Health and Safety Could Make Your Share Prices Grow

As health and safety professionals, we are challenged with an internal perception that safety is a cost center, particularly when you ask to invest in health and safety technology.  

After all, it can be seen as expensive with no apparent profit. So we may feel inclined to check off government mandates for workplace health and safety with a cursory nod. 

• Dry floors? 
• Sturdy furniture and working equipment?
• Do you have clean and organized rooms and passageways? 
  
  

In a world of checkboxes, investing in health & safety solutions might not be at the top of the priority list. However, research shows us it should be.  

Per the Health and Safety Executive (HSE), every business must have a policy for managing health and safety. Much research has shown that organizations could expect to make significant long-term cost savings through accident prevention. Over and again, researchers found that some of the richest and most successful companies were those that invested in health and safety measures. One of the most frequently quoted studies concluded that “companies that build a culture that focuses on the well-being and safety of their workforce may yield greater value for their investors.” The evidence seems conclusive: Best-run companies are safe and successful.

The studies on why it is crucial for businesses to invest in health and safety

In 2018, an international team of researchers mapped a 1945-2018 review of relevant companies across 12,700 indexed journals and found that some of the richest and most successful companies were those that invested in health and safety.

“Firms,” it concluded, “that invest in occupational safety often have better financial performance than those who do not ... This study’s findings underscore the financial gains firms can obtain by promoting occupational safety measures in their organizations.”

There are various reasons for their success. One is that workers are simply repelled by companies with high levels of accidents and high-stress levels. In fact, the American Institute of Stress notes these companies increase their workplace turnover by almost 50%. Businesses, in contrast, that are known for their workplace safety give their owners a recruiting edge. Another is that good health and safety drives efficiency through downtime reduction. It also reduces worker absenteeism and, overall, improves operational efficiency. To that end, Gallup shows that organizations with 70% fewer accidents than average are usually rated in the top 25% for worker engagement than those in the bottom 25%.

Improving safety can save you money

A quick look at the cost of workplace injuries and the potential return on investing in accident prevention shows that a safe and healthy workplace could be a profit center.

Injury costs can’t be depreciated, written off as business losses, or deducted as expenses. If you lose a certain amount of revenue from injuries, illnesses, or damage, you’d need to earn double as much for profit.

Workplace accidents involve both direct and indirect costs. Direct costs include:

• Medical expenses, such as the costs of hospital stays, medicine, therapy and ambulance rides.
• Compensation payments
• Costs for legal services
  
  

According to the HSE, in 2018/19 a single fatal injury cost about £1.7m. And that does not include indirect costs!

Indirect costs are usually more expensive and are worked out on the ratio of two dollars for every dollar of indirect costs. Indirect costs include training replacement employees, accident investigation and implementation of corrective measures, lost productivity, damaged equipment and property repairs, and costs associated with lower employee morale and absenteeism. These costs could damage your brand and usually result in lost customers, lost opportunities and lost profits.

Costs for investing in health and safety

The costs of investing in accident prevention are laughable in comparison. They include the following:

• According to the HSE, the total cost of workplace injuries was 2018/19 was £16.2 billion and £3.2 billion of that is the cost to the employer.
• Finally, imagine a new safety training program that costs £70,000 to implement but yielded a 10% reduction in incidents and a total savings of £250,000. The potential ROI of that simple program could be 257%.  
  
  

In short 

Companies have a phalanx of dreams to invest in. For most of us, health and safety comes as that very last acquisition. Meanwhile, studies show it makes sense to push it to the front of the line. Additionally, most respondents (54%) told EHS Today that the benefits of their health and safety program exceeded its cost. In the long run, it’s a small price to pay for saving lives, reducing injuries, and increasing your profits. 

Ready to see how health and safety technology can help? 

Health and safety technology makes it easy to manage, track and report your safety risks, manage all your regulatory compliance and enterprise risk from one single pane of glass, track your workplace engagement, and manage, track and report your safety risks.  

Ready to chat about how health and safety management solutions can help make your organization safe and even more successful?