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Investing in Safety Programs Leads to ROI Increase, New Study Show

Researchers from the Institute for Work and Health in Ontario, Canada, analyzed how much 334 organizations had invested in occupational health and safety practices (OSH). All of the organizations ranged in manufacturing, construction, and transportation sectors.

In order to properly execute the study researchers, led by Dr. Cameron Mustard, designed a three-phase process:

Phase 1: Estimating the average cost of lost-time workers’ compensation claims (both direct and indirect costs)

Phase 2: Identifying organizations with >100 full-time employees that had the lowest occurrences of work-related injuries/illnesses across the three sectors

Phase 3: Estimate the financial benefit of OSH expenditures through four steps

  • Estimating OSH expenditures

  • Estimating tangible financial benefits

  • Estimating intangible financial benefits

  • Calculating ROI on OSH expenditures

The results showed that the transportation sector saw the highest average ROI at 114% regarding OSH expenditures. The estimated average financial benefit in the transportation sector was $2,980, compared to $1,326 in average expenditures per employee each year. Regarding the construction and manufacturing sectors, the ROI was 34%($4,851 in estimated average financial benefits vs. $3,625 in average expenditures), and 24% ($1,884 in benefits vs. $1,551 in expenditures).

The results of the study help contribute to past and future research into OSH investing.

Further research into OSH investments

Other studies have reported different ROI's on OSH.

A study led by the International Social Security Association (ISSA) and German Social Accident Insurance (DGUV) reported that the average OHS expenditures per employee per year were more than €1,200 ($1,800 CAD) in a convenience sample of approximately 330 employers in Europe (Braunig and Kohstall, 2013). When asked about the ratio of the financial benefits to OHS expenditures, employer representatives reported that the average ROI was about $2.20 for each $1.00 invested in prevention.

Another study centered around the United Kingdom's construction sector and described that the ratio of financial benefits to OHS expenditures was about 2.6.

Researched in 2011, another study estimated the costs of work-related injury and illness in approximately 400 case studies. Then, estimated the potential financial benefits from 56 prevention measures with employer representatives. It was found that under conservative assumptions, the ratio of financial benefits to OHS expenditures was 1.29. And simultaneously, it was found that under a less conservative set of assumptions, the estimate was 2.18.

Bottom line: investing in safety programs will increase ROI.

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