In many companies, safety departments (and their personnel) are regarded as valuable assets and have a positive impact on decreasing the frequency of losses within the organization. But, in lean times, when sales fall off or a company undergoes a financial strain, management frequently looks at departments that are not revenue producing, like safety, as targets for cutbacks or elimination. Association for Environmental Management reports that the median ratio is one Environmental, Health and Safety departments' staff members for every 300 employees (ISHN, 2006) or .3 safety staffers per 100. A change in management may also signal trouble for safety departments. Safety and health professionals can see their resources go from "highly effective" to "woefully inadequate" in 12 months when a new management team takes over. While years of experience provide us with skills to negotiate when changes occur, if we do not have any concrete proof of our value, we become vulnerable to management down-sizing.

As a result, it is necessary for safety professionals to focus not only on minimizing losses within an organization by decreasing the frequency of losses and implementing compliance programs, but also on demonstrating to management the positive impact these efforts have on productivity, turnover, morale and bottom line profit.

Impact of Losses to an Organization

Senior financial executives, risk managers and safety directors strive to decrease the number of serious workplace injuries every year. Liberty Mutual's Safety Index for 2005 revealed that these types of accidents continue to affect organization's bottom line. While the frequency of workplace injuries is declining, the costs continue to escalate. The 2005 survey further revealed:

  • Employers spent $50.8 billion in 2003 on wage payments and medical care for injured workers;

  • The cost of managing workplace injuries has grown almost $1 billion per year between 1998 and 2003;

  • $1 of direct costs generates between $3 to $5 of indirect costs;

While most statistics shared with the public focus on the dollar costs, safety professionals focus on incident rates to benchmark and demonstrate our value. In 1944, R.B. Blake, a senior safety engineer for the Division of Labor Statistics, U.S. Department of Labor stated that the cost of accidents was the driving force behind the industrial safety movement. Significantly, he also found that prevention results in savings.

Most of the data reported on the cost of injuries focuses on the "direct costs," but, in addition to direct costs, there are "indirect costs" that must be considered. Direct (insured) costs are payments under workers' compensation laws and medical expenses. Indirect costs (uninsured) are not specific monetary expenditures, but are reflected in the increased costs of doing business.

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