Hidden Cost of Workplace Accidents

Hidden Cost of Workplace Accidents

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 various 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.

Here are 25 hidden costs of workplace accidents, according to WCF Insurance:
Production loss/worker distraction
Training costs/replacement worker
Loss of skill/efficiency – slowed production
Paperwork
Administrative time
Loss of morale
Legal issues
Medical expenses
Wages
Equipment
Workers’ compensation premium
Time lost from work by injured employee(s)
Loss in earning power
Economic loss to injured worker’s family
Lost time by fellow employees
Loss of efficiency due to break-up of crew
Lost time by supervision
Cost of training a new worker
Damage to tools, equipment, and other property
Time lost for replacing damaged equipment
Spoiled work
Loss of production
Spoilage – fire, water, chemical, explosives, etc.
Failure to fill orders
Overhead cost (while work was disrupted)
Fleet Owner advises companies to streamline their repair processes and repair 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 than 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 lagging 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 worker’s 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 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 production interruptions can 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.

Using Technology to Reduce Workplace Accidents and Related Costs:
Several technological solutions can make it easier to stop workplace accidents before they happen, and avoid all 25 hidden costs without infringing on worker privacy and without disrupting daily worker productivity (on the contrary!).

Predictive Safety’s AlertMeter and PRISM platforms provide leading indicators in real-time that correlate with worker performance and safety: individual alertness and fatigue level.

Impairment and fatigue are cited as common contributors to occupational accidents and injuries. With Predictive Safety’s fatigue management and impairment detection tools, you can stop these accidents and injuries before they happen:

PRISM is a fatigue management platform that accurately predicts when a worker is approaching high fatigue risk, offers the worker timely countermeasures to ward off fatigue while at work, and then notifies a supervisor when worker fatigue is dangerously high.
AlertMeter is a 60-second cognitive alertness test that workers take before beginning their shifts, and before starting critical tasks. It instantly identifies when a worker is impaired due to fatigue, illness, intoxication, etc. and alerts a supervisor. With AlertMeter, workplaces in various safety-sensitive industries have reduced incidents, cut costs, improved safety, and improved business.

Thanks, PH