Is Health and Safety a cost centre or a profit centre?

Workplace Health and Safety is of prime importance for any business. Generally, companies have a tendency to view investment in Health and Safety as a cost centre, something that is responsible for costs that affect the bottom line. If a Health and Safety system or program is in place and is not managed correctly, production can beaffected leading to financial loss to the business further embedding the perception as a cost centre.

Looking at the bigger picture

It is easy to look at a Health and Safety system/program and say it is costing you money, but you have to take into consideration if such systems have not been implemented, the possibility of negative outcomes are much higher. Consider the implementation of a Fitness ForWork (FFW) program, engaging consultants to provide this service comes at a cost. These programsassist employees ability to perform their duties in a healthier and safer manner, reducing the possibility of manual handling and/or musculoskeletal injuries, which in turn contributes to increased productivity and profits to the business. Without these types of programs there is an increased possibility of the organisation incurring some form of injury, i.e. a back injury which can impose in excess of 5 times the cost of having implemented a program that could have quite possibly prevented this.

Costs associated with suchincidents:

• Incident costs: including first aid, transport of injured worker and workers compensation.
• Investigation costs: including time to cease production and investigate the incident.
• Damage costs: including assessment, repair/replace, and clean-up time.
• Replacement costs: including locating, hiring and training a replacement worker.
• Productivity costs: including disruption and claim management time.
• Increased insurance premium costs: increased number of claims has a direct impact on insurance premiums.
By having a Health and Safety programimplemented, you are effectively preventingincidents. Ideally you should be viewing investment in workplace safety as something to increase performance and efficiency, and to maintain productivity, rather than something to prevent things from going wrong.

Safety as a profit centre

Having a well managedHealth andSafety system or program in placecan savean organisation money and contribute to their profit margin by reducing workplace incidents and associated costs. Research estimates that for every dollar a business spends on an effective workplace Health and Safety program, it reaps approximately six dollars of savings, in the form of increased employee productivity and reduced absenteeism, workers compensation claims and staff turnover etc.

Some of the benefits of having a good workplace Health and Safety program in place:

• Lower insurance premiums: Fewer work place incidents means less insurance or workers compensationclaims.
• Avoid uninsurable or indirect costs: Workplace incidents often lead to unforeseen indirect costswhich are generally not covered by insurance. These indirect costs tend to run higher than the direct costs. Avoiding incidents through good Health and Safety programs is the only way of making sure that you do not suffer these losses.
• Lower cost production and increased profits:Reducing incidentsleads to maximising productiontherefore you are able to make the same product or offer the same service at a lower cost. This puts you ahead of your competitors.
• A healthier, happier workforce: A safer workplace usually boasts of good employee morale due to fewer incidents and the resultant pain and suffering. This leads to happier employees and in turn, less employee turnover and absenteeism.
• Improved reputation: Having a great Health and Safety performance record improves your reputation within your given industry and in turn sets you apart from competitors as an industry leader.

Therefore, implementing a health and safety program that has been specifically designed and developed for your business reduces workplace risks. If your safety program makes you more money than it costs you, how can it be anything but a profit centre?