The ROI of Investing in Safety Training
What’s your organization’s safety worth to your bottom line?
If you’re committed to the safety of your workers and your community, you probably already know the value of a safety culture.
Investing in safety training is a very important step in achieving a safe workplace.
The return on investment in safety training, therefore, is exponential. You’re improving your company’s bottom line by preventing financial loss and maintaining a positive public reputation.
Safety Training – the ROI Model
The basic return on investment model (ROI) of the safety programs implemented by your business is the same model as applied to other capital expenditures.
The risk adjusted future value of returns must exceed the initial investment and recurring maintenance of the safety training program.
This basic economic analysis can be complicated with a safety program, since there are many benefits that a difficult to place a value amount.
The important benefits go beyond the avoidance costs of accidents and include the morale of all employese, the image in the local community and compliance with safety laws and regulations.
However, some cost impact should be assigned to all impact areas to measure the effectiveness of the safety training investment, and to ensure that the value received does in fact exceed the “all-in” costs of the safety program.
Safety Training Investment
The investment costs include the development of training materials or the cost of a contract to a third-party firm to deliver the training.
Also factored in is the time for instructors and overhead cost of employee attendance. A well-run safety program outlines process for new hire training before starting work – as well as recurring training for all employees on an annual or semi-annual basis, depending on the safety risks involved. A reserve training budget should be set aside in the event “spot training” is required given an accident event or new safety concern occurs.
These are the basic investment costs the leadership team needs plan for as part of the safety training program.
Cost of Accidents and Other Incidental Expenditures
The costs of accidents can somewhat be estimated with the help of insurance/risk professionals. Employee morale impact can be measured in the cost of employee turnover. The administrative costs of audits and possible litigation in the event of a non-compliance claim can be estimated.
What is difficult to value exactly are some of the very important subjective impact, such as community perception of the business. Still, an estimate for this type should be included as well.
The result is a risk adjusted profile of the cost impact as the result of a safety breakdown. Of course, the impact will vary by industry, but subjectively it is apparent that the costs related to an accident will exceed the implementation costs of training program.
The Simple Example
A discussion on a financial measure (ROI) needs to include some numbers to illustrate the investment impacts.
Assume an injury at the workplace requires an ambulance and a trip to the emergency room with a cost of $15,000. If your business has a net profit rate of 5%, an increase in sales of $300,000 is required to cover the cost of that accident.
If your business were to have multiple injuries of this type, you see how critical the impact to the bottom-line financials, in addition to the loss of the injured employee for several days and the morale impact on the workforce.
Safety Training With a Positive ROI
The ROI analysis for your company can vary, but it is apparent that an amount put into an investment in safety training, will return much more with a reduction in workplace accidents.
Contact us today to find out how Advanced Consulting & Training can help your organization achieve positive ROI through safety training. We are Ontario’s experts in safety training, having helped a wide variety of workplaces and job sites invest wisely in safety training.
