If (probably more like when) a child tosses a toy and breaks the living room lamp, he or she may be scolded and told to behave, but usually there is no mention of how much money it will cost to replace the broken lamp. Fast forward to the teen years, when your offspring backs the family car into that hidden low fence. Now the cost of repair takes on a little more relevance. Assuming the repair cost is within the family's auto policy deductable, we're talking hard-earned cash for the hefty repair.
Accidents in the workplace, be they property damage auto claims or perhaps sustained personal injuries, cost companies way more than the dollars expended. How much more? The answer will surprise most of you. To illustrate, let's look at three areas:
1. Direct Costs are those expenditures that cover hard dollar outlay. This is first dollar expenditure.
2. Hidden Costs are the expenditures of time, and will often include uninsured property damage at $5 - $50 x the direct cost. Such areas often include:
- Building damage
- Tool and equipment damage
- Product and material damage
- Cost of emergency supplies/equipment
- Repair and replacement cost
Uninsured miscellaneous costs are other hidden costs, and are typically $1 to $3 x the direct cost. Such areas include:
- Accident investigation time
- Wages paid for time lost
- Cost of hiring and/or training replacements
- Extra supervisory time
- Clerical time
- Decreased output of injured worker upon return
- Loss of business and goodwill
3. Replacement Costs. What will it cost a company to cover the costs via additional sales, increased services or productivity given the basic profit margin of the company?
Let's say a company sustains $20,000 in total costs from an accident, figuring in the above variables. This company has an annualized profit margin of 2%. What will be the requied sales dollars to recoup that $20,000?
The results are $20,000 divided by 2% = $1,000,000!
Educating employess, peers, and your teen son or daughter can have a direct correlation of relevance to their actions. What's YOUR number?
Steve Damsker is a Senior Risk Control Representative out of Westfield's Duluth, Georgia office. He has more than 30 years of risk control experience. His background includes 22 years in corporate risk control and insurance industry experience. Steve specializes in manufacturing, workers compensation and fleet safety. Steve is an authorized OSHA Outreach trainer for both the General Industry and Construction Safety 10 & 30 hour courses.