ROI Basics          

 

Would Zero Injury be of more interest if you were told that it is routine for successful users to get a 300-500% ROI on the cost of implementation and evergreen maintenance of the essential zero injury research based safety culture building techniques?

 

There are a number of questions regarding data gathering surrounding the effort to calculate the ROI obtainable when changing a safety culture from “injuries happen” to one that embraces the Zero Injury Concept (and ultimately achieves Zero injury on a scale with world class performance.)

 

Today we all know the costs of injury are very high. But little do we realize that it is a lot higher than we think. The “direct cost of injury” (that covered by Workers’ Compensation) is given to us in our Workers’ Compensation management processes when we audit our “Loss Run.”  By adding to our “injury losses” the carrier’s charges and our hidden “losses in efficiency,” and then calculating an ROI on the expense required to reduce injury frequency, one can see that the undeniable financial result is “pure gold” to the bottom line. Add to this the undeniable fact that you have done the right thing then who would argue that to strive for zero injury does not make good business sense?

 

The “losses in efficiency” flowing from employee injury are calculated by using the CII research based ratios between Injury Losses and “losses in efficiency, termed indirect costs.” This research performed by CII in 1988, gave the industry hard numbers on the indirect cost of injury. Yet employers are seldom, if ever, using these data to generate enthusiasm for Zero Injury as a workplace norm through an ROI calculation.

 

What if a company took their actual “direct cost” data and combined it with the CII research based Ratio between Direct and Indirect cost, and then combined this information in a calculation to determine ROI for the added money spent while in the process of embracing the Zero Injury Process? 

 

My experience reveals that the “pay-out” from reduced injury on successfully applying the Zero Injury principles is not a paltry 10-25% but an amazing 300-500%. I ask the reader; “Is there a quicker way to increase profit than this?”

 

Company leaders work endless hours to develop business, and then more hours preparing and performing the work, all more often than not, for a slim and optimistic 5 to 10% profit margin. They do this, while right in the midst of the management process, an opportunity exists to get returns on investment of 500%! Since we are talking employee safety, of course, this opportunity rests in how safety in managed.

 

If you are one of those that are managing safety the same way year after year, with near average unsatisfactory results, then you are the one that will gain the highest ROI on spending the money to install a Zero Injury Safety Culture in your company.

 

This author has applied specific data (real data) and the ROI result is astounding! Would you believe a 300% return is normal?  This is not just in the first year of the calculation. Once near Zero Injury is achieved the 300% will be there as long as the application of the Zero Injury concept yields world class injury statistics, year after year after year.

 

Learning this should be an “eye-catching” revelation to company leaders and a wakeup call to drive safety success to world class. The Zero Injury effort is most rewarding for those who enjoy performance that are near or over the OSHA/BLS national averages. The closer you are to Zero Injury when you start, the less the ROI on Zero Injury calculation effort will yield. But even if you are down in the 100% ROI range, it cannot be considered as anything other than a “brilliant investment of time and energy.”

 

Besides it is an investment that also preserves families.