Bottom line booster

If you think you can’t afford to invest in an effective occupational safety program, think again.

Recently, the Ohio Bureau of Workers’ Compensation notified employers that the rebates they’ve enjoyed the last several years are a thing of the past. The return on its investments is down, and companies’ out-of-pocket costs for workers’ compensation claims are increasing.

For this reason and others, you can’t afford not to invest in a safety program.

The obvious reason is the costs that are visible on the income statement. The average workers’ compensation claim in Ohio in 2001 was $40,000 in medical bills associated with the incident and wages for workers that are off work.

With medical costs on the rise, if your company has a 5 percent profit margin, you need sales of $800,000 to pay for that one claim, and that’s just for the direct costs associated with the incident.

Then there are indirect costs. The National Safety Council estimates that indirect costs associated with an incident are three to 10 times the direct costs.

For each workers’ comp claim, the potential indirect costs are $120,000 to $400,000. Administrative time spent completing incident records and accident investigations, lost time by co-workers talking about the incident, schedule disruptions, production losses due to the inefficiencies of replacement workers, equipment or product losses due to damage, and the cost of training replacement workers are all examples of indirect costs.

All of this time could be better spent improving quality, increasing production or securing new customers.

Companies with low accident rates are often eligible for participation in a group rating program that can reduce workers’ comp premiums. Low incident rates may also help a company avoid an OSHA inspection, saving the time involved in responding to the inspector and potential fines associated with the inspection.

Studies show that effective occupational safety programs not only reduce the costs associated with incidents, but they increase morale and productivity and decrease absenteeism. All of these factors increase profits, resulting in an improved bottom line.

How can you afford not to invest in an effective safety program?

For more information, contact your insurance company, the Division of Safety & Hygiene, OSHA’s On-Site Consultation Program or a certified safety professional. Dianne Grote Adams is president of SafeX. Reach her at (614) 890-0800 or [email protected]