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Making the Business Case for Safety and Health |
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Economic
Benefits of Workplace Safety and Health |
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Employers that invest in workplace safety and health can expect to reduce
fatalities, injuries, and illnesses. This will result in cost savings in a
variety of areas, such as lowering workers’ compensation costs and medical expenses, avoiding OSHA
penalties, and reducing costs to train replacement
employees and conduct accident investigations. In addition, employers often find
that changes made to improve workplace safety and health can result in
significant improvements to their organization’s productivity and financial
performance.
The following resources provide background on the economic benefits of workplace
safety and health and how safety managers and others may demonstrate the value
of safety and health to management.
Management Views on Investment in Workplace Safety and Health
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Chief Financial Officer Survey. Liberty Mutual Insurance Company, (2005). This survey asked
senior financial executives at large and mid-sized companies about their views on safety and
insurance. These executives cited increased productivity and reduced costs as the top benefits of
workplace safety and health.
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Executive Survey of Workplace Safety. Liberty Mutual Insurance Company,
(2001). Ninety-five percent of business executives responding to this survey
believe that workplace safety has a positive impact on a company’s financial
performance. Of these executives, 61 percent believe that their companies
receive a return on investment of $3 or more for each $1 they invest in
workplace safety.
Return on Investment in Workplace Safety
and Health
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Business of Safety Committee. American Society of Safety Engineers (ASSE).
This committee gathers data, prepares documents, and is a source of
professional information on ASSE’s efforts to show that investment in safety,
health, and the environment is a sound business strategy. This page includes
links to a variety of resources on the return on safety investment.
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White Paper on Return on Safety Investment. American Society of
Safety Engineers (ASSE), (2002, June). Concludes that there is a
direct, positive correlation between investment in safety, health, and the
environment and its subsequent return on investment.
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Health and Safety as a Return on Investment. American Industrial
Hygiene Association (AIHA) Media Kit, (2005, November 9). Summarizes how
industrial hygienists can be a good return on investment for an employer.
Tools for Calculating Economic Benefits of Workplace Safety and Health
- $afety Pays. OSHA. Interactive software that assists
employers in assessing the impact of occupational injuries and illnesses on
their profitability. It uses a company's profit margin, the average costs of
an injury or illness, and an indirect cost multiplier to project the amount of
sales a company would need to generate to cover those costs.
Journal Articles
- Michael Behm, Anthony Veltri and Ilene Kleinsorge. "The Cost of Safety: Cost
analysis model helps build business case for safety." Professional Safety
(2004, April). Presents a cost analysis model that can help safety,
health, and environmental professionals measure, analyze, and communicate
safety strategies in business terms.
- "Proceedings
From the Economic Evaluation of Health and Safety Interventions at
the Company Level Conference." Journal of Safety Research,
Vol. 36, No. 3(2005), pages 207-308. These articles describe several tools currently used
by companies to evaluate the economic impact of safety and health
interventions.
- Susan Jervis and Terry R. Collins. "Measuring Safety’s Return on Investment."
Professional Safety (2001, September). To address the challenge of maintaining
effective safety programs in the face of cutbacks, the authors discuss a
decision tool to help safety managers determine which program elements offer
the best return on investment.
Making the Business Case for Process Safety Management
- Business Case for Process Safety. American Institute of Chemical
Engineers, Center for Chemical Process Safety (CCPS). CCPS developed a
brochure and presentation to help companies demonstrate the business case for
process safety management.
Return on Investment in Personal Protective Equipment
- Safety
Equipment Saves Dollars. International Safety Equipment
Association. Provides cost-benefit profiles for various types of
personal protective equipment. It also includes a brochure that has a
worksheet for calculating the cost of a workplace injury and the added revenue
that a company must generate to recover the lost profit from the injury.
Relationship Between Injury Rates and Survival of Small Businesses
- Theresa Holizki, Larry Nelson and Rose McDonald. "Injury Rates as an Indicator
of Business Success." Industrial Health Vol.
44(2006), pages 166-168. Study of new small businesses that registered with the Workers’
Compensation Board of British Columbia. A statistical correlation was found
between workplace safety and health and the survival of a small business.
Businesses that failed within one to two years of start-up had an average
injury rate of 9.71 while businesses that survived more than five years had an
average injury rate of 3.89 in their first year of business.
Other Resources
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Safety and Health Add Value. OSHA Publication 3180. Also available as a 200
KB PDF,
6 pages. Summarizes how safety and health add value to your business, workplace, and
life.
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