October 8, 2001—Most executives in the US say that workplace safety has a positive impact on a company’s financial performance, particularly in light of the fact that indirect costs outweigh the direct costs of workplace accidents. In September, FMLink reported on the Liberty Mutual Workplace Safety Index, the first ranking of accident causes by direct costs to employers. More recently, FMLink reported on Liberty Mutual’s Executive Survey of Workplace Safety, a further study on workplace safety. Liberty Mutual has just released additional data from the Executive Survey, which follows.
According to Liberty Mutual, a leading provider of workers compensation insurance, 95% of business executives report that workplace safety has a positive impact on a company’s financial performance. Of these executives, 61% believe their companies receive a return on investment of $3 or more for each $1 they invest in improving workplace safety. The survey also reveals executives realize the benefits of workplace safety go beyond the company’s bottom line, with 70% reporting that protecting employees is a leading benefit of workplace safety.
The survey also highlights the impact two types of costs associated with workplace accidents are having on US businesses: Direct costs, or payments to injured employees and their medical care providers, and Indirect costs, such as lost productivity, overtime costs, etc. 93% of executives surveyed see a relationship between these costs, with 40% of them reporting $1 of direct cost generates between $3 and $5 of indirect costs.
By comparing the findings on indirect costs with its own research on the direct costs of workplace accidents and illness, Liberty Mutual calculates US businesses are paying a staggering $155 billion to $232 billion on workers compensation losses annually. The Liberty Mutual Workplace Safety Index announced this spring provided the first-ever ranking of the 10 leading causes of workplace accidents based on the direct cost of each accident cause. The Index estimated the total direct cost of all workplace accidents was $38.7 billion in 1998, the most recent year for which data was available at the time.
The survey further reveals that business executives may be focusing attention on certain causes of workplace accidents at the expense of others, and may need to realign their workplace safety priorities.
For example, executives report “Repetitive Motion” is the most important cause of workplace accidents and that they will focus workplace safety resources on this accident cause. However, five other accident causes each produced greater direct costs for companies in 1998, according to the Liberty Mutual Workplace Safety Index. The Index reported that workplace injuries caused by “Repetitive Motion” produced $2.3 billion in direct costs for employers in 1998, about a quarter of the $9.8 billion of the leading accident cause, “Overexertion.”
Similarly, executives may place less priority on accident causes that have greater potential financial impact. For example, survey participants report “Falls on the Same Level” as the 7th most important cause of workplace accidents. However, the Liberty Mutual Workplace Safety Index ranked this category as the 2nd most important accident cause.
Regarding workplace safety programs, 98% of respondents feel that direct employee participation is necessary for effective workplace safety.
Respondents report that benchmarking a company’s workplace safety performance is an important tool for improving workplace safety performance over time; 71% indicate that they compare their company’s workplace safety performance to that of other companies. For more survey results, visit Liberty Mutual.
