Both Injuries, Illnesses, and Fatalities = Expense Safety Programs, Systems, Equipment, Etc. = Investment

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2 Both Injuries, Illnesses, and Fatalities = Expense Safety Programs, Systems, Equipment, Etc. = Investment Whether investing in people, equipment, programs or the process, there are savings! Returns on Investment (ROI) exist! ROI = cash flow or savings that result from an action divided by the total cost of that action.

3 The True Cost of Injuries and Fatalities Selling the Investment The Right Message

4 Each year workplace injuries, illnesses, and deaths cost our nation: A) 1 billion dollars B) 100 billion dollars C) 150 billion dollars D 200 billion dollars Answer $200 billion dollars direct/indirect costs (2014 National Safety Council s Security Facts Report )

5 36.5 billion in administrative expenses 55.7 billion in medical costs 89.6 billion in wage and productivity losses 11 billion in employer s uninsured costs 3.2 billion in fire losses 2.2 billion in vehicle losses Every worker in the United States must produce an additional $1,400 in goods and services each year to offset the cost of injuries and death.

6 The numbers may surprise you!

7 It is important to understand that while we can put dollar figures to injuries and fatalities, cost savings is not the primary reason for safety efforts. We do it for people, their families, and loved ones.

8 Direct costs associated with injuries, illnesses, and fatalities include: Worker s compensation Medical expenses Property losses

9 Indirect measurable costs include: Workplace disruption Loss of productivity Worker replacement/overtime Training of replacements/retraining Increased insurance premiums Attorney fees Administrative fees OSHA penalties

10 Marketing/Sales Customers don t want to be associated with poor safety performers. Guilt by association May find another company to work with

11 Human Resources Employees are the best recruiters. If the workplace is safe, they will recruit. If employees feel they are at risk, they will not recruit and most likely leave.

12 Operations Where the work is done and morale is determined If people are getting injured, morale takes a nose dive Low morale = decreased productivity, poor customer service, infighting, and people looking for other jobs

13 The basis of this discussion will focus on models used by: The National Safety Council (NSC) The Center for Disease Control (CDC)

14 CDC Model Estimates $991,000 NSC Model Estimate $1,420,000 Although these estimates may seem high. They only account for direct costs.

15 Much more expensive For every dollar of direct costs, indirect costs may be as much as $2.12 (NSC) Using this math the cost of a fatal injury goes from costing $1.42 million to $3 million

16 Medically consulted injury estimate from NSC: $39,000 including wage losses, medical expenses, administrative expenses, and other employer costs

17 Amputation $66,777 Burn $37,389 Concussion $60,770 Crushing $56,567 Dislocation $73,800 Electric Shock $86,528 Foreign Body $18,953 Fracture $48,492 Laceration $19,059

18 How do we sell it?

19 Would you spend $1 to save $2 in the future? What if you could save $3, $,4 or $5 for every dollar? Easy choice right, but what if it were $50,000, to save $100,000 or $500,00 to save a $1,000,000?

20 The challenge with safety is selling it to management, especially when investment is required. Investing in safety can be different than calculating ROI for a piece of equipment. I.e. Install a new loadout system for $200,000 that will lead to an additional $600,000 of revenue over within three years.

21 Safety programs vie for the same resources as other programs that provide revenue Attitude that health and safety is not a business issue

22 Experts suggest that the savings exist Armed with the right info, we can improve our chances for success We can use direct and indirect cost associated with injuries for justification and projections

23 Hard sell when bosses, managers, and companies don t get it Start with the human side Invest to protect the company s greatest asset, the employee

24 Initial focus on the return on investment the human side Increased productivity Improved customer service Employee Satisfaction Morale Improved Community Relations Brand Image

25 The the human side Additional Benefits: Quality Lower absenteeism Lower employee turnover Image in the community

26 What do we do if the human side approach isn t enough?

27 Poll of company executives For every dollar a company invested in safety, they saved from $3 $5 dollars (Liberty Mutual)

28 Review the company s injury expense data history Use calculations for estimating indirect costs (projections) Loss of productivity Workplace disruptions Worker replacement Increased insurance premiums Look for productivity/efficiency gains

29 Include information and data that you can back up and feel confident explaining: Include the cost of a fatality or injury to communicate the size and scope of the problem Put it in terms that management can understand

30 Communicate the Cost of an Injury or Illness: As a percentage of payroll (i.e. our injuries costs represent 15% of payroll) In production terms We need to make X number of units per month/sales to offset or break even from injury costs before we start to make a profit or Our facility has to operate the first five days of the month just to pay for injury losses

31 In Product Cost Terms Out of our losses this month, we have to sell X next month to pay for them Per Employee This cost equates to $300 per employee per year

32 Designed to assess the impact of injuries and illnesses on a company s profitability Project the amount of sales needed to cover both indirect and direct costs associated with injuries using: Company s profit margin Average cost of an injury or illness Direct cost multiplier

33 Profit Margin Total Cost of Accident 1% 2% 3% 4% 5% $1,000 $100,000 $50,000 $33,000 $25,000 $20,000 $5,000 $500,000 $250,000 $167,000 $125,000 $100,000 $10,000 $1,000,000 $500,000 $333,000 $250,000 $200,000 $25,000 $2,500,000 $1,250,000 $833,000 $625,000 $500,000 $100,00 $10,000,000 $5,000,000 $3,333,000 $2,500,000 $2,000,000

34 The sell becomes more challenging when little to no history of illness or injury exists Hard to convince management there could be a problem

35 Switch the focus to the impact an injury would have on the interruption to business Use near miss data Use average injury cost data Saving projections Good safety management programs may impact insurance premiums (discounts)

36 Elements of a Business Case: Definition of the problem and desired outcome (goals) Both direct costs or benefits of a project Specific Ideas for Implementation Budget including start-up funding, ongoing costs Comparisons to other Companies (Competitors)

37 Consequences of non-action and noncompliance Discussions of alternative solutions Explanations of calculations, projections, etc.

38 Know the audience

39 Always consider the audience Discussing financials is appropriate for managers, leadership, etc., but may not be appropriate for discussions with front-line employees. Put yourself in their shoes Savings may appear more important than safety of employees

40 We invest in safety to protect employees A side benefit of investing in safety is savings, it s not the primary reason we do it, but a side benefit!

41 Review: The cost associated with fatalities The cost associated with workplace injuries The $afety Pays calculator Selling the Investment Elements of the Business Case The right message

42 Morrison, Kyle W. The ROI of Safety Safety and Health Magazine. May Safetyandhealthmagazine.com Web. 28 July Colford, Jill, The ROI of Safety Business Week. September Businessweek.com Web. 28 July Burns, Kevin, Strategies to Build Personal Leadership in Safety Web. 13 May 2013 National Safety Council, Preparing The Business Case for Investment in Safety nsc.org/journey, Web.

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