It’s your workforce versus your bottom line: Which should your company focus on protecting to ensure longevity and financial success?

Trick question. Although countless business decision-makers think of environmental health and safety as a sunk cost, it’s really an investment—and a shrewd one at that. Study after study confirms that organizations that invest in safety save money, boost productivity, and perform better in the long term. 

Most executives know all this on a rational level, but without concrete numbers, it can be difficult to conceptualize the financial impact of a safety culture. Fortunately, the National Safety Council has come up with a calculation so easy, so elementary, that any decision-maker can use it to estimate their organization’s safety ROI in seconds.

How to Calculate Your Safety ROI

Ready? Grab a pen and paper, or don’t—you probably won’t need them. Here’s a calculation based on the NSC’s model:

your safety investment × 2 = your ROI

It’s that simple. Take your safety investment, double it, and pay it back to your organization. For every dollar spent on safety today, you save $2.00 in the future.

This is a conservative estimate, by the way. Safety+Health magazine reports that “various studies have shown $1 invested in injury prevention returns between $2 and $6.” Indeed, a more accurate calculation of ROI may be to triple or even quadruple that initial investment.

Digging In…Where Does This Safety ROI Come From?

Returns Stem from:

• Decreased Lost Time: EHS programs can reduce worker injuries and incidents – allowing companies to decrease expenses related to medical care, PTO, litigation, and disaster mitigation.
• Compliance with Regulations, Laws, and Standards: Non-compliance can be disastrous, impacting an organization financially and damaging their reputation Avoiding legal fees and fines from OSHA or other regulatory agencies help maintain a healthy bottom line.
• Increased Operational Efficiency: A focus on safety leads to higher productivity, which drives short-term revenue growth and supports long-term sustainability.
• Improved Employee Satisfaction: Recruiting and retaining top talent is easier for organizations that provide safe and comfortable workplaces, care for employee well-being, and take steps to protect the environment.
• Positive Reputation: Employers want their employees, customers, and the public to view them as safety-focused.

Putting the Cost of Prevention into Perspective

As self-evident as those results may seem, some decision-makers may remain unconvinced of the value of a safety culture. Perhaps they’ve never dealt with a major accident and they believe the risk is so insignificant as to be essentially nonexistent.

Let’s put things into perspective: according to the National Safety Council:

The cost of work injuries per worker in 2018 was $1,100.

This includes the value of goods or services each worker must produce to offset the cost of work injuries. It is not the average cost of a work-related injury.

The cost per medically consulted injury in 2018 was $41,000, 

And, staggeringly, the cost per death was $1,190,000. 

These figures include estimates of wage losses, medical expenses, administrative expenses, and employer costs, but exclude property damage costs except to motor vehicles.

Altogether, the total cost of work injuries in 2018 was $171 billion.

This figure includes wage and productivity losses of $52 billion,

medical expenses of $35 billion, 

administrative expenses of $58 billion. 

employers’ uninsured costs of $13 billion, 

damage to motor vehicles in work-related injuries of $5 billion 

and fire losses of $8 billion.

Invest in Your Safety Program Today

By using KPA’s combination of ehs software, expert consultants, and award-winning online training to identify, remedy, and prevent safety and compliance risks KPA clients see real financial returns.

Addressing Safety Manager Pains Equates to Tangible Cost Savings

Here is a common safety manager pain point:

“I spend too much time doing paperwork, manually inputting data, and compiling reports from different sources.”

This creates risk and impacts your bottom line:

• Less time is spent in the field performing observations.
• Fewer hazards are identified and corrected, causing more incidents.
• Increased number of incidents drive up the cost of labor.
• Higher costs of labor decrease profitability, driving up prices.
• Higher prices drive customers to competitors resulting in potential lost revenue.

With KPA’s software and services many key safety management processes can be automated or performed by a KPA expert consultant. In terms of leadership, financial strategy, and fiduciary duty, there’s no reason to ignore workplace safety. Think of it this way: you can either double your company’s investment or put millions of dollars on the line. Which choice will your organization make?