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Prioritizing Workplace Safety (and ROI) to Get Back to Business Better

February 15, 2021

Where would you rank workplace safety as a priority for your company?  If you’re honest (and especially in the world we're living in today), would you rank it higher than profitability, production, or quality? Many organizations say it is the priority, but this is not always reflected in terms of where they invest their money, time, and other valuable resources. Why is this so often the case?

iStock-1272543047It can be difficult to see the tangible outcomes or results of an effective safety program because success is partly measured by the absence of injuries, fatalities, or other adverse events. Thus, it requires organizations to estimate the dollar value of something that was prevented in order to determine the cost savings of their investment. 

While most safety professionals are accustomed to this accounting metric, it might seem a bit unorthodox to professionals in many other disciplines. Luckily, there are useful estimates and benchmarks out there that can give us an idea of the approximate Return On Investment (ROI) that we can expect to see when we invest in safety. For example, according to the National Safety Council (NSC), various studies indicate that every $1 USD invested in injury prevention returns between $2 and $6 USD. In other words, spending money on safety today can provide a sizeable ROI in the future by preventing costs related to: 

  • Injuries 
  • Medical Treatment 
  • Fines 
  • Administrative Expenses 
  • Insurance Premiums
  • Productivity Losses
  • Property Damages 

When you consider that the average cost of a medically consulted injury is in the range of $41,000 USD, and the cost of a work fatality is estimated to be about $1.2 million, it is easy to see how investing in safety can not only save lives and keep people safe, but it can also save companies tremendous amounts of money. So, what types of things can we invest in to improve safety and realize the ROI?

Tangible Hazard Mitigation

There are many ways to reduce injury risk, and they vary in nature and scope. For example, companies can invest in improving the safety of the work environment by safeguarding equipment or mitigating existing hazardsSimple examples of this might include installing guarding on machines in order to prevent lacerations or putting in barriers to separate pedestrians from motorized vehicle traffic on the shop floor. The use of personal protective equipment (PPE) is another investment that most organizations invest in, which includes things like safety glasses, respirators, steel toe shoes, hard hats, or hearing protection, among several others. Training and education on safe work practices are other ways to invest in safety by providing workers with the technical knowledge and skills to perform their jobs safely and minimize the risk of injury. 

Improving Safety Behavior

Other common investments involve aspects of the organization that are less tangible but highly impactful, such as processes focusing on leadership, organizational culture, or safe work behaviors. It is in this arena that we at PSI specialize when it comes to supporting organizations on their safety journey. 

Over the years, we have worked in several high-hazard industries such as manufacturing, petrochemical, mining, and energy, helping organizations to improve safety by leveraging psychometric assessments to enhance safety leadership, reduce at-risk behaviors, and help companies hire individuals who are more likely to work safely. 

A few years ago, we partnered with a global chemical manufacturing organization by implementing PSI's SafetyDNA Program at one of their facilities. This program is a unique learning and development process, which includes a psychometric assessment of the workforce, an experiential workshop, and one-on-one coaching sessions. The validated online assessment is designed to capture an individual’s SafetyDNA profile on four critical factors related to safe behavior, while the workshop and coaching provide self-awareness about one’s risk profile and tendencies, along with useful tips on how to leverage personal traits to minimize risk in certain situations. 

Safety Assessments Show Statistically Significant Decrease in Incidents

A total of 898 employees at one of their US facilities participated in the process. Safety incidents categorized as “serious” by the organization were recorded three months prior to and three months after the personal coaching sessions. Serious incidents included OSHA recordable injuries with or without lost or restricted time on the job. During this timeframe, there were no significant changes in the type of work conducted, supervision, safety policies and procedures, or environmental factors. Interestingly, when we compared the number of safety incidents pre- versus post-intervention, total serious incidents were reduced from 14 to 5, which represents a 64% reductionThis is a statistically significant decrease in serious incidents, which also resulted in cost savings for the organization. Using the aforementioned $41,000 USD as an estimate of incident cost for a medically consulted injurya reduction of nine serious incidents likely helped this site achieve a cost savings of approximately $369,000. 

In another case study, PSI administered its SecureFit assessment to approximately 2,500 job candidates who were applying to production positions at a global auto manufacturing organization. SecureFit is a screening assessment that measures critical risk factors, such as safety, dependability, and turnover risk. This particular study provided us with a unique opportunity to determine the long-term results of hiring all candidates (including those who failed the assessment) because the organization decided to neither use the assessment results for any hiring decisions, nor communicate the scores to anyone. We then collected data on worker's compensation claims over the course of 12 months for those who were ultimately hired. These claims included the type of injury, number of days lost, and the amount paid in the claim. 

The results showed the assessment predicted who was more likely to be injured and file a claim. In fact, job candidates who failed the assessment but were subsequently hired were twice as likely to file a worker's compensation claim due to a work-related injury during the first 12 months of employment, compared to those who received a passing score. This finding is especially impressive since less than 10% of candidates in the sample failed the assessment. Based on NSC’s cost estimates, if this organization had used the assessment to make hiring decisions, it could have prevented 850 lost days due to injury, with a direct cost savings of $269,000. Those are just the direct costs; the total indirect cost savings over that time period would have been well over $1 millionThis is based on OSHA’s estimates that, on average, for every $1 spent on direct costs due to injury (e.g., medical costs), an additional $4 is also spent on indirect costs (e.g., administrative costs, fineslost productivity). 

Investing in employee safety is always a good choice from both the standpoint of worker well-being as well as cost savings. There are many ways companies can implement measures designed to enhance safety. While efforts aimed at the working environment and procedures are critical, it is important that we also focus on the individuals who perform the work and the leaders they depend on for a safe workplace.

As shown in these case studies, by giving team members critical self-awareness and coaching on safety behaviors, while ensuring that your company hires individuals who will work safely, you can further improve your organization’s safety performance while seeing a sizeable return on investment 

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Esteban Tristan, Ph.D. Esteban Tristan, Ph.D. is the Director of Corporate Safety Solutions at PSI. He manages the development and implementation of all safety solutions and services, which address some of the critical challenges faced by organizations today in workplace safety.