Why are you working? You need to earn money, of course. Your employer is in business for the same reason. Working for a company that does not make money may leave you without a job. You may be surprised to learn that most companies do not make money hand over fist. The costs of running your business and the level of competition limit how much you can charge for goods and services. What’s more, competition is no longer just local–it is often worldwide.
| ACCIDENT COSTS | 1% profit margin | 5% profit margin | 10% profit margin |
| Additional Sales | Additional Sales | Additional Sales | |
| $1,000 | $100 K | $20 K | $10 K |
| $5,000 | $500 K | $100 K | $50 K |
| $25,000 | $2.5 mill | $500 K | $250 K |
| $50,000 | $5 mill | $1 mill | $500 K |
| $100 K | $10 mill | $2 mill | $1 mill |
| $250 K | $25 mill | $5 mill | $2. 5 mill |
Most large US companies operate at a small profit margin–some as small as 1-2%. Operating like this means they earn only 1-2 cents for every dollar taken. Profit margins of 1% to 5% are more common, but this is still not a lot of “extra” money. Each time an accident occurs, the cost of the injury must be subtracted from profits. So, how much do these incidents impact your company in terms of direct and indirect costs?
Let’s discuss how many additional sales are required to pay for work-related injuries:
If the company is operating at a profit margin of 5%, then $20,000 in new sales will be needed to compensate for a $1,000 injury. If the profit margin is nearer 1%, an additional $100,000 worth of goods or services are necessary to keep that profit level. Many “widgets” must be manufactured to compensate for those losses! Since industrial back injuries average about $5,000 in expenses, other employees must work longer and harder to achieve necessary production levels every time a worker strains his back.
Whatever you do in production, sales, or service, think about the extra hours you must work to help pay for the average job site injury. Why should you care about this? Simple Safe work behavior can contribute directly to the bottom line and your job security. The more profitable your company, the more likely funds will be available for better equipment, improvements in the work environment, and, hopefully, wage increases.
Though money is essential for you and your employer, personal well-being is also essential. It is always wiser to spend more time doing the job safely than recovering from an injury. This is why you are asked to avoid taking dangerous shortcuts, wear your personal protective equipment, do the job as instructed, and support your company’s safety efforts.
Think of safety as another revenue stream. Accident prevention is a win-win proposition!
