There was an accident here recently and one of the workers is off for at least six weeks. He’s the only person on our shift with the training to operate the heavy machinery. Now, I’m stuck waiting for them to train someone to use the thing. Production is basically stalled. I’ve been doing busy work and helping co-workers, but we won’t get our orders filled on time if the machines aren’t running again soon.

Don’t Underestimate the Cost of an Accident

Accidents cost companies billions every year – and those are only the direct costs. There are many more issues to consider, ranging from lost productivity and quality concerns to damaged company reputation (learn How to Look After Your Business’s Safety Reputation). And let’s not forget how many employees will have to work out of their comfort zone to cover for their injured coworkers.

These indirect costs add up. And worse, they’re uninsured, which means that, at the end of the day, you won’t see any of that money back.

Direct Versus Indirect Costs

Direct costs are generally covered by workers’ compensation insurance, though the actual cost will vary with the severity of the injury and the number of total injuries for the company (which affects the price of your insurance). Indirect costs, however, are where companies really feel the impact of accidents. These additional costs are harder to measure but they are more than twice as expensive as direct costs, and they’re entirely paid by the company.

Lost production time is the elephant in the room here. Each and every one of your employees plays an important role in your company. When an injured worker goes on leave, it will have a meaningful impact on your daily goals and production targets.

With one or more workers out of commission, what does your company lose? Do you need to train someone to take over their work tasks (and if so, for how long)? And how’s the morale among your team members? If they’re feeling low or concerned for their safety, their productivity and the quality of their work could be affected (for related reading, see Three Levels of Safety). A worker suffering a serious injury can also be an issue with employee turnover. And with all of this comes additional paperwork that keeps whoever has to fill them out from performing their regular tasks.

Take Precautions

When an accident happens, it’s easy in retrospect to see what steps could have been taken to prevent it. If only you had better training, more employees, higher quality equipment, and so on, the whole mess could have been avoided. But by then, the damage is done and the costs have already added up.

It’s impossible to predict and prevent every single incident. But it’s a good idea to invest in safety and plan for things that could go wrong. Investing in safety training and taking steps to build a stronger safety culture are usually a good place to start (for advice, see Face-to-Face Safety: The Right Way to Build a Safety Culture).

Look for areas of concern by talking to employees and asking them if there’s anything about their job tasks or work stations that worry them. You should also consider cross-training employees so that they’re ready and qualified to help out when key employees are off the job.

The Bottom Line

The direct costs of accidents are easy to measure, calculate, and track. But they’re only part of the conversation. Indirect costs are often where your company will take the biggest hit, so be sure to make them part of every cost-benefit analysis.