Executives Believe Workplace Safety Worth Investment

Sept. 6, 2001
Ninety-five percent of business executives report that workplace safety has a positive impact on a company's financial performance, according to a survey conducted by the Liberty Mutual Group.

Ninety-five percent of business executives report that workplace safety has a positive impact on a company''s financial performance, according to the findings of The Executive Survey of Workplace Safety by the Liberty Mutual Group.

Of these executives, 61 percent believe their companies receive a return on investment of $3 or more for each $1 they invest in improving workplace safety.

The survey also reveals executives realize the benefits of workplace safety go beyond the company''s bottom-line, with 70 percent reporting that protecting employees is a leading benefit of workplace safety.

Survey results are based on interviews with 200 executives responsible for workers compensation and other commercial insurances at 125 mid-size firms (100 to 999 employees) and 75 large companies (more than 1,000 employees) representing a range of geographic locations and industries.

The survey also helps shed light on the impact two types of costs associated with workplace accidents are having on U.S. businesses: direct costs, or payments to injured employees and their medical care providers, and indirect costs, such as lost productivity and overtime costs.

Ninety-three percent of executives surveyed see a relationship between these costs, with 40 percent of them reporting $1 of direct cost generates between $3 and $5 of indirect costs.

By comparing the findings on indirect costs with its own research on the direct costs of workplace accidents and illness, Liberty Mutual calculates U.S. businesses are paying a staggering $155 billion to $232 billion on workers compensation losses annually.

The Liberty Mutual Workplace Safety Index announced this spring provided the first-ever ranking of the 10 leading causes of workplace accidents based on the direct cost of each accident cause.

The Index estimated the total direct cost of all workplace accidents was $38.7 billion in 1998, the most recent year for which data was available at the time.

Moreover, the survey findings reveal that business executives may be focusing attention on certain causes of workplace accidents at the expense of others, and may need to realign their workplace safety priorities, according to Liberty Mutual.

For example, executives report "repetitive motion" is the most important cause of workplace accidents and that they will focus workplace safety resources on this accident cause. However, five other accident causes each produced greater direct costs for companies in 1998, according to the Liberty Mutual Workplace Safety Index.

The Index reported that workplace injuries caused by "repetitive motion" produced $2.3 billion in direct costs for employers in 1998, about a quarter of the $9.8 billion of the leading accident cause -- "overexertion."

Similarly, executives may place less priority on accident causes that have greater potential financial impact. For example, survey participants report "falls on the same level" as the seventh most important cause of workplace accidents.

However, the Liberty Mutual Workplace Safety Index ranked this category as the second most important accident cause.

"Workplace safety has a ripple affect, either positive or negative, on so many aspects of U.S. business operations today," said Joseph Gilles, Liberty Mutual executive vice president, Commercial Insurance. "The first step for executives is to take preemptive measures to prevent employee pain and suffering caused by workplace injuries. Identifying the accident causes that have the greatest impact on their company and focusing workplace resources on these will help a company reduce costs and achieve strategic corporate goals -- such as assuring employee satisfaction and health, positioning the company as a low-cost provider, shortening production and delivery time, and improving product quality. Given the importance of workplace safety, companies should make sure their efforts are directed at those accident causes that have the greatest potential impact on their operations and employees."

by Virginia Foran

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