Real Cost of Accidents

Real Cost of Accidents

By Diane M. Calabrese / Published December 2016

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Unexpected, unforeseen, and unpleasant, accidents are easy to describe. The difficulty is in the recovery. Complicating a rebound from any accident are extenuating factors, which must be added to the sum total of what an accident really costs.

The Occupational Safety and Health Administration (OSHA) cites direct and indirect costs attached to employees who sustain injuries. The direct costs include workers’ compensation claims. Indirect costs include training or hiring a replacement for an injured employee.

If an employee is injured in an accident that involves property, such as a ladder, a lift, or a vehicle, there are other costs. Damaged property must be repaired. Insurance premiums may increase. Time must be taken for investigating and then making corrections to prevent the same mishap from occurring again.

According to a Safety and Health Management Systems eTool provided by OSHA (www.osha.gov/SLTC/etools/safetyhealth/mod1_costs.html), indirect costs can be compounded by the effect an accident has on colleagues of an injured employee. If the remaining employees must take on a bigger workload and become weary, their morale may decrease, or absenteeism may increase. Other costs may derive from scheduling disruptions, which in turn diminish customer satisfaction.

The employer and the employee both incur costs if an employee is injured in an accident. “Most people never realize until it’s too late that workers’ compensation only pays a portion of their wages,” says Ray Burke, owner Spray Wash Exterior Cleaning LLC in Tallahassee, FL. “And even if the employee feels great and is ready to return to work, workers’ compensation and medical professionals make that call of when it’s safe to return—not the employee.”

In short, words “good” and “accident” cannot be tied together in any sense. Prevention is the best way to eliminate the costs—all the costs—of accidents, and prevention begins with education.

“I think one of the best ways to educate oneself about safety is attendance at industry meetings,” says Burke. “Besides getting a safety certification through a professional organization such as UAMCC, the ability to speak with other contractors about their real-life experiences and accidents is so valuable.”

In the case of accidents, one adage definitely does not apply. “They say experience is the best teacher, but when it comes to preventing accidents, I’d rather learn from someone else’s mistake than my own,” says Burke.

As scrupulously as we all try to avoid accidents, things will still happen. Advance planning can mitigate disruptions should an incident require an employee to take time from work. “While it’s important to run lean, efficient crews, it’s more important to not have your business impacted by illness or injury,” says Burke. “We always try to have part-time, backup employees who are willing and able to step up into a vacancy.”

Readiness and Reality

An accident weighs on the psyche, yet carry on we must. Being ready to confront an unexpected event makes it easier to continue doing work, even in difficult times. Doug Rucker, owner of Clean and Green Solutions in Porter, TX, has a perspective summed up in two words: be ready.

“I call it having a backup to the backup,” says Rucker. “We are constantly training one to two new personnel so that they are able to step in should the need arise, either through an accident or injury, or an employee leaving. We also keep good relations with a few other contractors in the area that can pitch in and help in a time of need.”

A focus on safety must be a constant in the workplace, of course. Promoting safety takes commitment. “First off, regular scheduled safety meetings with your employees and reminders about the safety procedures you have in place are a must,” says Rucker. “Staying aware of industry-related accidents and talking about them and how we can prevent them are also reminders.”

The statistics on industry accidents are often surprising. In August 2016, OSHA provided a summary of statistics from 2014 at its website (www.osha.gov). In 2014, there averaged 13 work-related deaths each day. In total, 4,821 people died on the job. Seventeen percent of the fatal injuries occurred in contractor categories. Far and away, falls are the most common cause of death, accounting for almost 40 percent of the total.

OSHA puts falls in a category it labels the “fatal four” causes of death. The others in the foursome are electrocutions, struck by an object, and caught-in or between (compression or crushed).

Well-trained employees know they can never skip using a safety harness or establishing grounds. They know they must maintain situational awareness at all times so they can be aware of colleagues working in the area. They know these things because their employers make education a priority and formalize policies and procedures for conduct and methods at work.

“At CentraFlo Pressure Cleaning, we have policies and procedures in place,” says David J. D’Eramo, owner/president of the company, which is based in Winter Springs, FL. “When-ever we receive new equipment, particularly safety equipment, we hold training on the new equipment, allowing our employees the opportunity to get their hands on it, and receive instruction on its proper use and function, as well as practice using it.”

The attention to the new must always take place in the context of refreshers about the familiar. “We also hold a separate mandatory safety training once every month,” says D’Eramo. “This training may be hands-on training, an open-table discussion, or instructional videos online. Having these programs in place is the way to prevent accidents.”

Good Starts, Good Finishes

Employees must themselves be committed to safe practices. Good employees share the same interest as their employer in safety. At the most basic level, the costs incurred by an employer because of an accident siphon away dollars that might otherwise be used for raises, bonuses, or upgrades to equipment.

Hiring reliable employees is always a goal. When employees will be driving company vehicles, checking on their driving record is important. Some insurers will require this.

“We subscribe to a service that runs DMV [department of motor vehicles] reports for us,” says Brenda Purswell, president of Alklean Industries Inc. in Pasadena, TX. “We went through an audit by the insurance company and that is one of their requirements.”

Businesses have a valuable partner in their insurer(s), who will welcome the opportunity to give advice on best practices in safety. Take advantage of the expertise insurers have.

A foundation of safe practices day in and day out is integrally tied to the bottom line. Any accident can work against an employer who is bidding on a contract, and getting the contract is the ultimate good finish.

“When you want to sell to larger companies, it is a requirement to report your lost-time accidents,” says Purswell. “If you have any in the last five years, you may be barred from doing business with many, if not most, companies. This can be a huge financial loss that it is impossible to calculate in loss of future business.”

So the real cost of accidents includes the cost of lost contracts, a loss that is, as Purswell notes, incalculable. What we can calculate are costs of accidents, and those costs are enormous.

A Public Citizen (www.citizen.org) study for the state of Maryland that was published in August 2012 attached a dollar cost to construction injuries and fatalities between 2008 and 2010. The dollar amount was $712.8 million.

The aggregate data for the United States are more incredible, of course. The 2016 Liberty Mutual Research Institute Workplace Safety Index, which is based on 2013 data from their records, the U.S. Bureau of Labor Statistics, and the National Academy of Social Insurance, reported the total cost of the most disabling injuries in 2013 as $61.88 billion.

Complexity

Prequalification for bidders often includes requirements that driving records of employees have been checked and that employees are routinely screened for drug and alcohol use. But public entities vary widely in requirements that bidders must meet. Private companies are more likely to require demonstration of a safe record of work.

Employers striving to maintain a safe work environment can sometimes find themselves in a contradictory situation. They would like to do routine checks for drug and alcohol use, for instance. But to do the checks and remain within the law governing employee rights, the checks must be done in an equitable way. Having suspicion that an employee is impaired on the job may not be enough reason to single out the employee for a test. That’s vexing.

A good finish results from a good start, though. By taking the time to hire employees who are likely to be reliable members of a team committed to safety, an employer can reduce the incidence of accidents and protect all members of the team.

One real cost of accidents is reduction in quality of life. It’s very difficult to put a dollar amount on limited mobility, partial loss of vision, hearing impairment, and other lasting injuries, but diminished quality of life is a real cost. Though a monetary value cannot be assigned, the real harm to employees is the largest damage inflicted by accidents and is the primary motivation for safety.