There are no two ways about it: workplace accidents and injuries can squeeze company’s bottom line. The Occupational Safety and Health Administration (OSHA), United States Department of Labor, estimates that employers pay almost $1 billion per week for direct workers’ compensation costs alone. That’s money that comes directly from profits. Altogether, businesses spend over $170 billion a year on costs linked to workplace accidents, injuries, and illnesses, says OSHA. Put simply, one major accident at a worksite can put a real dent in your company’s profits.
But it doesn’t have to be that way. Many of the accidents and injuries that occur on worksites are avoidable if companies had better safety training program. That’s especially true when it comes to contractors and temporary employees. These workers are the weak links in many companies’ safety efforts and the cause of numerous workplace accidents. Put another way, organizations in the hard-hat industries must take a long-term approach to safety training program. Investing in safety training program upfront beats paying thousands (or even millions) in workplace injuries or deaths later on.
The True Cost of Workplace Mishaps
If you’re like a lot of managers, you don’t realize just how costly worksite injuries and accidents are. That’s because you don’t consider all the indirect costs involved when a worksite mishap occurs. As a result, you ignore these costs when it comes to calculating the true cost of workplace injuries. When added to the direct costs of worksite accidents or injuries, indirect costs can bump up the total costs by thousands or even millions. For some, these costs are the difference between operating in the black or running in the red. They may also be the difference between surviving and failing as a company.
What’s more, companies nowadays tend to employ more contract workers than permanent employees. Those in the construction and mining industries, for example, are more prone to workplace injuries than businesses in other markets. Many hard hat companies often use a high number of contractors and temporary employees. They generate a disproportionate number of workplace accidents and injuries. The total cost of fatal/nonfatal injuries in the construction industry, for example, is about $13 billion annually, according to one report. So, if you’re a hard hat company, you need to find a way to reduce workplace injuries and accidents.
Determining Direct and Indirect Costs
Determining the direct costs of workplace accidents, injuries, and illnesses is straightforward. These costs are well known and remain the same whether the accident involves full-time employees or contract workers. These costs include things like the immediate cost of treatment for the worker, physician and hospital bills, prescription medications, occupational therapy, and medical equipment. These costs are easy for managers to determine. You just look at the bills.
But indirect costs are often hidden. They tend to fly under a company’s radar, so managers don’t always include them when determining the true cost of workplace injuries. These costs can significantly boost the true cost of workplace accidents. In fact, studies show that indirect costs can often be three to four times the accident’s direct costs. Sometimes, they can amount to as much as 30 times the direct costs.
Indirect costs include things like:
- Training replacement contractors
- Workplace accident investigations
- Implementing corrective measures
- Repairs to damaged equipment/property
- Surcharges on insurance premiums
- Civil or criminal penalties for safety infractions
But these aren’t the only indirect costs. “Any time there are losses in a company, you face possible morale issues among employees and loss of production time to deal with the situation and subsequent investigations into the accident,” says Gerry McEwen, a safety/loss control representative with GMGS Insurance Services, in an article on Smart Business. “You also face employee downtime due to the loss and investigation. And if there’s a fatality, you will have to spend time and money on employee counseling. There will be major effects from such losses on the company overall, not just on the employees but to the bottom line.”
Benefits of Employee Orientation Programs
One key area that hard companies can target to reduce workplace mishaps is new employee orientation. Hard hat businesses tend to use more contractors and temporary employees than companies in other industries. While these workers may spend less time on a company’s workforce, they’re at a higher risk when it comes to workplace accidents and injuries. Overall, these employees in their first month of work have more than three times the risk for an injury than workers who have been on the job for more than a year, says the Toronto-based Institute for Work & Health in an article in Safety and Health Magazine.
But contractors and new employees tend to receive little safety training when first joining companies. Some companies have no structured onboarding plan at all. For example, only one out of five new Canadian workers receive safety training program, says the Toronto-based Institute for Work & Health. Plus, certain subgroups of new employees, like hard hat workers, are at heightened injury risk. “That makes sense because a lot of those industries are cyclical; they’re seasonally employed,” says Ken Kolosh, statistics manager at Canada’s National Safety Council. “Almost by definition, many of those workers are always going to be new employees. The construction industry has a lot of seasonal employment. It has a lot of contractor-type workers, so a larger proportion of that population by definition is going to have less than three months of service.”
Employee Orientation Can Be a Challenge
But employee orientation can be a challenge—especially when safety is involved. Because of the short-term nature of these workers, you can’t apply traditional learning and development methods. Contractors and temporary employees also present unique safety training issues. For example, short-term workers like these require less depth in content being delivered by training programs. These issues make getting them up to speed quickly difficult when it comes to safety training program. So, these workers are more prone to workplace accidents and injuries than full-time employees.
Savvy hard hat companies turn to technology, like an onboarding software solution, to beat the employee orientation challenge. When combined with Cloud technology, onboarding software offers advanced features that can dramatically boost safety training program for contractors and temporary employees. For example, self-paced learning, knowledge testing, and repetition of key information can help contractors and temporary workers begin their first day with a clear understanding of the hazards they face and the task at hand. The solution helps companies prepare contract workers well in advance of their first day on the job.
Improving the Bottom Line
In the end, it all comes down to one critical question: Do safety management programs improve company’s bottom line? The answer is a resounding “YES,” especially for businesses that use a lot of contractors and temporary employees. Establishing an effective safety and health management program reduces accident and injury costs anywhere from 20 to 40 percent, says OSHA. And onboarding software can play a big part in creating a safety culture within a company, especially when it comes to contractors and temporary employees.
Plus, businesses operate more efficiently when they implement effective safety and health management systems. One Fortune 500 company increased productivity by 13 percent, while a small 50-person shop cut the percentage saved on accidents by more than $265,000, thanks to its safety and health programs, says OSHA. Ultimately, investing in safety training program now can help companies boost their bottom line in the long term.
