Why is worker’s compensation creating a huge dent in your profit?

Written by  Sunday, 24 June 2018 00:24

While preparing a budget, most organizations make a provision for the management of injuries at the workplace. But, more than often, the actual expenses incurred due to the injuries exceed the tentative expenses allocated in the budget.

This happens because businesses tend to underestimate the expenses and the extent of injuries that can occur at the workplace. They also ignore or do not take into account the indirect expenses to be borne due to injuries.

And it is this ignorance that can create a huge dent in the profits. The importance of avoiding injuries at the workplace is not just associated with the huge amount of costs involved, but also with the fact that most of these expenses can be easily avoided. Let me reveal why healthcare expenses are eating into business profit and how it can be avoided.

1. The higher risk of accidents at workstations

The cost of accidents at the workplace is an area of major concern for employers. Many businesses do not realize how much these accidents can cost. In fact, most expenses are not obvious.

Accidents involve direct costs like the hospital, medical, and rehabilitation expenses. These expenses are added further by workers' compensation payments, insurance premiums, and sometimes, loss of insurability.

Additionally, there are other less obvious, or indirect costs that are always uninsured. These include the disruptions to the normal work flow when the other workers stop to assist the injured employee, and a resulting drop in the production.

Also, if profits are not sufficient to cover the costs, the business may need to defer the procurement of latest facilities and equipment that could have improved profits.

2. Recovery period

The employee may have to take time off from work for varying periods depending on the extent and severity of the injury. It can cause a loss of income for the worker’s family and leave them in financial ruin.

This can create a significant psychological stress and even affect the personal relations of the employee. The stress can affect the employee’s productivity even after they resume work due to their deteriorating emotional support network at home.

3. Impact on others

The employee morale may hit the bottom after a serious workplace injury. The co-workers and supervisors, who worked with the injured employee, can be emotionally affected. This can have a detrimental impact on the quality of their work. This may result in a substandard production of goods and services provided by your employees. This may harm the reputation of your business in the long run and even result in the loss of business from unsatisfied clients and customers.

Also, after having witnessed how the accident occurred, and how it was handled by the company, can leave the employees resentful towards the employer. In extreme cases, the employees may resort to violence in the case where they feel the incident was handled in an unprepared or unethical manner without due consideration to the injured employee’s immediate treatment. Such disruptions in work can affect the normal business flow and reduce the profits.

4. Higher attrition rates

When the business doesn’t have accident prevention facilities in place, it can become difficult to retain talented and hard-working employees. The higher risk of injuries, lack of adherence to safety standards, and ignorance to employee health can create an impression of your business being “not employee-friendly.” This can also result in difficulties in attracting skilled workforce who would rather work in an organization that cares for employee safety.

These factors can have a huge impact on the quality of services you provide and thus, affect your business growth.

Also, with higher attritions rate, your business will also end up spending some amount on training the replacement staff. The business will also have to bear the cost of the hiring process including giving advertisements for vacancies, charges of HR consulting firms and so on. This will add to increased expenses.

5. Legal consequences

Workplace accidents have the potential to invite legal consequences including lawsuits and regulatory actions. The expenses involved in these would be higher in the case your organization has obviously violated the guidelines of relevant authorities and in worse cases, may result in the termination of your business licenses. This marks the importance of having safety facilities in place to avoid workplace injuries.

The benefits of adopting safety precautions to prevent injuries at the workplace

  • Companies are losing a lot of their hard-earned profit due to their employees getting injured. The loss of body alignment and mobility of the employees at the workstation is often hampered due to the repetitive movements and heavy lifting. Taking the right steps to minimize the risk of injuries can improve the profit significantly by bringing down the direct and indirect costs.
  • Avoiding injuries also means avoiding the loss of time due to the injuries and an improved productivity of your workforce.
  • When your workforce is aware of the steps their employer is taking to ensure their safety, it’s bound to have a positive effect on their morale. This will help them work with a better focus and positive attitude.
  • The lesser number of injuries will instill confidence in the minds of your workforce. This will also reduce the attrition rate and help you retain the talented employees.
  • The tax advantages you can avail by adopting safety practices to avoid injuries cannot be overlooked. The new tax laws allow you to save on the taxations by claiming the expenses involved in adopting safety training. This means, lower taxes to be paid and hence, a better profit!

Most of the workplace injuries can be avoided by increasing proper body mechanics, nutrition, and flexibility. The benefits a business can derive by taking precautions to avoid injuries are numerous. By hiring Work Force Strong, they can enjoy a higher return by investing in their employees’ health by reducing the costs involved in injury management, loss of working days, attrition rate, improved productivity, training of new staff, taxation, and so on. That is why, the businesses looking to improve profits favors bringing down workers’ compensation costs by avoiding workplace injuries.

To find out more how our Work Force Strong Program can significantly bring down workers compensation claims due to injury, please contact Work Force Strong at 518-275- 8348 or checkout our website at www.wfstrong.com.