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How Much Should a Company Spend on Safety Per Employee?

Posted by EHS Insight Resources on November 2, 2021 at 8:21 AM

Did you know that companies spend more than $1 billion per week on direct workers’ compensation costs for non-fatal, disabling workplace injuries? Work-related deaths are even more expensive, ringing in at $151 billion.

The business case for safety makes itself. But it begs a question on the other side of the coin: how much does a company spend on safety per employee? And more pertinently, how much should a company spend on safety per employee?

If you’re asking these kinds of big questions before your next budget meeting, here’s what you should keep in mind.

How Much Do Companies Spend on Safety Per Employee?

In order to figure out what companies should spend, it helps to know what they’re currently spending. Unfortunately, that answer is a bit tricky, since not all companies have the same safety expenditures based on their industry. A construction site, for example, will look quite different than an insurance office.

One way to look at it is the cost of safety training per employee. According to Training Magazine‘s 2020 Industry Report, companies spent an average of $1,111 on training per employee in 2020. However, that varied widely between companies–small companies spent an average of $1,678, while large companies spent just $924. Keep in mind, mid-size and large companies (1,000 to 10,000+ employees) invest between 2% and 5% of salary budgets back into training.

For most companies, though, safety is a smaller part of the training expenditure. 24% of companies spend less than $5,000 on safety training in their total training expenditure, and another 21% spend between $10,000 and $24,999. Of these, most companies (44%) spent less than $200 per learner.

After that, you have to add in extra safety costs, like equipment and workers’ compensation. It makes no sense to look at these as averages across industries–outliers like construction drag up the average for everyone. A good approach is to look at averages in your specific industry. A construction site, for example, will likely owe a more expensive payout for a serious injury when compared to your average office.

How Much Should a Company Spend on Safety Per Employee?

This brings us to the more pertinent question: how much should a company spend on safety per employee?

Unfortunately, there is no set dollar amount that hits the sweet spot for all companies everywhere. How much you should spend will go up if you have more or fewer employees–for example, if you have to pay higher workers’ compensation premiums to account for more employees. This will also vary widely based on your industry–dangerous industries like construction, mining, and logging will always pay more than lower-risk industries.

A better way to think about it is safety ROI. The right spending level for you is the one that gives you the best ROI for the total expenditure. For example, it may be worth spending more to change safety training if you realize that your old training isn’t working. Conversely, you may purchase PPE in bulk and spend less while still getting better PPE than you had before.

Invest in Safety Tools You Can Trust

Ultimately, the question isn’t how much a company should spend on safety per employee, but rather the value that they get for those safety dollars. You’ll get the best results by investing in multi-faceted, powerful tools that give you the most bang for your buck.

Like our safety management software, which makes it easier than ever to manage all facets of your safety program from one convenient dashboard. So if you’re ready to make smarter investments in safety, get in touch today to learn how our software can help.

Topics: Workplace Health and Safety, EHS Management, Safety Management, Human Resources

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