By Robb Tinney
Safety Advisor
It’s one of those things that happens on jobsites and in factories. Charlie is using a piece of equipment and became distracted for a moment. Something slipped, and now he’s bleeding and in some pain. Work stops and a crowd gathers. The shift supervisor walks over, determines that there’s no need for an ambulance, and drives Charlie to the local occupational medicine clinic. Four hours, a local anesthetic, twenty-three stitches and a painkiller later, the supervisor drives Charlie home. The clinic sends a bill for about $1,000.
So how much did that injury cost Charlie’s employer? If you answered $1,000, you’re making the same mistake that many employers do.
You see, direct medical costs are only the beginning of the bottom-line impacts of a worker’s injury. While emergency room and doctor visits, medical bills, medicines, and rehabilitation may be the most visible costs, they’re definitely not the most painful ones. The indirect costs of an injury generally total between four and ten times the amount of the direct costs. So Charlie’s moment of inattention could end up costing his employer $10,000.
Think of injury costs as icebergs in your path. You’ve probably heard that only about ten percent of an iceberg is visible above the water’s surface. When it comes to injuries, the direct costs are the visible portion. You may not even realize the unseen impacts for months or years.
What are those indirect costs? They vary by the nature of work, the workplace itself, and the type of injury, but some that may affect you include:
Lost productivity. Injuries tend to bring work to a dead stop, as other workers come by to offer assistance or simply see what’s happening. The worker’s time for that day represents lost productivity, and if the injury is serious enough, you may have to replace the injured employee’s lost hours by hiring and training another employee. A serious injury or fatality may shut down that portion of your workplace for hours or even days. In addition, specialized machinery that’s affected (such as a CNC machine when blood contaminates the fluids used in the milling process) may need to be shut down and cleaned before work can resume. All of these factors may impact your overall schedule and ability to meet customer timelines.
Administrative time. While Charlie’s supervisor was taking him to the clinic and home, he wasn’t performing his normal supervisory work. Did productivity (and safety) suffer? He probably also spent time documenting the incident, taking him away from his regular duties. Your office staff may also have to contend with additional insurance or OSHA paperwork.
Insurance costs. Injuries are likely to be reflected in your premium costs and EMR for the next three years. That means you’re likely to pay even more for insurance coverage three years after the incident occurs.
OSHA involvement. An injury may bring closer attention from OSHA, and the more serious the injury, the more closely they’re going to examine your worksite.
Morale and reputation. An injury may make workers feel unsafe, which can have a direct effect on productivity and turnover. If your company is smaller, and employs multiple members of the same family, that’s likely to impact morale even more. In addition, your customers may have less confidence in your company’s ability to serve their needs.
Media attention. How much would your company’s reputation suffer if images of your trucks and worksites appeared on the evening news? No matter how skillfully you handle the reporter’s questions, viewers are more likely to blame you for what happened.
The calculation doesn’t stop there. To stay in business, your company has to remain profitable, so you have to achieve a profit margin on every project. If you fail to achieve that profit margin, you have to make it up elsewhere.
Let’s say your company’s profit margin is ten percent. In order to make up the $10,000 that Charlie’s injury cost you, your company will now have to perform $100,000 of additional work. Even if your profit margin is higher than ten percent, every dollar you lose through an injury requires you to earn many more dollars in make-up work. If your profit margin is less, just one injury on a project could destroy its profitability.
Injuries can also impair your ability to land work. More prospective customers are examining injury rates and EMR. If they notice that you have a higher-than-average rate of injuries, it sends a message that the quality of your work may not be up to par, and that there’s a greater likelihood of delays that could affect their business. Many won’t even give you the opportunity to bid.
Simply put, the full cost of a single workplace injury may be far more expensive than the cost to upgrade your safety program or hire a safety professional. When you look at the total cost, it’s clear that there is no such thing as a minor injury. Properly managing the safety process allows you to manage and avoid the cost of injuries, rather than letting injuries manage your cost of doing business.