OHS expenses = profitable investment

OHS expenses = profitable investment


Investing in occupational health and safety (OHS) has a price. Don’t think this money is lost, far from it!

“Organizations place OHS investments in the expenditure category when in reality, these investments pay off,” explains Alain Daoust, EHS Expertise Director at SPI. The benefits are even bigger compared to standard investments!

A spectacular return on investment

In 2009, the European agency for occupational safety and health (EU-OSHA) produced a study on the benefits gained by an organization that invested in OHS. The conclusion: for each dollar invested in OHS, the return on investment is 120%!

The EU-OSHA noted that on the European territory, the cost/benefit ratio for an OHS investment is about 1:2.2. Each invested dollar yields a $1.20 benefit! We can deduce that the result would be similar in an industrialized country such as Canada.

“In a company, we spend money buying machinery or developing a new niche because we expect our investment to pay off, adds Alain Daoust. We don’t realize that an investment in OHS reaps similar, if not higher benefits.”

Direct and intangible costs

To reach this conclusion, the EU-OSHA has recorded two types of costs: direct and intangible.

Direct costs are expenses associated with an accident or injury. If an employee performs sanitation work, is exposed to a feeder screw and loses a hand, the company will compensate him.

However, we should not overlook the multitude of potential intangible costs! Productivity will be affected, and the employee will have to be replaced. The motivation of his colleagues could be impacted. Also, the accumulation of accidents can greatly tarnish the image of the company.

That’s an extreme case, but think of the catastrophe of Bhopal, India in 1984. A highly toxic gas was released and resulted in thousands of deaths. The entire chemical industry was badly shaken, and Union Carbide (now owned by Dow) is still pursued by lobby groups 20 years later.

For Alain Daoust, “intangible costs are perhaps the most important number for a company in a long-term perspective.” They are difficult to measure, but negative consequences on sales figures are undeniable and often have a lasting effect! For example, he noted that a “high employee turnover rate due to a bad reputation can result in significant expenses that can hinder the company’s development.”

Efficient investments

To maximize returns on OHS investments, it’s all about making the right choices!

Implementing prevention measures using slogans and posters is legitimate, but not sufficient. According to Dan Petersen, American OHS specialist, we relied too much on this technique that places the burden of prevention on employees.

Investing more on securing the workplace is worth it. The cost will be higher, but the benefits will be greater!

Would you like to evaluate what would be the best OHS investment in your company? Seek advice from SPI!