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When you run a business, it’s important to control expenses to remain profitable. However, unexpected costs can arise that throw off the balance. Employee injuries can be one of the most disruptive things that happens to a company.
When an employee suffers an injury at work, the employer’s workers’ compensation coverage will pay benefits to the injured employee. However, the initial payout is only the beginning of the financial effects that can be felt from this type of injury. Having a safety management system in place can help you maintain your bottom line and keep you in business.
In many states, workers’ compensation insurance is mandatory for businesses with more than one employee. This insurance covers employees for rehabilitation, costly medical expenses and wages lost as a result of a work-related incident. However, companies pay premiums based on their safety history. The more injuries on the job, the higher your premium will be.
The cost of worker injuries is no small matter. In 2009, studies estimated that the direct cost to companies was anywhere from $58 to $74 billion. With an effective safety system in place, you can reduce these high-expense injuries.
Beyond the direct costs, unexpected or hidden costs can be even more expensive to plants. The indirect costs may be twice as high as the direct costs. The largest impact is felt in payroll. After an employee is hurt on the job, chances are you will need to hire someone to replace the injured worker for the time being. This means spending money on training the new hire. Additionally, overtime must be paid to cover the gap in productivity. The attention of managers will also be directed toward various administrative tasks related to the accident, causing even more expenses.
When someone is injured on the job, work comes to a standstill. Investigations must be conducted, and efforts must be taken to prevent the same injury from happening again. In the case of damaged equipment or tools, costly repairs must be made, or replacements purchased. All of this must occur before work can resume. This major delay can affect the scheduling and timeline of projects, as well as the ability of your team to complete the project within the expected timeframe. Productivity can also be affected, as workers may be fixated on the injury that took place.
Safety management can enable your plant to avoid these costly pitfalls. A good strategy will boost employee morale, as personnel feel the company cares about their safety and well-being. This helps to increase productivity and attract other workers to your organization. Companies with a safety-conscious reputation are viewed as top employers. Customers also feel more confident in those companies that pay attention to their employees’ safety. By emphasizing safety, you can strengthen your plant’s standing in the eyes of the community and generate positive feelings toward your brand.
Catherine Metcalf is a freelance content creator for a local Philadelphia worker's compensation lawyer and an expert on the subject of safety in the workplace.