Wearing Hardhats Isn’t Enough:
A Company Safety Program Necessary
for Long-term Payoff

Outsourcing, a Cost-Effective Approach to Establish a Proper Safety Program

CHICAGO, Ill.—One dollar saved is more than a dollar earned – at least that is the opinion of one expert in the safety consulting field. According to Gary Glader, Certified Safety Professional and president of Network Safety Consultants, one dollar saved in insurance claims or insurance premiums is equal to $10 in revenue at a 10 percent profit margin. With the rising costs of insurance, the potential for significant savings is a strong incentive for companies to control claims through implementation of effective safety programs.

“One of the challenges we often face is the belief that the responsibility for a safety program can be handled by staff members within an organization along with their other duties or moving someone from within the organization to a full-time safety position.” Glader cautioned, “This seldom works as most of these individuals do not have the background or knowledge to be able to successfully implement and manage a safety program.”

During tough economic times many businesses, particularly small ones, may not be able to justify hiring a full-time safety professional. Outsourcing safety programs through a safety consultant paid on a fee basis is a more cost-effective approach and consultants have safety expertise specific to many types of business environments.

The cost of accidents is severe. Direct and indirect costs of accidents and the cost of non-compliance with OSHA regulations have a substantial effect on an organization’s profitability. An organization cannot afford to overlook their responsibility to maintain an effective safety and compliance program.

For example, assume a company operates on a five percent profit margin and experiences $50,000 in direct accident and injury costs with no one claim larger than $2000. The actual, total cost to the company is $50,000 multiplied by a factor of 10 which includes the indirect, and uninsured, costs of lost productivity, lost business, additional training for replacement employees, and lowered employee morale. Thus, the actual impact to the bottom line is $500,000 and only $50,000 of that is covered by insurance. In order to make up for the half million dollar loss to the bottom line, the company must generate an additional $10 million in sales to offset the effect of the losses.

Accidents are preventable and the cost of losses can be controlled and reduced. To enjoy the long-term payoff of improved safety requires an effective safety program, which Glader defines as a systematic process that combines many elements – not just a set of rules or incentive program – and must be enforced and promoted from top management on down. The ultimate goals he says is to establish a culture where safety exists on a plane equal in importance with productivity and quality.

Network Safety Consultants is a full service safety consulting firm specializing in the needs of the manufacturing, construction, and service industries. The firm is a wholly owned subsidiary of The Horton Group, one of the largest insurance brokers in the United States with more than 300 employees and offices in Waukesha, Chicago, Scottsdale, Nashville and Munster, Ind., in addition to their Orland Park, Ill. headquarters.