Controlling the Huge Cost of Accidents Today

There's no way to put a dollar value on the pain and suffering an accident can cause. But OSHA has released startling information on the financial impact of accidents.

Some are the direct costs - medical care, physical therapy, compensation, continuing pay.

Then there are the indirect costs. Among the first are those caused by:
  • Loss of productivity
  • Product losses
  • Lost time by fellow workers
  • Loss of customers
  • Damage to morale
  • Damage to tools, equipment and other property
  • Clean-up costs
Then other costs start to mount, among them those for:
  • Overtime
  • Overhead
  • Legal fees and settlements
  • Clerical and administrative costs
  • OSHA and civil fines
  • Medical costs
  • Welfare and benefits
  • Training
  • Workers' comp and insurance

The total impact

As this table from OSHA shows, those indirect costs not only exceed the direct costs but also range from 1.1 to 4.5 times their costs.

Sliding Ratio
Direct Cost Indirect Cost
$0 - $2,999 4.5
$3,000 - $4,000 1.6
$5,000 - $9,999 1.2
$10,000 - or more 1.1
Direct Cost x Cost Multiplier = Indirect Cost

Where do these costs come from? Your profits. And as this next table shows, if you're earning a 5% profit margin on your revenues, you'd need to boost revenues 20 times over the total cost of the accident to make up for the lost profits.

Gross Revenue Increase
Required to Cover Injury Costs
Total Injury
Cost 		Profit Margin
1% 3% 5% 10%
$1,000 $100,000 $33,333 $20,000 $10,000
$3,000 $300,000 $100,000 $60,000 $30,000
$5,000 $500,000 $166,666 $100,000 $50,000
$10,000 $1,000,000 $333,333 $200,000 $100,000
$25,000 $2,500,000 $833,333 $500,000 $250,000
$50,000 $5,000,000 $1,666,666 $1,000,000 $500,000
$75,000 $7,500,000 $2,500,000 $1,500,000 $750,000
$100,000 $10,000,000 $3,300,000 $2,000,000 $1,000,000
$250,000 $25,000,000 $8,300,000 $5,000,000 $2,500,000
$500,000 $50,000,000 $16,666,666 $10,000,000 $5,000,000

Put another way, you'd need to generate anywhere from 42 to 110 times the direct costs of the accident to cover the impact that the direct and indirect costs together make on your profits.

Safety - a safe investment

Any way you look at it, safety pays.

Even a relatively small improvement in your safety performance can pay big dividends. And we can help in any of a number of ways, from taking an objective look at your safety programs today to recommending improvements to developing safety communications targeted to your specific business and your specific employees.

Contact Employee Safety Campaigns today and discover why so many of the most profitable companies are also the ones with the most effective safety programs.