Have you ever wondered what the “return on investment” (ROI) is for an effective safety management system? Employers, especially those involved in high-risk industries, hear a lot about the importance of workplace safety. OSHA safety precautions are in place to help guide them in creating processes to keep workers safe from common dangers on the job. However, despite even the most vigilant of employer’s who put forth their best efforts, workers are still injured on the job. In virtually every industry, workplace injuries and illnesses occur on a daily basis. When occupational injuries and death are looked at annually, on a national level, the cost is staggering.
The solution is simple: invest in an effective safety management system. Why do you need a safety management system? The short answer is, to protect the lives of your workers. But, in the business world, a company must also be able to justify the money spent with a positive ROI when investing in and implementing safety measures. Even if you desire to do everything in your power to protect your employees, the hard truth is that resources will dictate the level of safety you provide. Even so, various studies have shown that just $1 invested in injury prevention returns between $2 and $6 – that’s bottom-line profit from money not being spent on administrative costs, insurance, healthcare and lost wages due to workplace injuries.
How much do workplace injuries and deaths cost a company? That $2 to $6 return doesn’t seem like much until you look at the big picture and start adding it all up. According to a 2014 report from the National Safety Council, the total cost to society for all occupational injuries and deaths in 2012 was $198.2 billion. This breaks down to $36.5 billion in administrative expenses; $55.7 billion in medical costs; $89.6 billion in wage and productivity losses; $11 billion in employers’ uninsured costs; $3.2 billion in fire losses; and $2.2 billion in vehicle damages.
When you use this to calculate the injury impact per worker, every worker in the US must produce an additional $1,400 in goods or services each year to offset the cost of workplace injuries and deaths. While the cost of different types of injuries varies drastically, the average cost per medically-consulted injury is $39,000. The average cost of each workplace death is $1.4 million.
With that said, if we assume a very conservative estimate, that 1,000 companies nationwide invested an extra $5,000 each in safety management systems, according to the ROI above, it could save them each anywhere from $10,000 to $30,000 in accident-related costs. On a national level, it could save society anywhere from $10 to $30 million. If more companies invested in better safety systems, it is possible to significantly decrease the number of occupational injuries and deaths, and drastically reduce the financial burden on society, as well.
How much does a truck accident cost a company? When exploring the total cost of a truck accident and how it can affect your company, we need to explore past the basic surface costs, as the answer to this question is much deeper than you may realize. First, you have to realize that there are many types of costs associated with an accident, starting with visible (direct) costs and hidden (indirect) costs. Further, there are human, psychological and environmental costs, which not only impact your workforce, but our total economy, too.
Let’s start with the basics by listing the visible (direct) costs that your company will face when a driver is involved in a truck accident: cargo damage; vehicle damage; injury costs; medical costs; loss of revenue; administrative costs; cost of insurance increases; towing costs; storage of damaged vehicle; and more.
Now, let’s look at the hidden (indirect) costs of a truck accident: loss of clients or customers; lost sales; meetings missed; salaries paid to employees in accident that are not working; lost time at work; cost to hire or train replacement workers; time; loss of personal property; vehicle replacement; damaged equipment downtime; accelerated depreciation of equipment; accident reporting; government agency costs; poor public relations and publicity; increased public relations costs; and the list goes on and on.
How much revenue is lost with a truck accident? The answer to this question is nothing short of staggering. Hidden or indirect costs can be four to ten times greater than the visible or direct costs. It is crucial for companies to realize the incredible impact of the hidden costs of a truck accident, not to mention the amount of revenue that must be generated to make up for the lost profits from these costs.
A recent article in the Business Report stated that if you take the average cost per truck accident, which is $148,279, as provided by the FMCSA, it would take additional revenue of $7,413,950 to pay the costs of the accident, assuming an average profit margin of 2%. The amount of revenue required to pay for the costs varies inversely to the profit margin. Further, the cost of a truck accident with a fatality is considerably higher, at $7,633,600.
The cost of a truck accident is a controllable cost that can directly affect the company’s bottom line. When profit margins are tight and competition is intense, the ability to control accidents is vital. The importance of an improved workforce safety initiative, which would result in reduced accidents and injury costs, results in putting a substantial amount of money back to the bottom line.
Although it might seem less important, the impact on public relations could be the worst of it all. In addition to the costs mentioned above, and with the rise of Social Media’s influence on spreading the negative publicity and poor public relations, a further impact can be made on a company’s goodwill. The 2014 crash involving a Walmart company truck and a limousine carrying comedian Tracy Morgan and others, which lead to the death of James McNair and the injury of several others involved, as well as the pending lawsuit, has been a public relations nightmare for Walmart. Tracy Morgan received $90 million himself, and McNair’s children received $10 million!
As you can plainly see, the true costs of a truck accident can be staggering, but not just the direct costs, also the indirect ones, too. Any methods that can be used to decrease these accidents has the potential to have a considerable positive impact on a company’s bottom line and overall image to the public. There is more on the line than just safety itself, but safety is pretty important, too.
Joining an association like the NTA can create or improve your safety management system. As an association, NTA has many service providers who can conduct a safety assessment of your workplace and make recommendations based on OSHA safety precautions and guidelines for your specific industry. With the overall goal of reducing workplace injuries, illnesses and deaths, we will identify risks and present you with plans to mitigate them. Once you have a system in place, we will help with implementation, employee training, and required OSHA reporting to ensure both safety and compliance. For more details about how to get started, visit www.ntassoc.com or call (562) 279-0557.