What is the cost of workplace accidents to your business?

Costs of accidents in the workplace can be exponential, with every $1 in fines leading to $4 in indirect costs. Implementing a health and safety management system can return $2 for every $1 invested

What is the cost of workplace accidents to your business?

In a previous article we discussed Health and Safety, and the severity of the consequences for businesses failing to meet these standards.

Health and Safety can be seen as an ever-changing risk for businesses to manage, due to a lack of understanding around the impact of violating the standards. Whilst many businesses understand the impact a large fine can have, it is perhaps less understood that good health and safety process management can offer businesses return on investment.

Evidence suggests that for every $1 in fines businesses can expect to spend a further $4 in indirect costs[1]. For a business facing a $15,625[2] fine, which is already not an insignificant sum, to see the real overall costs spiral upwards to $78,125 when indirect costs are factored in, could put many businesses in significant risk of collapse.

So, what do the indirect costs[3] look like? A few examples of the costs to business are:

  • Insurance premiums increase
  • Compensation claims
  • Lost productivity and employee morale
  • Recruitment for replacing temporary or permanent employees
  • Accident investigation
  • Damaged property
  • Tarnished reputation

An employee perspective

When we consider the impact of health and safety failures on employees, we first have to start with the prospect of an employee getting injured whilst at work. In the US, in 2021 alone there were 4.26 million work-related, medically consulted injuries, and 4,472 preventable injury related deaths. For retail specifically, there were over 500,000 injuries requiring medical consultation[4]. If employees in unsafe working environments are injured, or worse, the human costs are incalculable on an individual level.

Secondly, there are the costs associated with replacing the injured person on a temporary or permanent basis where their workload must be shared amongst their colleagues. In the short term, for an injury lasting less than a week, this could be manageable but stressful for the remaining employees. For on-going absence, this poses the need to recruit for replacements and it can be difficult to recruit if the company has developed a reputation for health and safety failures. This is often perceived to be an indicator that employees are not valued. This leaves roles open which is an on-going cost and burden to the recruitment process.

When businesses hire new employees, they have to allocate resources, both time and money, to train them. Often, this training falls on the shoulders of in-store colleagues who may not have a comprehensive understanding of OSHA violations and are simply trying to complete their own tasks. As a result, the training may not be delivered in full or may not be fully comprehended by the new recruits, and it may not be taken seriously by employees. All of these factors can lead to more health and safety issues and add to the pressure felt by employees to complete their duties.

A customer perspective

For customers, the effect of sub-standard health and safety and low employee morale, or insufficient team members to properly manage the store well, will have an impact on their experience and ultimately, their loyalty to the store and chain.

A store which has less employees trying to cover more tasks will inevitably lead to some crucial tasks being missed. This could be empty shelves as the employees have not had time to restock, it could be long wait times at the checkout due to a lack of available cashiers, or it could be encountering a stressed employee and not having a good experience in store. Each and every one of these is linked inextricably to the employees the business is placing on the frontline, and this can leave customers feeling frustrated and taking their custom elsewhere.

How can businesses take the lead and change these perspectives?

The reality is that the negative impact on both employees and customers is challenging to overcome once it has happened, much like the health and safety issues that brought them about in the first place. Having a serious OSHA violation on record leads to a chain of stores vulnerable to inspections at other premises.

Investing in health and safety can help businesses demonstrate that they are taking the consequences of failures seriously, and that they want their business to flourish, their employees to thrive and their customers to feel welcomed and satisfied on every visit.

Investing in injury prevention not only makes workplaces safer, but it returns on average $2 for every $1 spent[5]. The return from this investment pays dividends not just to shareholders, but to

  • OSHA – demonstrating that violations are being taken seriously. Implementing a health & safety management system shows businesses are investing in better standards
  • Employees – a safer workplace will help employees to feel valued, boosting morale and reducing absenteeism and high turnover
  • Customers – a commitment to a safer store, happier employees and a demonstration of meeting OSHA standards can help customers to feel safer and have a more enjoyable experience in-store

[1] Go2HR – Why it pays to invest in safety

[2] OSHA – Penalties

[3] OSHA – Business Case for Safety and Health

[4] NSC Injury Facts

[5] OSHA – Business Case for Safety & Health