Workers’ compensation insurance helps insulate a company from the direct costs of an employee injury. For example, the company’s workers’ compensation policy will pay for medical care and will cover partial wages while the worker or workers recover.
While direct costs of workplace injuries may result in higher workers’ compensation rates, companies must also consider the indirect costs associated with employee injuries and workplace accidents. Research indicates that the indirect costs of a workplace accident can be up to 20 times greater than the direct costs, and in certain specialized industries, these indirect costs can soar to 50 times the direct costs.
What are some hidden costs of an employee injury or workplace accident?
- Decreased labor and productivity: If you have one or several injured employees who can no longer work, this could create critical shortages that could slow production or bring certain departments to a standstill.
- Lower employee morale: A bad work injury can be distressing and traumatic, even to employees who are not injured. This could lower morale or cause distractions that lower productivity.
- Less production: If your injured employee or employees were responsible for the production of products, you may have to deal with decreased inventory or longer wait times to sell products and collect payment
- Damaged equipment: Damaged equipment from a workplace accident must be repaired or replaced. Not only will the repair or new equipment cost money, but every minute the equipment is not functioning could also cost the company’s productivity.
- Disrupted schedules: Having to cover the responsibilities of an injured co-worker or try to work around a damaged piece of equipment can disrupt your employees’ schedules, leading to stress and a loss of productivity.
- Loss of customer and public goodwill: If a customer becomes aware of a workplace accident or if their product or property was damaged, this could drastically undercut their confidence in your company. Not only is there a chance that they could fire you from the job, but in this world of Yelp and other highly public customer satisfaction websites, a negative review can hurt your chances of closing prospects
- Hiring and training new workers: If your injured employee or employees will be out for an extended period, you might have to consider hiring a temp or bringing on a new employee or new employee. You and your management team will require time to interview, hire, and train new employees. You’ll also have to absorb lower productivity until your new employees become proficient.
- Cleanup: If a workplace accident causes widespread damage, you or your employees may have to spend significant time cleaning up the damage, which will cost your company time and labor.
Just because your company has workers’ compensation insurance doesn’t mean you are insulated from the costs of a workplace accident or injury. The hidden costs of an injury are severe. The best way to avoid absorbing all the indirect costs of a workplace injury or accident is to try and prevent accidents as much as possible by implementing a strict workplace safety program.
Call to Action:
Minimize the impact of workplace accidents with effective loss control strategies. Complete our 4C Advising form to discuss how we can help protect your business and ensure a safer work environment. Partner with us today to enhance your risk management efforts and safeguard your company’s future.
