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What are some of the indirect costs of accidents?

Q:

What are some of the indirect costs of accidents?

A:

Workplace accidents are costly for everyone involved. One study found that businesses spend about $170 billion every year on costs associated with occupational illnesses and injuries. When we hear those kinds of figures, it's usually the direct costs of accidents that come to mind: workers' compensation payments, medical expenses, legal services, and so on.

But what about the indirect costs? A conservative estimate of losses associated with accidents finds that for every dollar of direct costs, there are three dollars of indirect costs. Indirect costs aren't as obvious, but it's clear that companies can't just ignore them.

Training Replacement Employees

According to the Bureau of Labor Statistics, more than a quarter of injury and illness cases result in 31 or more days away from work. When you have an injured worker, it might be necessary to train a temporary replacement, which will cost you both time and money. Even if your existing employees manage to absorb the injured worker's job responsibilities, you might still see extra costs in overtime payments.

Accident Investigation

Finding out why an accident happened takes time. Conducting a thorough investigation might require bringing in outside help or taking some employees away from their work.

Lost Productivity

Minor injuries can take a toll on the emotional state (and productivity) of other employees, while serious injuries or fatalities can shut down operations completely until police have conducted their investigation.

According to OSHA estimates, lost productivity from workplace injuries and illnesses costs companies an astounding $60 billion each year. Part of this comes from having fewer employees on the floor, but there are also qualities issues due to overtime fatigue and low employee morale.

Implementing Corrective Measures

In addition to any OSHA fines that are levied, preventing another accident may mean implementing important new safety measures. Keep in mind, though, that making these changes now will likely save you money by preventing further issues down the line.

Repairing Damaged Equipment and Property

Post-accident cleanup involves paying workers to clean up damaged property, equipment, or products. Employers must also bear the cost of repairing or replacing equipment and restoring the workspace back to its original condition.

Conclusion

OSHA estimates that businesses with established health and safety management systems can reduce their injury and illness costs by 20 to 40 percent. And it’s not just about saving money. Having an effective system in place means workers are safer – and that’s invaluable.

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Written by Zac Brough
Profile Picture of Zac Brough
Zac Brough currently serves as President of SafetyWear, a division of Sullivan-Brough, Inc. Zac has over 18 years of safety distribution experience having worn nearly every hat within the SafetyWear organization. He is a second-generation owner of the family business which celebrates 40 years in 2017. SafetyWear has been a member of SMG since April, 2001 and in that time, has achieved both Gold and Peak Performer status as well as earning The President’s Choice Award. Zac has also served on various SMG distributor committees over the years.   Full Bio