Why the ROI of safety isn’t always obvious

While many companies would argue that safety is their number one priority, they often hesitate to innovate in that area of the business. The ROI of safety is nearly impossible to calculate because it doesn’t depend solely on quantifiable outcomes.

The hidden ROI of safety

If you buy a new machine that increases output, there’s a measurable return on your investment. After a certain number of uses, you’ll be able to decrease production costs and get back all the money you spent. But the ROI of safety and health investments isn’t as quantifiable.

In health and safety, incident prevention is the focus. So, there’s no way to know how many incidents you’ve prevented by investing in new equipment or technology.

Senior leaders often focus solely on metrics, which can make it difficult for EHS departments to advocate for more resources. It’s not that companies are unwilling to invest in safety. It’s just that their standard methods of measuring success don’t apply the same to many EHS metrics. For many companies, the hidden ROI of safety comes down to gaps in communication.

The communication problem

A common source of stress in the EHS profession is a lack of resources. Most EHS managers, at some point or another, have struggled to get the support they need to improve safety outcomes. From their perspective, there are hundreds of reasons to upgrade equipment or invest in technology solutions.

But communicating these benefits to executive leaders isn’t always easy.

At the senior level, everything is viewed within a wider scope. Whereas the safety manager is concerned about their department’s performance, directors and CEOs must consider the entire company. The ROI of safety improvements might be obvious to an EHS director, but it might not be to the general manager or CEO.

Companies that have too wide of a communication gap often struggle to improve safety performance. Because if the EHS program is stagnant, then it’s bound to see an increase in incident rates and overall risk exposure.

Defining the ROI of safety measures

There are many ways to invest in safety performance, including:

  • Replacing and repairing safety equipment
  • Dedicating time each week or month to discussing safety opportunities
  • Buying EHS software and other technology solutions
  • Rearranging work areas or processes
  • Updating and repairing facilities
  • Launching a safety rewards program

Not all these investments cost money, but all of them do require buy-in from the top down to work. The key to improving communication between EHS departments and executive leadership is coming up with a clear definition of the ROI. Is it a percentage decrease in near misses or injuries? Is it a decrease in employee turnover, workers’ comp cases, or lost time incidents?

The ROI of safety measures will vary depending on what they are and which area of performance they impact. You’ll find that once everyone’s on the same page about the expected returns, it’s much easier to execute projects and initiatives successfully.