Cost of a Lost Work Day: The ROI of Safety

by | Oct 17, 2020 | Blog

Cost of a Lost Work Day

Unintentional accidents are at an all-time high and are presently the third leading cause of death behind heart disease and cancer. And that means that workplace injuries need to be protected against at all costs: not only is it financially important, but is a moral obligation of the business that’s also important for the morale and the health of the company. Let’s take a look at the cost of a lost work day, as well as how companies can invest in preventative, proactive measures by leveraging technology that will yield significant ROI.  

What are the True Costs of Workplace Incidents?

The cost of a lost work day can be broken down into two categories: direct costs, which are costs that are directly attributable to the incident, and indirect costs, which may not be as direct of a result but still can impact business performance and reputation. Let’s take a closer look:  

Direct Costs of a Lost Work Day

A medically-consulted injury has an average cost of $39,000, while a death has an average cost of $1.15 million. The Liberty Mutual Research Institute for Safety published a study in 2016 showing that workplace injuries accounted for some $62 billion annually. 

Indirect Costs of a Lost Work Day

Indirect costs are costs that are not directly tied to the accident, but are rather residual expenses at the cost of the company, such as decrease in worker morale, increased worker fatigue, and a negative business reputation. The direct costs of a workplace injury only comprise 29 percent of the total injury costs. The indirect costs are an additional 71 percent. The Occupational Safety and Health Administration (OSHA) estimates the costs at around $1 billion per week. In fact, this indirect cost of a workplace accident or injury averages anywhere from four to 10 times the amount of the direct costs a company is likely to be on the hook for. Take slips, trips and fall injuries for example – these are among the leading preventable injuries if the proper safety measures are in place, yet they account for some $70 billion in worker’s compensation costs and lost time on the job each year. Here are some examples of the indirect costs of a lost work day:

Business Reputation

Even with all the costs associated with workplace injury, the damage to a company’s reputation is often the most serious consequence that can last for months or years after an injury or death occurs. It begins with the loss of confidence among stakeholders. 

These can include:

  • Customers who stop buying from the firm. 
  • Prospective customers who likely would have bought from the firm.
  • Investors who stop buying or, even worse, sell their holdings, which can cause the company’s stock to tumble. In turn, that nose-dive can lay waste to a company’s market capitalization.
  • Strategic partners (and potential new strategic partners) that dissolve or put relations on hold.
  • Customers, competitors, and bad actors may post negative info that further harms the public perception of the company. This is relevant because a BrightLocal survey found that 93 percent of consumers read online reviews, while another study determined that 80 percent of consumers will not buy from companies with negative reviews. 

Disengaged Workers

Disengaged workers cost businesses a lot more than they might realize. Those employees are what the Gallup organization defines as “unhappy and unproductive at work and liable to spread negativity to coworkers.” 

For instance, about one-sixth of employees are not engaged with work, while about one-third of those peoples’ salaries go to waste — you can quickly see that’s equivalent to almost six percent of the company’s total payroll. For a 50-employee company with a median payroll of $50,000 per year, that’s more than $146,000 wasted, and the numbers get exceptionally large at larger companies. 

Worker Fatigue

Aside from the $1,200 to $3,100 that worker fatigue can cost a company in lost productivity per-employee, per year, there are numerous other statistics that back up the importance of why businesses must take the necessary steps to become an advocate for safer, healthier working operations.

The manufacturing industry and fields where employees are more likely to work night shifts are particularly at risk for sleep deprivation and fatigue-related issues. According to Safety + Health magazine, these are the types of workers that report getting less than six hours of sleep per night:

  • Workers in manufacturing (34%)
  • Night shift workers (44%)
  • Night shift workers in health care, social assistance (52%)
  • Night shift workers in transportation, warehousing (70%)

Furthermore, worker fatigue alone is estimated to cost employers a combined $136 billion in health-related lost productivity. When you consider that some 70 million Americans suffer from some type of sleep disorder, these statistics become even more staggering.

According to OSHA, accident and injury rates are nearly 20 percent higher during evening shifts and 30 percent higher during night shifts when compared to the conventional day shift. Furthermore, it’s estimated that working 12 or more hours per day is associated with nearly a 40 percent greater risk of injury. 

ROI of Safety  

According to the Occupational Safety and Health Administration (OSHA), 20.7% of the worker fatalities in private industry in 2017 were in construction. Protecting workers and teaching workers to protect themselves and each other should be the primary goal of any safety program.  

Establishing a financial return on investment (ROI) helps identify the value of your safety program and can help you measure and drive wider adoption of safety practices. Ultimately, you want your company to reap the benefits of your safety investments. 

Building a Budget to Improve Safety

Many businesses find themselves cutting corners on safety because they think that safety is too expensive. They may not think that they can bid on jobs with safety in mind, because they are going to get outbid. The truth is: Safety is as expensive as it has to be. Safety isn’t optional. It’s a necessary expense.

Furthermore, safety has a higher ROI than many organizations may think. A single incident or accident could cause a company millions, not only in equipment fees and medical costs, but also in stopped work and damaged reputation. Over time, a reputation for safety improves all levels of an organization, ranging from client trust to employee satisfaction.

Businesses will gradually get better at improving safety. They will have better processes, technology, and equipment. But even at the beginning, safety pays for itself. How does that work?:

  • Employees are safer and happier. Employees know when they are being valued by the organization, and they will work harder for an organization that values their safety.
  • The budget is more likely to be realistic. Ultimately, the business is going to need to make expenditures for safety. If these expenses aren’t contained within the budget, the project could run over.
  • The budget is less likely to be hit by a single, large expense. If a safety incident occurs, the effects of it will be dramatic. The more the organization invests in safety, the less likely this is.
  • The project is less likely to be delayed. When safety incidents happen, projects have to be delayed. Equipment may need to be fixed, and employees may not be available

Estimating ROI for Safety Improvements

When implemented, digital software solutions drive up to 34 percent greater employee efficiency and a 2X gain in accelerating decision making. When it comes to choosing the appropriate safety software for your company, focus on identifying the features will benefit your business the most. Solutions that support active participation from workers can provide significant payback in a short time. These solutions help ensure frontline workers and frontline leaders share in the responsibility of safety.

Connecting digital solutions with engagement and mobile technology can help companies may find significant ROI. More than 81 percent of adults in the U.S. own a smartphone and that increases to 96% for younger adults and that adoption number will no doubt increase. Leveraging technology that workers use in their personal life makes adopting technology on the job much easier and less stressful. Allowing employees to have the opportunity to easily identify risks and concerns through mobile-based frontline worker safety software, workers can be more intuitive when it comes to safety. By giving workers a voice-enabled by technology, they can share ideas on safety-related improvements and processes that can make a real difference in the future.

Prevent Workplace Injury 

According to a study from California State University at Fullerton, only about 4 percent of all workplace injuries are the result of faulty equipment or other unpredictable issues. So what can be done to better keep workers safe and prevent workplace injury? It begins and ends with implementing prevention efforts to be more proactive right now to ensure that your business maintains productivity, even after a workplace accident. 

  • Productive and proactive prevention: Safety should be emphasized and established as a core value during the onboarding process and reinforced beyond that point. This helps employees embrace safety measures, as they know from the beginning that the company emphasizes and prioritizes worker safety. Part of any ongoing safety training should include proper use of PPE and normalizing reporting job site hazards, which can be a simple process through Anvl’s Workflows. 
  • Pre-employment screenings: Safety shouldn’t just start with a worker during orientation – it should start during the hiring process. In high-risk environments, it’s imperative only workers who are physically and mentally able to operate certain equipment are hired to do so. 
  • Observe and Improve: Make sure you’re routinely conducting research on the key leading indicators that are relevant to your company so you can adequately assess in what areas you’re struggling and where improvements can be made. Identifying leading indicators allows for risks to be assessed early on, before they become a reality. 
  • Adequate staffing: One of the leading indirect causes of workplace incidents is understaffing, as it can lead to fatigue and work exhaustion from overwhelming a small staff. And, when a worker is mentally and physically fatigued, accidents are more likely to occur.
  • Safety management software: investing in the right safety software, such as that from Anvl, can go a long way toward identifying hazards before they become a threat. It’s one of the best ways to make any operation more proactive and predictive, resulting in more streamlined productivity among the workforce.

Cost – Benefit of Investing in Tech to Improve Safety

Digital software solutions provide a better way than paper, and when implemented, companies may see up to 34% greater employee efficiency and two-times faster decision-making, according to VMware software company. Here is a look at how leveraging technology can yield significant ROI while also protecting your workers: 

  • Decreased lost time—Search for positive results in metrics, including days away from work, restricted work, job transfer rates, and days for transfer or restriction. However, you must be cognizant that other people in other departments, including your executive team, may not understand just how important these metrics are to the bottom line. Be prepared to provide examples that demonstrate what these metrics mean to the business.
  • Lower insurance costs—You can easily demonstrate the ROI of a safety culture through a decrease in insurance costs, especially those related to workers’ compensation. According to the National Safety Council, for every dollar in direct costs, indirect costs could be as much as $2.12 from workplace injuries, such as workplace disruption, loss of productivity, and more. Help key stakeholders at your company understand the root causes of workers’ compensation claims to really drive home how positive safety culture is affecting the jobsite worker.
  • Greater productivity and profitability—Improved employee morale and safety culture adoption tend to be more subjective than data-driven metrics. In other words, higher morale means higher productivity, but more importantly, engaged workers can translate into profitability. According to Forbes and Gallup, highly engaged teams show 21% greater profitability. Evidence of a good safety culture adoption includes high rates of participation in safety training, employee willingness to share safety suggestions or point out hazards without fear of retaliation, and communication between employees and supervisors on safety matters.

Make a Difference for Your Workers

Ultimately, the goal of preventing the cost of a lost work day is to make a work environment safer for your employees and promote a safety culture within a business. Make a difference in your frontline workers’ lives by taking the necessary steps to protect them on the job. If you do, you will see these outcomes…

How Employee Safety Behavior Impacts ROI

Behavior is an automatic learning process. We learn how to behave based on the environment we are in. If a worker is in an environment where proper checks are routinely ignored or misinspected, it is more likely that they will assimilate to the same mindset. Likewise, if a company rolls out software like Anvl, where employees are consistently engaged with a safety platform to manage their tasks, workers will be influenced to make safer decisions on the floor. This is why it is essential to invest in technology that challenges workers to put safety at the forefront of every operation- it all comes down to driving culture change.

Consider this in the context of Anvl’s Smart Dynamic Workflows. Our workflows empower frontline workers to consider the best way to move forward onsite and get solutions in real-time when faced with potential issues. The implications of our safety management software go beyond tracking work progress and efficiency- Anvl’s solutions have the potential to reinforce safety behavior on behalf of the employee. After a safety solution is implemented, a worker perceives that a company prioritizes safety as a company goal and is asked to consider safety on a regular basis. With workflows, feedback is provided instantly, which conditions employees to learn safer behaviors for the future as well as gain more insight into managing risk.

It is no secret that investing in safety drives high ROI and can sharply reduce the associated costs that come with a lost work day. However, it’s important to understand why this happens, which empowers safety leaders to make an informed decision on the best kind of safety programs or technology to invest in. It is not enough to purchase form builders so that safety inspections can be checked in a digital format. It’s best to look for ways that will keep workers engaged with safety, and condition them to consider safety outcomes and consequences with every step forward- this is exactly what Anvl is here to do.

Total Worker Health

Total Worker Health (TWH) is a holistic view of employee health. TWH, according to the National Institute for Occupational Safety and Health (NIOSH), is a fundamental method of protecting workers. Controls are designed to eliminate or reduce recognized hazards, risks, and stressors in the workplace and look to address how work programs and job conditions impact overall worker health and safety.

The CDC notes that….

  • Nearly 50% of Americans have at least one chronic health condition. 
  • Construction workers suffer a double dose of on-the-job health problems. According to one NIH study, “Substantial mental distress was associated with both injury and self-reported pain” for a high percentage of construction workers.
  • According to research, 10% to 20% of all causes of deaths related to cardiovascular disease among working-age populations can be attributed to work.
  • One in four American workers are past age 55 as of 2020, according to the Bureau of Labor Statistics.

The foregoing are factors that can impact the workplace, as well as worker safety and health at all levels of the organization. Leaders who are committed to worker safety and health can team up with managers and workers as prime movers to promote health and safety best practices in the workplace.

Partner with Us

Anvl’s solution works to identify hazards with our smart digital workflows and mitigate risks at the earliest point possible. Also with data collection, management can look at leading indicators over time and identify areas for safety improvement. Anvl’s solution transforms your current paper processes into a digital solution that is more actionable and in-the-moment to ensure the safest working conditions for your employees.

Rethink the way you think about worker safety. Making investments in safety improvements also drives enhanced safety behaviors on the behalf of the employee, and employees feel more satisfied and engaged in their work environment. See how Anvl can be your tool in promoting and encouraging the aforementioned safety culture in your business.