Based on a report from the Ontario (Canada) Workplace Safety and Insurance Board (WSIB)
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How prevention saves a small business money
Oct 09, 2014
All too often, people see health and safety as a cost rather than a savings. But investing in health and safety is a solid business strategy that can protect your people while improving profitability.
Ontario’s Workplace Safety and Insurance Board (WSIB) has calculated the average compensation cost of a claim in 2010 to be over $19,000. This is just the direct cost. Associated costs could total three to 10 times that amount. In other words, preventing an injury could save your business from $19,000 to $190,000.
Avoidable direct costs include:
- lost productivity and revenue
- surcharges and lost revenues
- Ministry of Labour orders.
A detailed breakdown of associated costs provided by Ontario’s Workers Health & Safety Centre provides additional insight into the full costs of an injury. Taking these potential costs into account can help you allocate resources where they’ll provide the greatest return.
- maintenance/repair of damaged equipment/machinery
- expedited depreciation of damaged equipment/machinery
- removal/disposal of damaged or redundant equipment/machinery
- loss/removal/disposal of damaged raw material or product
- clean up and/or maintenance
- equipment/machinery rental
- purchase and installation of new equipment/machinery
- other workplace modifications
- Administrative costs
- managing the incident scene
- investigating the incident
- filing and managing claim and claim process along with other WSIB ramifications (e.g., Workwell Audit)
- dealing with Ministry of Labour (MOL) inspectors and orders
- managing return to work or modified work
- rescheduling/reassigning staff
- developing new work procedures
- external OHS services (consultants, engineers)
- in-house activities (promoting awareness and prevention efforts)
- developing, implementing, evaluating and maintaining new health and safety policies and procedures
- developing, implementing and maintaining a preventive maintenance program
- developing, implementing and maintaining new hazard or job specific training
- negotiating/working with a union or workers
- higher absenteeism
- higher turnover
- overtime (to cover productivity shortfalls)
- wage supplements, benefits (to the injured worker or family in the case of a fatality)
- wage/benefits of replacement worker
- higher WSIB premiums
- WSIB penalties/surcharges
- higher short/long term disability benefits/premiums
- legal costs, fines, indemnities
- expert witness fees
- MOL orders – cost of compliance
- loss of skilled/productive worker
- replacement worker who is less productive/may produce lower quality product or service
Intangible business costs (damage to your business reputation)
- diminished attractiveness to potential employees and customers
- lower retention of existing workers and customers
- damaged corporate image and public trust
None of these categories take into account the physical, emotional and financial harm injuries can cause workers, including:
- acute and chronic pain and suffering
- loss of income and accompanying economic uncertainty
- emotional and financial losses experienced by their families, friends and community.
A safe and healthy workplace is good for business. It protects workers from injury and illness, lowers injury/illness costs, reduces absenteeism and turnover, increases productivity and quality, and makes the business a more appealing prospect for employees and customers.