Very healthy returns on investment (ROI) are possible by investing in safety, according to a recent article in the National Safety Council’s Safety + Health magazine.

Citing various studies, the NSC puts the return on every $1 invested in injury prevention at $2-$6!

Yet many companies aren’t making these investments (e.g., improving facilities, purchasing safety equipment, investing in safety training, strengthening safety inspection processes).

In the article, two key reasons for not investing aggressively in safety are suggested:

1. The Business Case Isn’t Emphasized

The article’s author, Kyle W. Morrison, interviewed Rich Widdowson, the vice president of safety, environment and real estate for the multinational corporation, Schneider Electric. Widdowson discussed the motivation for Schneider to recently invest in improving its safety.

“I hate to go into the dollar savings. They’re there, but that’s not why we do it,” he said. “We don’t do this because of the dollars. We do this because of the people.”

Due to its safety investments, Schneider’s OSHA recordable injury rate fell from 3.6 per 100 full-time workers in 2002 to a rate of 0.5 in 2003. Widdowson focused on what that means in human terms—approximately 900 fewer people injured in 2013 than would have been injured in 2002.

That attitude is admirable, humane, and completely understandable. It can feel callous to talk about financial impacts when lives are at stake, because human welfare indisputably comes first.

But there were significant bottom line benefits—an estimated $15 million in direct savings, as well as indirect savings in multiples of that amount (more on that below).

In an effort to stress business morality, there’s a danger that the financial benefits of safety will be underemphasized. If you’re trying to influence more safety spending in your company, don’t be afraid to express the case in hard business numbers.

It won’t mean that you put the financial impact above the human impact—it will just mean that you’re highlighting the total picture.

2. The ROI Is Difficult to Calculate

Realizing that a business case needs to be made for safety is only the first step. The business case must then actually be developed.

That can be challenging for safety professionals without strong financial backgrounds. And even if a “business analyst” is enlisted to help, hard numbers can be elusive.

As the Safety + Health article points out, to determine the return on investment (ROI) of safety investments, you first have to quantify the financial consequences of unsafe practices. How much does an injury cost? How much does a death cost?

The NSC has made some estimates.

• An average fatality costs “society” $1.42 million in direct costs (worker’s comp, medical expenses, civil liability/litigation costs, property losses).
• For each $1 in direct costs, indirect costs (workplace disruptions, productivity losses, worker replacement, training, increased insurance premiums, etc.) could reach as high as $2.12.
• Depending on the type of incident, the indirect costs could reach as high as 17 times the direct cost.

However, these numbers are only a starting point in making a business case for a specific company to invest in safety. To convince key decision makers, you’ll need numbers based on your company’s actual safety experience.

Include all the relevant costs and benefits, expressed within the context of the company’s overall business plan. Safety improvements usually result in significant operational benefits (e.g., increased efficiency, less labor, less downtime) besides the avoidance of injury or death, and these should all be factored in.

Sounds like a hard and time-consuming process, doesn’t it? It is.

But it’s often necessary to secure additional resources for safety.

Takeaway

In an ideal world, the appeal to “doing the right thing,” would be enough to persuade increased safety investment, but a strong business case is often what opens up the budget. With full awareness of the paramount concern for human well-being, safety proponents should unapologetically argue the financial merits of safety investments, supported by as much data as possible.

Read the full Safety + Health article, “The ROI of safety.”