Calculating the True Cost of a Workplace Accident
Posted by Graniterock on Mar 18, 2015
At the bustling Lisi aerospace - Hi Shear Corp. plant in Torrance, California, among the 680 employees is a group of highly experienced machinists, some with more than 30 years on the job. The challenge is that when one of these workers gets injured, the costs can be high. It can take up to three weeks to train a replacement, there's equipment down-time, interrupted schedules and other costs that may not be obvious at first.
Facility managers everywhere are concerned about keeping employees and customers safe in their facilities. The direct costs of injuries and illnesses are pretty clear: those claimed under worker's compensation insurance and/or disability insurance. But did you know that the indirect costs - those not directly related to the injury but occurring as a result of the injury — can be even greater? Because there is no such thing as a "typical" injury, indirect costs can be difficult to compute. Experts put the ratio of indirect to direct costs anywhere from 1:1 to 20:1.*
Add Up All Of The Indirect Costs
These indirect costs include, of course, the lost time of the injured employee. The Bureau of Labor Statistics estimates, for example, that for workers in heavy construction, each nonfatal occupational injury or illness requires the employee to miss eight to nine days of work. There is also lost time for the other employees who stop work to treat the injured person.
The indirect costs mount from there: supervisors and foremen need to investigate the cause of the accident. Damaged machinery, tools and other property may need to be repaired or a spill cleaned up. You may need to train a new employee to replace the injured one or make arrangements for the work to be done by someone else. And there may be legal fees, plus management time spent dealing with regulators and attorneys.
How costly is all of this? The National Safety Council estimates that the lost time associated with the average injury costs nearly $30,000. In 2006, Liberty Mutual reported in its annual Workplace Safety Index study that in 2004 (the most recent year of the report), employers spent $48.6 billion for wage and productivity losses, medical expenses and administrative expenses for workers hurt on the job. The most injury-prone jobs, according to the Bureau of Labor Statistics, are in manufacturing and healthcare.
Injury Prevention with PPE Products
The first line of injury prevention is usually Personal Protective Equipment (PPE) such as gloves, hard hats, steel-toe shoes and safety glasses. But effectively reducing accident rates may also require, in some cases, a cultural change within the organization.
At Lisi Aerospace - Hi-Shear, which manufactures fasteners for the aerospace industry, hand lacerations are one of the most common injuries, because the machines produce a lot of metal chips. Laura Forrester, environmental health and safety manager at the plant, discussed this with her Grainger account manager, Bernadette Stevens. As part of a new, employee-based PPE initiative, Lisi Aerospace - Hi-Shear partnered with Grainger to find appropriate gloves for workers at each machine. "At first there was some apprehension," Laura says."Employees were wary of yet another PPE item to use, and worried that the gloves might be cumbersome." Another issue, she says, is that the company needed a cultural change to get employees to buy in to an improved safety program. Bernadette brought many different samples for employees to try out and choose from. After the safety committee made its selections, Bernadette set up a bar-coded, Vendor-Managed Inventory (VMI) system to maintain the glove supply in each department.
Within two months, the plant saw a 20 percent reduction in hand lacerations. "The biggest benefit, obviously, was the reduction in injuries," Laura says. "But there is also a different attitude in employees. They see that we are trying to make it better and safer for them. It's the culture change we wanted."
Given the high — and often hidden— costs of accidents, employers are increasingly turning to PPE and other safety products for preventing injuries or making them less severe. The Liberty Mutual Workplace Study Index released in 2005 found that more than 60 percent of the senior financial executives surveyed reported that each $1 invested in injury prevention returned $2 or more.
You can offer your employees a variety of PPE and other safety products. Sprains and strains, which account by far for the most injuries in five key industry sectors —construction, manufacturing, retail, educational and health services, and leisure and hospitality (according to the Liberty Mutual Workplace Safety Index) — can be reduced by using such products as backsupports, body belts, hydraulic hand trucks and anti-skid tape. Cuts/lacerations/punctures, another leading category of injury in those sectors, can be reduced with protective gloves, safety glasses, protective clothing and protective face shields. And a variety of injuries can be prevented by the use of traffic safety equipment such as barricade lights, safety and security mirrors, and clear and well-placed signage.
Safety is the right thing to do for your employees. It's also the smart thing to do for your company's bottom line.
*Source: U.S. Department of Labor - www.osha.gov/SLTC/etools/safetyhealth/mod1_costs.html
Additional sources for this article: International Safety Equipment Association, "Personal Protective Equipment: An Investment in Your Workers' and Company's Future"
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