Would you spend $1 to save $3 in the future? It may seem like an easy choice, but if that first dollar suddenly becomes millions of dollars, and the savings may not be seen until years later, spending all that money up front can become harder to justify.
If you’ve been struggling to prove the ROI of safety, know that you aren’t alone. Environment, health, and safety (EHS) leaders are well aware that the health and safety team is one of the most important departments in any organization. The problem is that the majority of EHS departments lack the tools necessary to put together a convincing case to management to gain support for health and safety programs. The two main challenges facing EHS leaders are:
The Importance of Proving ROI of Safety
– Inability to access, analyze and leverage compelling data and convert this into information
– Inability to present the case in a language that C-level executives readily understand.
Learn how to overcome the common challenges many EHS professionals have when trying to demonstrate the value to the business of workplace safety.
Challenge 1: Inability to access, analyze and leverage compelling data and convert this into information
When trying to demonstrate the ROI of safety, many EHS departments aren’t sure where to begin. The main reason is that most have not been consistently measuring EHS performance. Some EHS leaders might not even be sure which safety metrics they should be tracking.
Luckily, the data issue is not an insurmountable obstacle to overcome. The reality is that you are already collecting an abundance of data each and every day. Whenever a worker completes an inspection, hazard assessment, or any other type of safety activity, that is data that you can harness. You just need to start using all of that data to your advantage.
For many organizations, safety’s return on investment is dependent on knowing how much an injury actually costs. Fully understanding all the costs associated with a workplace injury can be difficult. While the National Safety Council and the Centers for Disease Control and Prevention have models that attempt to estimate the costs, the different models can vary greatly. Additionally, these models only reflect direct costs. Direct costs include workers’ compensation, medical expenses, civil liability or litigation costs, and property losses. When you add in indirect costs, the price gets even higher. Indirect costs include workplace disruptions, loss of productivity, worker replacement, training, increased insurance premiums, and attorney fees.
Once you start compiling EHS data metrics, you will have the resources at your fingertips to prove the ROI of safety programs, allowing you to secure much-needed support for future initiatives.
Challenge 2: Inability to present the case in a language that C-level executives readily understand
Selling the idea of investing in safety can be difficult. The financial return on investment can help. C-level executives are primarily interested in the bottom line, and too many executives view health and safety programs as a cost center. The funny thing is, this opinion couldn’t be further from the truth. In reality, for every $1 invested in safety, a company saves at least $3. This cost-saving information is exactly the type of information your executive team wants to hear.
Whenever you are communicating ROI of safety to management, it’s important to frame your performance and initiatives in relation to larger corporate goals. It also helps whenever you can tie in your ROI to financial goals. For safety programs, the financial return often manifests as increased productivity, improved customer service, and money-savings from fewer injuries.
Decreasing costs is a common goal for executives and demonstrating how health and safety initiatives support that goal will go a long way. Even a single workplace injury is one too many and can cost tens of thousands of dollars. Lost productivity, administrative costs, and compliance all add up. In 2015 workplace injuries cost the U.S. $142.5 billion in lost productivity, medical costs, and administrative expenses. These numbers underscore how critical it is for more organizations to start investing in health and safety.
If you can demonstrate, using the safety metrics you have compiled, that as employee safety training increases, the amount of lost-time injuries decreases, that will go a long way to proving ROI of safety to executives. This kind of solid proof will likely lead to more resources being allocated to your EHS program. Of course, while cost savings are a major motivator, safety’s biggest return on investment might be human capital and keeping workers safe.
At Safeguard, we know that the ROI that results from developing a strong safety culture includes returns that are relatively quantifiable, like direct costs saved, as well as those that are less easily quantified, like quality losses. Your Safeguard consultant can provide you with services and products that make managing your business easier. Contact us today for the office solutions you need.