Do you know the cost of safety? Or, put another way, do you know the economic benefits of investing in quality safety measures that are designed to prevent injuries? Do you know how much an injury will potentially cost your company?
If you’re not calculating your safety ROI, the truth is, you won’t know how much your business is losing through faulty prevention measures (or how much your business is saving with measures that actually work).
Here are three steps to calculate your safety ROI.
Know Your Factors
The first step is knowing what factors you’re going to account for. In other words, you have to know what you’re going to measure, why you’re measuring it, and what you hope to see that would indicate a worthwhile ROI.
Another helpful tool is using OSHA’s Safety Pays program to assess the impact of occupational injuries and illnesses on their profitability. This estimation tool uses information you supply about your company's profit margin and adds the average costs of an injury or illness and an indirect cost multiplier to calculate an estimate of the amount of sales a company would need to generate to cover those costs. For example, if your company’s profit margins are 3%, OSHA estimates that it would require an addition $6,229,366 in sales to cover the direct and indirect costs associated with one amputation injury.
However, be careful not to use these numbers as a crutch. Far too many organizations look solely at the number of injuries or accidents from one year to the next as their indicator of success. The reality is that looking solely at workplace accidents or injuries does nothing to address the underlying causes.
With that in mind, don’t be afraid to go a little deeper. Look at the causes of safety issues and metrics that would indicate whether the measures you’ve taken to address them are working.
Know Your Metric for Success
From there, you have to know your metric for success - why you’re measuring something and what a successful change would look like. In other words, you need to have goals.
If you don’t know what your standard for success is, you’re never going to meet it. The same thing happens if you set an unrealistic standard. The key is to be specific about what you want to achieve, why you want to achieve it, and how certain measures will help bring it about.
Look for positive results in metrics, like X decrease in lost time or more positive actions from employees indicating a stronger sense of involvement.
Show Your Work
Finally, make sure to show your work. This is often done in terms of numbers, particularly economic costs.
If you’re in a position of trying to sell safety to the higher-ups, especially from a financial perspective, it’s often helpful to posit safety as what you want to happen, rather than focusing on what you don’t want to happen.
This is a tricky bit of semantics that can make the difference between organizational assistance and resistance. When you posit safety in terms of what you don’t want to happen, you become the department hobbling the whole organization, holding it back from ideas it wants to try.
Instead, show your work as a way of strengthening something positive, like safety culture. Talk about the tools that can help create that situation and use them as a way to get everyone more involved in the end result.
Maximizing Your Safety ROI
When you’re trying to pitch a safety investment, knowing your safety ROI is critical to making a case that resonates. The key is knowing what you’re selling and why, and how various investments can pay it forward. Read our article on how to build a health and safety business case.
We know that you can’t afford another solution that slows you down. That’s why when you invest in our safety software, you get programs that are the top of their class, designed to meet your biggest challenges and adapt alongside you.
It’s time to invest in a safer tomorrow. If you agree, pull up a chair and start the conversation.