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Financial Goals Directly Impact Employee Safety

Jan. 3, 2017
New research examines the impact of meeting financial goals in a company and higher injury/illness rates.

Financial goals may be more important than employee safety, according to new research in the Journal of Accounting and Economics.

UCLA Anderson of Management Associate Professor of Accounting Judson Caskey and UT Jindal School of Management Assistant Professor of Accounting N. Bugra Ozel collaborated on a study that examined 14 years of data on workplace safety from the OSHA, documenting any data that might show correlation between analysts’ forecasts and injury/illness rates.

Caskey and Ozel found that any changes in operations or production that are meant to increase earnings impacted the number of injuries in the company. Specifically, an increase in employee workloads and in abnormal reductions of discretionary expenses caused a rise in injury/illness rates when analyst forecasts were met or exceeded.

“Managers can indirectly, and perhaps inadvertently, detract from safety by increasing workloads, hours, or the desired speed of work flow,” the authors said. “For example, rushed employees may have more accidents, and increased workload and hours without additional rest and recovery time can increase stress-related injuries. Managers can also directly impact safety by cutting safety-related expenditures.”

Researchers also noted that the relation between benchmark beating and workplace safety is stronger when there is less union presence, when workers’ compensation premiums are less sensitive to injury claims and among firms with less government business.

The complete study and its findings will be published in the February issue of the Journal of Accounting and Economics.

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