Whatever the company size or industry, businesses are focused on increasing profits and reducing costs. As many safety professionals are keenly aware, one of the challenges for their industry is the transparent costs and often-hidden value of investing in safety equipment, training, and other resources. As an idea, everyone can agree that the safety and health of employees should never be compromised, but when it comes to work practices that are just inherently dangerous, the strength of a company’s commitment to that idea can be challenged and the question of “how much investment is enough?” will arise. This is why there needs to be a greater understanding of the return on investment (ROI) for financing software and other tools that promote safety in the workplace.
In the simplest terms, ROI is calculated by subtracting the initial cost of the investment from its final value, then dividing this new number by the cost of the investment. This means that, when planning to budget for a specific investment to improve safety, companies should weigh the benefits of investment vs. the costs. The costs must include an estimate of the money that is and potentially could be lost by not having that resource. As estimating expenses can get into the realm of murky guesswork when discussing the costs and benefits of “safety” in general, the focus of this article will be specifically on implementing and maintaining safety management software solutions. Again, this topic includes some generalization, as the ROI for safety software will vary depending on the specific software and the organization using it. However, implementing safety software typically results in several benefits that can contribute to a positive ROI. This article will be the first in a series explaining the top contributions implementing safety management software makes to a positive ROI.
Safety software helps organizations reduce the number of workplace accidents and injuries.
The ASSP’s comprehensive survey and report analyzing the ROI for EHS management programs affirmed (most lately in 2019) the statistic that companies save $2-$6 for every $1 invested in tools to promote workplace health and safety. Investments in software that improves EHS programs can result in lower costs associated with workers’ compensation claims, insurance premiums, and lost productivity due to employee absences. The software accomplishes all this by streamlining the process of identifying potential hazards and proactive safety measures to prevent accidents from occurring.
For 2022 alone, the direct cost to U.S. businesses in worker’s compensation claims for just the top 10 most frequent, nonfatal workplace injuries totaled over $49 billion. Related to this, the more worker’s compensation claims a company is generating, the greater the chance that their insurance premiums will increase. Alternatively, many insurance companies will offer businesses savings on their premiums if they can prove they take a proactive approach to risk mitigation and have a consistently low number of claims. According to data collected by the National Safety Council (NSC), the true cost of workplace injuries is not just from compensation claims. In 2020, days of work lost due to injuries totaled 65,000,000. This number does not even account for time lost on the actual day the injury occurred or when workers sought medical attention following the return to work. The total cost that this adds to a company for delayed projects and general productivity loss is difficult to estimate, but not to imagine.
To give an example of the direct benefits of investing in safety management software, consider the following hypothetical scenario:
A manufacturing company implemented safety and health software that identified the need for additional safety equipment and more effective workplace controls. As a result, the company saw a decrease in workplace accidents and illnesses, resulting in a reduction in workers’ compensation claims, insurance premiums, and days that were taken off/productivity losses. The investment in safety and health software paid off in the form of direct financial savings for the company.
While the above scenario is hypothetical, it is by no means fictitious. There are plenty of case studies that show the direct financial benefit of creating a safer work environment to reduce the frequency and severity of accidents and injuries. To calculate the ROI of safety software, an organization should consider the costs associated with implementing and maintaining the software, as well as the potential cost savings that come with reducing financial losses associated with workplace accidents and injuries.
Author Bio
Abigail McKay
Abigail McKay leads SafetyStratus’ growing team of contributors as the Content Manager. Abigail has a Bachelor’s Degree in English and utilizes her education to communicate to the best of her ability the input from SafetyStratus’ team of safety professionals and technology experts. She has spent the last year building up the EHS knowledge resources available to SafetyStratus users and the wider community.
