little quick math means that US-based companies are shelling out around $54 billion per year in direct costs associated with workplace injuries.


2. Indirect costs

Of course, direct costs aren’t the only problem. You must also deal with indirect costs. You must replace any employee who can’t return to work. That can cost you as much as twice the employee’s annual salary depending on how crucial and rare their skillset is to the work. While employees with high morale generally prove more productive, workplace injuries can drive employee morale into the ground. That poor morale will cost you in lost productivity. You can face the extended indirect cost of voluntary turnover from employees who no longer feel safe working for your company. You may need to repair or replace equipment and even vehicles.


3. Limiting financial loss

Limiting workplace safety-related financial losses has to begin by creating a genuine culture of workplace safety. An annual 15-minute refresher won’t get the job done. Workplace safety must be a daily action item. Managers and supervisors should be trained to encourage workplace safety through on-the-spot corrections and consistent review of safety rules. Consider setting up a reward system around days passed without injury. For example, you could offer a pizza party for each month without injury. If your employees go six months without injury, give them all an extra paid day off.


4. Safety saves

Workplace injuries are profoundly expensive when you take into account the direct costs and indirect costs. Those costs can grow even larger if your other employees believe the injuries occurred as part of a pattern of poor workplace safety. The damage to morale and potential voluntary turnover it can create can cripple a company. Creating a culture that prioritizes workplace safety not only saves employees from injuries, but it saves you money in the long run.


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