Economic Benefits of Health and Safety Management

Economic Benefits of Health and Safety Management

Written by Tanya

Published August 16, 2023

Health and safety management is an important component of any successful business. Not only does it protect workers, customers, and other stakeholders from harm, but it can also provide tangible economic benefits.

Businesses need to take appropriate steps to ensure that the health and safety of their employees and other stakeholders is prioritized. The ones that don't end up suffering costly losses and major disruptions.

It doesn’t come as shocking news that poor or non-existent occupational safety and health (OSH) practices cost companies money.  But did you know that according to studies, for every dollar invested in OSH, there is a return of $2.4?

The study was initiated by the International Social Security Association (ISSA), and included 337 interviewed companies representing 19 countries.

Creating a safe and hazard-free environment contributes, not only to better mental and physical well-being of workers but also higher productivity. Businesses with higher safety and health standards are more competitive and sustainable.  

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Labor Rights are Human Rights 

 

Did you know that the International Labor Organization regards a safe working environment as a human right? Providing decent working conditions is also amongst one of the 17 Sustainable Development Goals (SDG).  As a senior manager this means you have a huge responsibility that goes beyond the everyday working tasks, where budgets and bottom lines often gets the most attention. 

This is not a story that aims to preach or “teach you a lesson”, but there’s no doubt that poor workplace safety and health costs money. By sharing this article we hope to create awareness and provide a new perspective on how your company may turn the overwhelming and time-consuming OSH-tasks, into profit. We are convinced, supported by a huge number of reports and research, that by investing in good OSH management you can improve performance and profitability.  

Good OSH is Good for Business

 

Moreover, with insight into identifying the costs we believe that it will be easier for a management team to raise awareness of the magnitude of the problem. Our goal is to help you set priorities and contribute to a more efficient allocation of resources for OSH.  

To establish why this is important, let us start with some figures from the Bureau of Labor Statistics and the National Safety Council:  

  • Over 2 million recordable nonfatal workplace injuries and 5,200 fatal injuries occurred in 2021 
  • 103,000,000 days were lost in 2021 due to workplace injuries 
  • In 2021 the total cost of work injuries was $167 billion which includes productivity losses, medical expenses, as well as administrative expenses 
  • Per worker, businesses can expect to spend around $1,080 on work injuries 
  • If a worker were to die, this would cost around $1,340,00
  • The cost per medically consulted injury in 2021 was $42,000

Here's the gist: the most obvious economic benefit of health and safety management is cost savings. When businesses implement safety protocols such as hazard assessments and job hazard analyses (JHAs), they are able to identify potential risks before they become threatening or costly.

This proactive approach can help prevent accidents, injuries, and illnesses before they occur—thereby saving the company money in things like medical costs, insurance premiums, legal fees, and other related expenses. In addition, employers may see a decrease in the number of employee absences due to illness or injury. This can result in additional cost savings due to increased productivity.

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Identifying the Reasons for These Costs 

 

Occupational injuries, diseases and deaths have several high economic costs to employers, whereas senior management has the final responsibility. While some costs, like the loss of skilled staff and absenteeism are obvious, there are various other negative effects that might not be so easy to estimate. One example of this is presenteeism, where employees go to work despite illness, increasing the likelihood of mistakes.  

More examples of direct, indirect and intangible costs dealing with occupational injuries, diseases and deaths include:  

  • Healthcare costs 
  • Productivity and output losses 
  • Employer adjustment costs 
  • Other workers working overtime 
  • Hiring temporary workers 
  • Recruiting and training a replacement worker  
  • Insurance premiums 
  • Production disturbances
  • Administrative costs 


Benefiting Occupational Safety & Health Management 

 

As identified above, it’s clear how a healthy and safe work environment is an important contributor to labor productivity and promotes economic growth. Investing in OSH increases the competitiveness and productivity of enterprises by reducing costs resulting from accidents at work and work-related health problems, and by enhancing worker motivation. 

It's understandable that healthy and safe working conditions not only save money through decreased risk of accidents and illnesses; they also lead to increased productivity.

Employees who feel safe at work are more likely to be productive than those who don't feel safe—and therefore less likely to take breaks or call in sick due to stress or anxiety caused by unsafe working conditions.

Implementing a comprehensive health and safety management system helps ensure all employees are aware of their rights and responsibilities when it comes to workplace safety—which helps create a culture where everyone feels comfortable taking initiative without fear of reprisal for speaking up about potential hazards or concerns.

When employees are working in safe conditions they feel secure and better equipped to do their best work without fear of getting hurt on the job.

A safe workspace provides employees with peace of mind which leads to higher productivity levels due to improved morale and reduced stress levels. Employees who feel valued and supported by their employer are more likely to stay longer, leading to greater job satisfaction which results in higher retention rates.

Furthermore, when workers know that their employer cares about their safety they are more likely to take initiative on projects and tasks because they trust their efforts will be appreciated and rewarded for their hard work.

A strong strategy initiated and adopted by senior management leads to numerous benefits, summarized below: 

  • Improved productivity through less absence
  • Cutting healthcare costs 
  • Keeping older workers in employment
  • Stimulating more efficient working methods and technologies
  • Reducing the number of people who have to cut their hours to care for a family member 

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Safety at Work is a Hidden Opportunity

 

Occupational safety and health (OSH) is moving into the spotlight, as regulatory requirements, environmental concerns and production standards such as ISO certification, all take hold.

Introducing UNs Sustainable Development Goals (SDG) means a growing need to manage health and environmental responsibilities in the workplace, proactively and comprehensively. Safety and health at work can be key to sustainable development and investment in OSH is important to both the public and private sectors as a competitive advantage. 

In communication with hundreds of customers each day, we see that practicing health and safety has a new way of thinking. From a traditional hierarchical mindset, operating with multiple systems that are often manual and cumbersome, EHS management today clearly benefits from innovative and digital systems. 

woman in yellow construction hat holding an iPad in a manufacturing area
New technology has made it possible for us to develop solutions that are 100% tailored to each unique need. Introducing EcoOnline EHS to the market has pioneered the way companies can plan, act and evaluate in collaboration with the employees. Through one centralized and customized system, safety management can be done proactively and decisions made based upon real time information.  

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A study of 1.8 million employees in 230 organizations across 49 industries and 73 countries, makes clear that employee engagement strongly relates to key organizational outcomes in any economic climate. Even during difficult economic times, employee engagement is an important competitive differentiator for organizations.

If Money Doesn't Convince You, Compliance Should 

 

Occupational safety and health are regulated by one of the most extensive and complex legislations, which companies must comply with. As the risks at work are changing with new technologies and new working environments the legislation is in constant change - are you up to date?  

We understand that it can be difficult, and it often seems easier to take shortcuts in order to avoid the hassle often associated with managing the HSE tasks. But the responsibility falls on you, as the manager, to ensure you adhere to the law. It doesn’t matter if you manage a small, local company or a huge international enterprise – if an accident occurs, it is your responsibility. 

The risks differ in every workplace, from the traditional high-risk involved in using machines or working at heights, to new and emerging risks such as stress, bullying and harassment (psychosocial risks). 

Whether the risks are few or many, the absence of HSE management can have serious consequences. For your reputation, your economic wellbeing and most importantly, the health of your colleagues. 

Do you dare take the risks that are involved in not taking full responsibility? 

How to Improve HSE in a Cost-Effective Way

 

Open communication between employers and employees is key when it comes to creating a safe workplace environment.

When there is open dialogue, employers gain insight into what potential risks may exist within their facility that need attention. It also provides clarity on whether there is any new technology being used that may require additional training or procedures put into place.

By addressing employee concerns directly and quickly, you create trust between both parties which further encourages employees to come forward with any issues they may have, instead of waiting until something goes wrong before speaking up about it.

EcoOnline has the tools that give you control and help you manage your HSE tasks efficiently and in accordance with the law. With EcoOnline's EHS platform, it’s easier to build a strong internal safety culture. Every task including incident reporting and investigation, risk assessments and safety audits are built with the purpose of being customizable and intuitive.

One of the key drivers to become more cost effective is to minimize risk. Within EcoOnline's EHS platform you get access to critical safety information, instantly helping you get an overview of the risks your employees are exposed to. This makes it possible for you to reduce these risks and thereby win back time otherwise spent on documentation, as well as reducing costs associated with sick leave and halts in production.  

EcoOnline makes it easier to get a full overview of all the tasks different employees are responsible for, as well as the status of these tasks. Our support team is available to help you with any queries you may have.

While cost is a consideration, it should not be the deciding factor. Investing in the most comprehensive and tailored HSE system on the market will help create a safe work environment for employees. It’s easy to gain control when you have the right tools. 

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Author Tanya

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