Convincing senior leadership to invest in environmental, health and safety (EHS) software can often be a challenge, especially when budgets are tight. Despite the clear benefits of safety programs, decision-makers might hesitate, viewing them as an added expense rather than a strategic investment.
One of the most effective ways to secure buy-in is by demonstrating the cost of workplace injuries compared to the savings and efficiencies EHS software provides. Health and safety software can help your organization identify trends and problems before they escalate into costly accidents, ultimately helping you achieve a greater return on investment (ROI).
In 2023, the Bureau of Labor Statistics reported 2.6 million nonfatal workplace injuries and illnesses, with the highest number of injuries stemming from the health care and social assistance, manufacturing and retail trade industries. Not only do these incidents impact the affected individual, but they impose significant financial burdens on the organization. But how much does an “on-the-job” accident cost? The exact answer depends on a variety of factors.
For starters, there are the direct costs, which are the immediate expenses related to an incident. These can include medical expenses for the injured worker, workers' compensation, medical expenses and legal service costs. According to the 2023 Liberty Mutual Workplace Safety Index, workplace injuries cost companies $58.61 billion in direct costs alone.
Workplace incidents also have indirect costs, which are the secondary expenses that arise because of the incident. Indirect costs incorporate a broader range of expenses, such as the following:
Lost productivity and time lost from work from the injured employee
Loss in earning power
Decreased efficiency by other employees or supervisors as they cover for the injured employee
Time and expense of recruiting and training a new worker
Time and expense of replacing or fixing tools, equipment and other property that were damaged during the incident
Spoiled work and production losses
Failure to fill orders
Overhead during disrupted work
Mental health issues that cause absenteeism or affect productivity, such as PTSD or anxiety
Indirect costs of an accident are typically higher than direct costs. A conservative estimate is that for every $1 spent on direct accident costs, an additional $3 is spent on indirect costs. Some studies have even show that the indirect costs can extend up to 20 times the direct costs.
There’s good news, however. According to research from the American Society of Safety Professionals (ASSP), every $1 invested in safety saves a company between $2-$6 by preventing injury, lost work and administrative work. In 2020, the ASSP reported on the following statistics attributed to EHS program implementation:
Investing in an EHS program allowed one company to cut workers' compensation costs over a two-year period by $2.4 million.
Implementing a fall protection program reduced one employer's accident costs by 96%.
EHS program adoption saved one company $930,000 annually by experiencing 450 fewer lost-time injuries than the industry average.
The lost workday incident rate dropped from 28.5 to 8.3 for an organization participating in a health and safety research program.
These financial benefits highlight the need for an investment in safety and show the return on investment that EHS programs deliver.
Financial savings are the just tip of the iceberg to the benefits that EHS software can provide. While these nonquantifiable advantages may not show up directly on a balance sheet, they still contribute significantly to long-term business success.
Embedding safe operations fosters trust between employees and leadership, demonstrating that the organization values its workforce. This can lead to increased job satisfaction, better mental health, reduced turnover and higher productivity.
Companies with strong safety records are often seen as responsible and trustworthy by customers, investors and the public, helping to differentiate your organization in a competitive market.
A robust safety program positions your organization as forward-thinking, and having well-established EHS practices ensures your organization is better prepared to adapt to future changes.
Streamlining EHS&S processes by automating tasks, tracking accountability and consolidating data reduces the manual time and labor spent on these processes. Over time, this translates to significant cost savings and allows teams to dedicate more time to important tasks.
When arguing the importance of investing in safety, stakeholders may be worried about the upfront cost of safety software. However, it is important to remind senior leadership that, for the most part, all direct and indirect costs of workplace accidents are avoidable with the proper tools and software. If you can demonstrate to business leaders and financial decision makers how improving safety performance through technology can reduce costs, you will have solid evidence that more resources should be allocated to your health and safety program.
The easiest way to prove the ROI of EHS software is to use our safety calculator. This tool allows you to see how much money your company can save through investing in digital health and software.
Ready to demonstrate ROI and fast-track your health and safety journey? Use our safety calculator below!