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EHS MANAGEMENT BLOG

The Business Value of Safety

The COVID-19 pandemic has illuminated the very real ways in which safety contributes to the financial and operational well-being of a company.

Senior business leaders are relying heavily on safety professionals to guide policy decisions, protect workers, and ensure compliance with shifting state and federal requirements.

We’ve entered an age where many EHS leaders now report directly to C-level executives, and where safety is considered mission-critical for many businesses.

But the work isn’t done. To keep their seat at the table, safety leaders must continue to position themselves in a way that makes it obvious to executives why their contributions are so important.

We’ve compiled the data to show just how much value the safety function contributes — not just in terms of cost reduction but also in productivity, employee morale, and shareholder value.

You can see some of the highlights of our findings below. If you’d like to see the full infographic, you can download it here.

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injury-trends

More than 2.8 million U.S. workers are injured on the job every year, affecting not only their physical health but also their emotional and financial well-being and ability to participate in the workforce. That’s one injury every 7 seconds.

If we look back at the past 45 years, we can see that the number of recordable injuries and illness has steadily declined thanks to the creation of the Occupational Health and Safety Administration (OSHA) and the rise of workplace safety programs. In 1973, the incident rate was 11 cases per 100 workers, compared to 2.8 per 100 workers in 2018.

Today, preventable work-related deaths and injuries cost businesses and society $170.8 billion each year. A single medically-consulted injury costs $41,000 — just slightly less than a year’s salary for the average full-time worker in the U.S.

That figure includes the cost of lost wages, medical expenses, administrative and employer costs, and motor vehicle damage. However, it doesn’t take into consideration the cost of OSHA penalties. In 2020, the penalty for a serious OSHA violation is $13,494. The penalty for a willful or repeated violation is $134,937.

Even small improvements in safety can result in significant savings for individual companies, as well as the economy and the nation as a whole. However, the true value of safety goes far beyond the costs associated with work-related injuries and illnesses.

employeesFor a long time, safety and productivity was seen as an either/or scenario: If you follow safety procedures, production will suffer — and vice versa. That couldn’t be further from the truth. In fact, by eliminating preventable work-related injuries, employers could gain back 103,000,000 days of production — the equivalent of 394,636 full-time workers. Over and over, companies that prioritize safety see gains in output and efficiency.

This is all part of a bigger shift in thinking among corporate leaders. Today, astute executives recognize that employees are the lifeblood of a company — perhaps even more so than customers. This knowledge has given rise to the (somewhat cringeworthy) term ‘human capital’: the idea that an organization is only as good as its people.

Harold Schultz, the founder and former CEO of Starbucks, once put it this way: "The way your employees feel is the way your customers will feel. And if your employees don't feel valued, neither will your customers."

Prioritizing health and safety is one obvious way to make employees feel valued. Companies that put safety at the forefront enjoy happier staff, higher engagement, better worker morale, and lower turnover. When you consider that the cost of replacing an individual employee can range from .5 - 2X the employee's annual salary, health and safety looks like a no-brainer.

stock-performance

Employers and employees aren’t the only ones who benefit from a safer workplace. Research shows that safety can also impact stock performance and shareholder value. Companies with proven health and safety programs are likely to have a competitive advantage in the marketplace. Between 2001-2014, the earnings level for companies with award-winning health and safety programs was 333%, compared with the S&P 500 return of 105% during the same time frame.

 

In terms of actual returns, safety is one of the smartest business investments you can make. A survey of financial decision-makers found that the perceived return on investment was $4.41 for each $1 spent on safety. Other surveys have put that number as high as $6!

For comparison, online advertising has an average return of $2.18 for every $1 spent. Preventive maintenance, training, and energy efficiency improvements — all popular initiatives — return less on average than investments in safety. terms of actual returns, safety is one of the smartest business investments you can make. A survey of financial decision-makers found that the perceived return on investment was $4.41 for each $1 spent on safety. Other surveys have put that number as high as $6!

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The bottom line: safety pays

 
Safety is the future of business, and it goes beyond meeting the minimum standards set by regulators. Done right, comprehensive safety programs reduce operational costs, boost worker morale, and increase shareholder value. 
 
It's time we stop seeing safety as a cost center and start seeing it as an opportunity. To that end, we must equip safety professionals with the tools and resources to achieve safety results including modern EHS software that makes it happen quickly, affordably, easily, and remotely.  
 
EHS management software can reduce the potential for incidents and drive safety performance by helping to identify areas that need improvement, measure which efforts work, and allocate resources efficiently. 
 
That includes the ability to perform proactive safety inspections remotely using mobile devices, monitor safe work behaviors, investigate incidents and tie the results to corrective actions to prevent reoccurrence, and schedule and track training to ensure employees are equipped to do their jobs safely. 
 
If you'd like to learn more about how EHS software can help see better results from your safety program, check out these other helpful resources: 
 

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Sources: U.S. Bureau of Labor Statistics Injuries, Illnesses, and Fatalities, NSC Injury Facts, OSHA.gov, Gallup, Journal of Occupational and Environmental Medicine, NSC Journey to Safety Excellence, Nielsen, Forrester/ABB, Association for Talent Development, USGBC

 

 

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