MODULE 1: MANAGEMENT COMMITMENT

Direct costs of accidents...only the tip of the iceberg

Direct costs for accidents are usually considered those costs covered by workers' compensation insurance and other minor medical expenses for the accident. The company pays insurance to cover these costs. The average direct costs depend on the nature of the injury or illness, but usually range from $1,000 to $20,000. A good round figure to use when estimating all average direct costs for lost time workplace injuries is $10,000. Of course, the more accidents, the higher the insurance. In many states, workers' compensation continues a relentless drive upward. However, in most states, workers' compensation pure premiums have dropped more than 70% over the last ten years because employers are recognizing the value of safety and health programs.

Indirect costs....hiding under the surface

Indirect costs are all the additional costs associated with an accident. What is important to realize is that indirect costs are usually much greater than direct costs: From two to fifty times as costly. Another important point is that, unlike direct costs, indirect costs are uninsured.. .they come right out of the corporate pocketbook. These are the costs that can drive a company into the red.

Consider what one lost workday injury might cost your company in terms of:

o Production down-time.
o Productive time lost by an injured employee.
o Productive time lost by employees and supervisors helping the accident victim.
o Cleanup and start-up of operations interrupted by an accident.
o Time to hire or train a worker to replace the injured worker until they return to work.
o Time and cost for repair or replacement of damaged equipment or materials.
o Cost of continuing all or part of the employee's wages, plus compensation.
o Reduced morale among your employees, and perhaps lower efficiency.
o Cost of completing paperwork generated by the accident.
o OSHA penalties.