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The reasons for strong workplace safety programs are obvious: to protect life and limb, to avoid the costs of repairs, to avoid interruptions and obstacles in production, and to avoid citations and fines. But company managers may only appreciate the full cost of incidents only once they have occurred, as they create a domino effect of hidden costs that can impinge on business growth.

For example, the cost of an accident involving a company vehicle—even when no injuries were sustained—far surpasses that of the tow and repair. Quoted in a recent Fleet Owner article, James Svaasand of Penske Truck Leasing explains:

"There are the costs of downtime and replacement vehicles, and the management time needed to work with insurance carriers to resolve claims, and those costs can escalate significantly when winter weather and storms lead to a higher number of fleet vehicles in need of body repair at one time….Fleets that need to perform body and paint work, whether to repair accident damage, or even refurbish vehicles for resale, have to consider a number of expenses. There are brick and mortar costs and in many places permit fees and environmental regulations to address, especially when it comes to painting operations….Adding to that challenge is keeping up with equipment and training needs for the different repair techniques required for today’s vehicles with their variety of structures and use of a mix of aluminum, steel and plastic components."

Though the kinds of costs may vary from industry to industry, this example shows how the cost of an accident can be compounded by a number of factors, and often, company managers do not consider or foresee all of these factors in their budgetary and safety program planning. When the accident also involves one or more injured people, the cost multiplies—and may also include a human cost that cannot be fixed or replaced. Fleet Owner advises companies to streamline their repair processes and repairing vehicles and equipment at a higher volume to mitigate the costs of accidents, and to “dig deeper” to find additional ways to reduce the costs resulting from accidents, like insurance claims, repairs, and so on.

One way to dig deeper that the article omits is to acknowledge the impact that good safety programs can have on mitigating the costs of accidents: by reducing the number of accidents overall. Safety programs are meant to keep people safe, but also the equipment they use, since one depends on the other.

“The cost of an accident can be compounded by a number of factors, and often, company managers do not consider or foresee all of these factors in their budgetary and safety program planning."

If a company’s assessment of its safety program focuses on trailing indicators, and its safety program is essentially reactive instead of proactive, then incidents that cause damage or hurt employees could be seen as inevitable, and behaviors and conditions that deserved correction would be identified only after the incident occurred. Though the factors that increase and complicate the cost of accidents may not themselves be mitigated, a safety program focused on predicting and preventing risky situations, in part by managing behaviors, can reduce the number of incidents and consequently mitigate their overall cost. Plus, with safety programs focused on prevention and behavior in place, companies may be able to lower their workers comp insurance costs, according to a recent article by Stephanie Goldberg and Sheena Harrison for Business Insurance.

Furthermore, safety programs emphasizing proactive and predictive methods and that seek to imbue a positive safety culture can help avoid additional losses in employee morale and trust in leadership—and actually improve them. Goldberg and Harrison illustrate that safety programs celebrating safe behaviors, “rather than celebrating fewer accidents,” will help employees avoid feeling as if their work practices are being “policed” for safety and that reporting incidents or stopping work will be met with a reprimand.

Complicated repairs, worker’s comp claims, insurance claims, environmental regulations, permit fees, and interruptions to production can all compound the difficulty and expense in dealing with accidents, even when no injuries are suffered. And though an injury-free accident is far preferable to the alternative, all accidents often come with hidden costs. The costs may be somewhat trivial when compared to a loss of life or livelihood, but these hidden costs that can inhibit a company from reaching its growth potential, as well as the costs in morale and trust among the workforce, make the importance of a preventative, behavior-based safety program key to ensuring a positive safety culture and bettering production, morale, and the bottom line—all on top of improving health and safety.

Read Fleet Owner’s article

Read Goldberg & Harrison’s Business Insurance article 

Posted in Insider

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