">The Ripple Effect of Safety – RiskWise

The Ripple Effect of Safety

The development and implementation of a workplace safety program or the lack of such a
program has a ripple effect that flows to affect other aspects of the organization. When a
company has established a safety program and has educated workers on what is expected in the
performance of their jobs, positive benefits flow back to that organization. This is a return on
the investment of the safety education.

The positive benefits that enhance an organization include:

1) improved productivity as workers aren’t missing work due to injuries
2) improved morale among employees as they aren’t talking about that “missing finger”
3) lower experience modification factor as less injuries lowers the Mod
4) lower workers compensation insurance cost
5) improved bid position to quote jobs more competitively
6) lack of negative press that comes when plants have serious injuries
7) lack of OSHA fines due to compliance
8) avoidance of the indirect or hidden

This is a positive ripple effect. The reverse can be said of companies that do not have workplace
safety programs. They may experience a negative ripple affect through the organization and
beyond. Of the items listed above we can simply reverse the positive and state in a negative
them light.

1) poor productivity as workers are missing work due to injuries
2) poor morale among employees as they are talking about that “missing finger”
3) higher experience modification factor as more injuries raises the Mod
4) higher workers compensation insurance cost
5) poor bid position as to not quote jobs competitively
6) negative press that comes when plants have serious injuries
7) OSHA fines due to none compliance
8) possible non-renewal of insurance coverage

This is a negative ripple effect. We can surmise that an organization that continues to have
injuries will experience the negative side of events. In addition to the above positive items being
turned around into negative items there are additional negative events.

In addition to the actual dollars paid out in claims and premiums to provide workers’
compensation insurance coverage, there are various Indirect Cost associated with injuries and
injury management. It is estimated that indirect cost usually approach 4 times the cost of an
injury. So, if a particular accident cost $10,000 to provide medical care and lost wages -the
estimated indirect cost is $40,000 in ‘other’ cost to the company.
Indirect cost defined- cost associated with injuries other than the claim dollars spent. Often
these costs are “hidden” in the form of non-productive activity.

Types of Indirect Cost:

1) Managers time dealing with the claim; filling out claim forms, doing
accident investigations, dealing with adjusters, speaking with doctors,
nurses, and the injured worker, etc.
2) Lost productivity of the injured worker- the injured worker was (usually)
more productive than a new hire may be because they have been trained
to do their particular job and have experience at that job.
3) Loss of product due to contamination of blood, hair, spillage, etc.
4) Loss of use of equipment due to pending investigation.
5) Loss of time due to OSHA investigations.
6) Time needed to hire a replacement until injured worker can return to work.

Indirect cost, while “hidden”, drive up the ‘cost’ of a claim, affect morale of the staff and do not
serve to increase revenue nor reduce expenses. So, while not readily visible, hidden cost does
negatively affect the bottom line.

Therefore, the prevention of workplace injuries has a direct and positive impact on the bottom
which is due to the none existence of the above issues. Proaction always has a much improved outcome over reaction. We can plan, direct control and monitor performance when we are thinking ahead of what might occur to negatively impact the
firm. However, when we react the cow is out of the barn and we have to work to mitigate
losses, minimize negative impacts to the firm and clean up the event.
Why is it that we rarely have time to proact and prevent but we always have to make the time to
react and contain? Like most management decision the choice is yours. Are we going spend
some time preventing injuries or spend out taking care of the injured worker/machine/product?