Have you ever added up the cost of accidents and occupational injuries to your business? Or looked at the impact ‘near misses’ would have had if you had been less fortunate?
If you haven’t, you could be in for a nasty surprise.
While SMEs account for well over 50% of the economy, they suffer a disproportionate number of occupational injuries. This is particularly worrying as SMEs are also more vulnerable to the damaging effects a health and safety incident can have on their business.
In numerous studies, SMEs regularly cite financial constraints as the main reason for not investing to improve safety management and procedure. But if they don’t account for the losses, or potential losses, caused by poor H&S practice, they have no idea of the true cost of failing to make those improvements.
Tasked with alleviating this problem, the Health & Safety Executive faces two major constraints. The first is the sheer number and diversity of businesses in the UK that they have to reach. This is compounded by the guarded reaction many have to “helpful” approaches by authorities that have the power to fine them.
In business, the bottom line is often the key driver. So, is there really a return on investment to be had from safety?
A report undertaken by the European Agency for Safety and Health at Work (EU-OSHA) set out to examine the pay back cycle of investment in safety. The result was noteworthy, in that 84% of the businesses studied had a payback within 4 years, and almost two-thirds of these (64%) saw that payback within 2 years.
While the EU-OSHA study was cross industry, in the main it aligned with construction supply and manufacturing sectors. The key metrics used to quantify safety investment payback were demonstrating a reduction in absenteeism, a reduction in accidents and an improvement in productivity.
This study offers a means to measure safety improvement that will help the board of directors evaluate the financial rationale for investing in safety initiatives. Until now it has been common for directors to have gut feeling that money will be saved but the decision to invest is often an insurance purchase.
Start by ensuring you have a good understanding of the reactive parts of your health and safety system. For example, can you clearly and concisely get reports on accidents across your businesses in a timely and meaningful fashion?
All too often accidents are scribbled in an accident book and hidden away, only rearing their head when a claim is made or if they sound serious enough to warrant the time of a director. Accident stats should be to hand and reviewed regularly. In this digital age there is no reason why they cannot be collated in spreadsheets or better still on an online platform. Admittedly this is not the whole story, as it won’t tell you how many accidents are currently being prevented, but it will provide a useful benchmark moving forward.
Using this data, accidents can then be viewed as lost time and money with an appreciation of the current position of the business. Once accident statistics are to hand, you should look to improve the quality of your statistical data. Encouraging reporting of near misses is an effective way to identify areas for improvement.
Bottom line bonus
With more and better data to hand, over time, you can begin to demonstrate that the on-going maintenance and improvement of safety standards across your business is adding value and plugging a hole in the bottom line!
Furthermore, a good clear safety recording system can lead to a fairly immediate hard cost saving in the form of lower insurance premiums. By demonstrating your commitment to proactive improvement, using accurate and detailed safety data, the insurer can be confident that there are no skeletons lurking in the cupboard. Without this information they are insuring an unknown quantity, and charging you more for the privilege.
The most important action to take away is ensuring you are recording accidents correctly and that they are being properly reviewed and action taken to prevent repetition. This information can then be used to measure future return on safety improvements.
To find out more about how Southalls can help you see a return on safety investment within your business, get in touch.