Can you put a price on safety?

You can’t put a value on life, but can you put a price on effective health & safety intervention? 

Guest author Philip Baker,a director of the British Safety Industry Federation, answers this question and more in this blog. 

When considering the cost of health & safety, the best place to start is the cost of not managing health & safety. 

Last year, the UK saw a reduction in fatal accidents in the workplace from 149 to 1111. This represented a significant improvement, but it still meant 111 people didn’t come home from work.

HSE figures also showed that during 2018/19 582,000 workers were injured in workplace accidents, and a further 518,000 suffered a new case of ill health believed to be linked to their work. 

The ‘human’ cost of these deaths, injuries, and ill-health is immense. Often the person who has an accident at work is the primary bread-winner. If they don’t come home, or they sustain a life-changing injury, that household suffers financially, not to mention emotionally.

Then there is the knock-on cost to the Government and taxpayers, estimated at around £3.4bn annually, as a result of increased benefit payments, lost taxes and NHS treatment costs.

Lost production time, absenteeism, sick leave, higher insurance premiums, legal costs and penalties all stack up to make workplace accidents and injuries a massive financial drain for employers too.

Sadly, this doesn’t appear to be enough to convince many business leaders of the value of spending on health & safety management. 

If a business hasn’t had a serious accident in the workplace, health & safety can seem like an onerous expense rather than an investment that will benefit its bottom line. This is especially true in the current uncertain economic climate, where any spending has to be critically examined. 

That is why the business case – as well as the moral argument – for spending on health & safety has to add up. Health & safety initiatives must not only prevent injuries but also contribute to the efficient and profitable running of the business.

Can health & safety be measured in ROI terms?

Attributing costs and benefits to health & safety activities is difficult and complex. As a consequence, data on health & safety outcomes is rarely integrated with financial data, making statements on the value of OSH interventions difficult to prove. 

However, there is evidence that organisations can obtain significant returns on investment; it is estimated that every €1 spent on health & safety measures yields an ROI of €2.20, according to the International Social Security Association2.

This ROI is measured through metrics such as improved productivity, reduced insurance premiums, increased retention and enhanced reputation.

Here’s a very simple example of how spending on health & safety can yield a return: a furniture-making workshop was served with an HSE improvement notice when inspectors visited, there was sawdust all over the place, and an employee was sweeping it up with a brush. Spending a nominal amount on a vacuum cleaner and capturing the dust at source would resolve the situation; the worker would be more efficient and effective and would not be at risk of developing lung conditions or nasal cancer. It might also be possible to re-purpose the sawdust.

How much should companies spend on managing health & safety?

The amount of money that a company should ring-fence for health & safety depends on the level of risk that exists within that organisation – generally speaking, the risks tend to be greater where there are occupational hazards such as asbestos, dust, machinery and manual handling.

How should that money be spent?

Health & safety spend can be broadly categorised into investments in technology/equipment and investments in time, e.g. training, auditing, implementing reporting systems etc. 

One example of how investing in technology can make a business more efficient and effective whilst preventing injury is the use of drones and satellite imaging for carrying out roof surveys. By harnessing these technologies, people don’t have to work at height, and more accurate information can be gathered. 

How can you get the best value from health & safety-related investments?

It is essential that organisations invest in the most up to date technology/equipment, rather than trying to cut corners, which can be counter-productive. 

Take, for example, hand-held power tools: in the last five years, leading manufacturers have developed tools that create less vibration for the user. However, some companies, in the interests of cost-saving, still choose to economise on cheaper tools that generate more vibration, thereby exposing workers to the risk of developing musculoskeletal disorders. 

To ensure money spent on training is not wasted, first of all, be sure that you understand exactly what training is required, and secondly, select a competent training provider. Find out who is delivering the training, what their qualifications are and what they are promising to do. Consider whether the length and format of the course is sensible - for example, a manual handling course that lasts an hour is probably too short, but one that lasts a full day is probably too long unless you have serious manual handling issues in the workplace that cannot be designed out or eased with the right equipment. 

Too often, businesses see health & safety training as a box-ticking exercise rather than thinking it through as a process that can benefit the business. 

About the author

A structural engineer, Philip Baker, has spent the last 25 years in health and safety for a very broad range of clients.  As well as running health & safety consultancy BPS Solutions, Philip holds a number of non-executive director positions for health & safety organisations and sits on and chairs several industry committees.  Amongst these roles, Philip is on the board of the British Safety Industry Federation, the Occupational Safety and Health Consultants’ Register and the Association for Project Safety.

References:

[1]   https://www.hse.gov.uk/statistics/fatals.htm
[2]  Calculating the international return on prevention for companies - Final report 2013, ISSA