Does management in your organization really understand that safety pays back directly to the bottom line? Do they understand that the cost of accidents goes directly to the bottom line and potentially requires several million dollars of incremental sales as an offset? One accident can result in financial chaos at least 10 ways. How?

J.B. Titus, CFSE

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Does management in your organization really understand that safety pays back directly to the bottom line? Additionally, do they understand that the cost of accidents also goes directly to the bottom line and that often times this cost potentially requires several million dollars of incremental sales as an offset? For some companies, one accident can result in financial chaos. Let’s spend a few minutes to look a little deeper at how this happens.

   Let’s take a quick look at what worker injury costs to a business might include:

-- Medical bills

-- Insurance premiums

-- Worker’s Compensation

-- Citations and fines

-- Temporary disability

-- Production losses

-- Damage to machinery

-- Hiring and training a temporary employee

-- Wages for work not performed

-- Legal fees... to name a few.

   In my opinion, when you look at the potential direct and indirect costs of an injury it becomes obviously clear that investments in injury prevention are far less than the cost of an injury. Realizing from above that the direct costs of an injury go right to a company’s balance sheet bottom line, one can quickly understand the financial impact. An industry wide rule of thumb is that $1.00 dollar invested in machine safety returns $3.00 to $4.00 in real savings. It’s no wonder that industry safety experts say that a business and the workers thrive in a safe, healthy, and caring work place.

   Understanding this concept, let’s take the next step and talk about the impact of injury costs to the top line. The concept of required incremental sales is brought out quite well by two web sites I’ve come across. One web site is OSHA and the second is Safety Management Group and the links are listed below in the referenced articles. This concept also takes into consideration the direct and indirect costs of an injury as well as other factors such as; injury types, profit margin, number of injuries, and various industry average default values.

   As you apply your particular company’s information as directed on the web page the estimated offset revenue required is quickly displayed. And, you will be amazed at the order of magnitude of the revenue required on the top line. You can no longer wonder as to why machine safety is a smart business decision and the right thing to do for operator safety, employee morale, and safety compliance.

   What opinions, questions, or experiences can you add to this discussion?

   Your comments or suggestion are always welcome so please let us know your thoughts. Submit your ideas, experiences, and challenges on this subject in the comments section below. Click on the following text if you don't see a comments box, then scroll down: Machine Safety Pays.

   Did you see the Safety Integration Webcast?

   Related articles:

Injury Cost Calculator, Safety Management Group

http://www.osha.gov/dcsp/smallbusiness/safetypays/estimator.html

http://www.michigan.gov/documents/dleg/wsh_cet0182_305579_7.pdf

Designing In Machine Guarding

Machine safety pays off

Contact: www.jbtitus.com for “Solutions for Machine Safety”.