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Calculating Your Safety ROI

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. Why? Because a safer workplace leads to…

  • Fewer incidents: between workers’ compensation and insurance, legal fees, and employee replacement, every incident carries significant upfront and subsequent costs.
  • Improved productivity and efficiency: fewer injuries mean fewer disruptions, fewer lost hours, and fewer days away from work.
  • Higher workforce morale: the safer people feel, the better they tend to do their jobs.
  • A better reputation: companies that prevent safety incidents avoid negative publicity and negative brand associations among customers, prospective hires, and shareholders.
  • Easier hiring: given the choice, people would rather work for a company that prioritizes worker well-being.

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 “[v]arious 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.

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: a single workplace fatality can threaten to sink a company.

The Centers for Disease Control and Prevention estimate a fatal injury may cost nearly $1 million, while the National Safety Council places it around $1.4 million. And when you factor in the indirect costs of lost productivity, employee replacement, insurance, attorneys, and so forth, the cost jumps to $3 million on average.

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?

About The Author

Toby Graham

Toby manages the marketing communications team here at KPA. She's on a quest to help people tell clear, fun stories that their audience can relate to. She's a HUGE sugar junkie...and usually starts wandering the halls looking for cookies around 3pm daily.

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