Lost Money Due to Injuries

As we discussed earlier this month (Cost of Injuries), injuries can cost fire departments a lot in both immediate costs and future budgeting costs.  Avoiding injuries is the most cost-effective strategy and that’s what this blog is all about!  With this blog post, though, we hope to bring you some financial specifics surrounding the value of making a concerted effort to avoid injuries.

Considering the Cost

The cost of injuries includes both direct and indirect costs.  Department heads must be aware of both of these costs.  Take note of the following information.  Although it addresses the worst case scenario, a fatal injury, the types of losses listed could apply to any incident.  According to Society for Human Resource Management:

“The NSC estimates that each fatal work injury costs approximately $790,000.  This figure includes lost wages, medical insurance and administrative compensation claims, which would also be significant.

For every dollar lost in direct costs, $3 to $10 can be lost in indirect costs.

Examples of indirect costs include:

·          Expense of accident investigation

·          Expense of hiring and training replacement

·          Time lost by others involved in accident or investigation

·          Lost efficiency

·          Lost production time

·          Overtime costs

·          Tool and equipment damage

·          Lost orders

·          Legal costs

·          OSHA civil and criminal penalties

Safety Programs

    Calculating direct and indirect costs of accidents is desirable, because having those numbers helps top management justify the cost of safety programs. “ (The SHRM Learning System: Module 6, Risk Management.” Society for Human Resource Management (2009), pg. 6-56.)

How Does Your Department Stack Up?

The Bureau of Labor Statistics provides information on industry standards for injuries and illnesses.  According to the Bureau of Labor Statistics (BLS), you can compute your department’s incidence rate for safety management and, “Incidence rates can be used to show the relative level of injuries and illnesses among different industries, firms, or operations within a single firm. Because a common base and a specific period of time are involved, these rates can help determine both problem areas and progress in preventing work-related injuries and illnesses. “

The BLS calculation for incident rate (IR) is as follows:

IR =      Number of Recordable Injuries X 200,000 (this number does not change)

               Number of Employee Labor Hours Worked (# of employees X 2000)

Example:

Injuries – 61

Employees – 223

IR = 61 x 200,000      =      12,200,000      =      27.35

             223 x 2000                    446,000          

Use this rate to compare your department against the industry for your size.  See the BLS report – Total Injuries Cases (Firefighter information is located on the last page). This information will give you a general idea of how your department is doing against the standard for the industry.

Invest in Safety

What does all this mean?  Departments would be smart to invest in safety.  Some departments invest money in wellness programs, or even robots to avoid injuries and it is worth the money.  Many departments invest time and energy in developing a “culture of safety” that puts value on taking care in every day situations and emergency incidents.  Valuing this type of culture, from the top ranks down, helps lower chances of injuries and we’ll be discussing this further in our next blog post.  Stay tuned!

Are your department’s budget issues shared with the whole team?

Does everyone in the department, regardless of rank, understand how injuries impact them?

Does everyone in your department feel comfortable voicing safety concerns or ideas for safety improvement?

How are safety changes implemented in your department?