One of the challenges safety professionals face is quantifying the results of a safety program. Business owners are well familiar with return on investment (ROI). Capital investments and other expenditures are made after consideration on the return on investment.
Can a return on investment be calculated for the investment in employee safety and health initiatives? Probably not, in the classic sense of ROI. If I buy a piece of equipment for a new product and determine my costs per unit, I can quantify my ROI based on sales volume. How do I do that for something like safety?
First, let’s look at another purchase we commonly make that does not fit the standard ROI calculation. Why do we purchase auto insurance? In its simplest form, insurance is purchased to pay us in the event of an unexpected loss. Even if you have gone the last 30 years without an auto accident would you really want to opt out of insurance coverage?
If you never experience a loss and yet have paid for auto insurance year after year, what did the premium buy you? It bought you a comfort level that would not exist in the absence of coverage. If you are required to buy auto insurance under the laws of your state, you can imagine how you would might feel if pulled over for a traffic stop after choosing not to purchase coverage. In the absence of a tangible return, we recognize the value of the intangible.
Like insurance, a safety program can create a certain level of comfort based on the knowledge that you are focused on compliance, cost reduction and the welfare of your employees. When you know you are engaged in a process that is geared toward making sure employees are going home from work each day, the comfort level you gain is the best ROI of all.
Rich Galutia CSP specializes in the areas of employee safety (OSHA), trucking compliance (FMCSA) and animal feed safety (FDA).