Thought Leadership

The human factor. Thoughts and observations.

The life-blood of any organisation is its people; the success of every system, in every organisation is determined by human factors. We are seeking a deep understanding of these human factors; these are some of our thoughts and observations.

The ‘Other’ Costs of Workplace Accidents

The ‘Other’ Costs of Workplace Accidents

The more indirect Injury-related costs are a mix of obvious and hard-to-measure costs. One barrier to coming up with accurate figures is that every workplace accident is different. It’s very difficult to predict which injury will occur, and to whom, and how that will affect morale, wages,profitability, productivity, claim culture and retraining requirements. When we think of workplace accident costs we normally think about the legal and insurance related costs associated with an occurrence, however there are other significant costs inherent in any workplace incident. In Ireland the following points are worth noting in terms of the significant ‘other’ costs of a workplace accident.

  1. Based on average wages and average number of lost time days per business(across sectors) the average labour cost alone (assuming staff are paid when they were out) was in the region of €800 per employee.
  2. Based on workforce accident statistics roughly 10% of the workforce would typically lose 4 days per annum as a result of a workplace accident
  3. This equates to a labour cost of €1,600 per annum for a company with 20 staff and €16,000 for a company with 200 staff.
  4. In addition, the number of people that missed 2-3 days as a result of an injury at work also stands at 10% so it would be safe to put a cost of €600 on that category per accident.
  5. So we can conclude that on average an SME employing 200 people has a direct annual labour cost of €22,000 associated with work related incidents and  smaller company with 20 staff has a direct annual labour cost of €2,200.
  6. Trying to put a cost on the loss of productivity as a result of a workplace accident is more complicated and we could certainly multiply the figures above by a number of factors. In addition to the costs of time and resources to investigate and report the accident, staff retraining following the accident and loss of staff morale means that even if we are conservative in our calculations, we can easily multiply the direct annual labour cost by a factor of 3 (this multiple will further increase based on sector).
  7. So conservatively speaking, outside the direct costs of a workplace accident (e.g. insurance premium increases, claim costs, legal costs) we can approximately calculate that an SME with 200 staff face average indirect costs of €66,000 per year and smaller business with 20 staff face indirect costs of€6,600.
  8. Most accidents are covered by insurance, but any occurrence negatively affects future premiums. Depending on the nature and size of your business workplace accidents could also easily add another couple of thousand per occurrence onto the bottom line.

These figures make a convincing argument to be proactive in preventing and managing workplace accidents so that you actually save money and increase margin, not to mention the corporate responsibility and staff morale argument! If businesses don’t invest in sustainable safety management systems and solutions they won’t realise their potential from both a cultural and profitability perspective.

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