“…just a single injury prevented over a two-year period results in a 300% return on investment.”
Every employer knows that worker injuries have significant direct and indirect costs. But too often, employers rely on subjective hiring practices that fail to assess whether candidates have the physical capability to complete the job they are assigned to. This “luck of the draw” approach leaves many employees—and employers—vulnerable to injury because the demands of the job are beyond the worker’s ability to get it done safely.
Despite the near-certain risk of injury over the long term, many employers do not invest in preventative measures at the time of hire. Those who do invest proactively in safety generally do so to comply with contractual requirements or corporate principles on safety. But increasingly, the reasons for proactive investment are also economic: earning a strong return on investment and gaining a competitive edge to increase market share.
In order to reasonably evaluate their options and invest proactively, employers need to:
“In Alberta, a single injury resulting in the average lost time typically costs Alberta employers approximately $87,500 in direct and indirect costs.[1,7]”
Identifying the True Cost of an Injury [9,10,15,16]
The true cost of an injury is often not obvious, as much of the cost is both indirect and spread out over time. Direct costs are just the tip of the iceberg; the largest portion lies beneath the surface, hidden from plain sight.
Consider these direct and indirect costs:
|Direct Cost||Indirect Costs|
|Lost Time||$_____||Cost of internal investigation||$_____|
|Medical costs (initial and follow-up)||$_____||Raised premiums for the employer||$_____|
|Compensation for work lost||$_____||Hiring, training, and paying replacement workers||$_____|
|Penalties and fines||$_____||Production downtime||$_____|
|Total direct costs:||$_____||Lower employee morale||$_____|
|Loss of goodwill and damage to reputation||$_____|
|Loss of products or services||$_____|
|Additional WCB costs for prolonged claims||$_____|
|Failure to be awarded contract bids||$_____|
|Total indirect costs:||$_____|
|Direct costs $_________ ~30% + Indirect costs $_________ ~70% = True cost of an injury|
Though the costs of an injury vary by industry and according to the nature of the incident, it is estimated that on average the indirect costs of an incident can be as much as four times the direct costs. 
Once a musculoskeletal injury occurs, the likelihood of a repeat occupational injury is significant. Repeat injuries can lead to compounded costs for employers as the duration of lost time extends and the injuries entail ongoing medical, administrative, and rehabilitative costs.
“In the last decade, the largest category of lost-time injuries has been musculoskeletal injuries.[1,7,14]”
The first step in evaluating proactive investments in safety is to quantify the true total cost of injuries and the total cost of proactive measures. For proactive measures to return value from a solely financial standpoint, the following must be true:
Total cost of injuries avoided =/> Total cost of proactive measures
In this exercise, we will consider Alberta as a whole. It is estimated that the total cost, direct and indirect, of a musculoskeletal injury resulting in 20 days lost time for a skilled worker in Western Canada is between $50,000 and $125,000, or between $2,500 and $6,250 per day.[1,4,7] For our purposes, we will use an average total cost of $87,500, or $4,375 per day lost.
The rate at which Functional Fitness Evaluations identify candidates as unfit varies from position to position, but across industries, the average range is 5%–12%. Here, we will assume that an average of 8.5% of candidates are identified as unfit.
The provincial average, 3 injuries per year, translates to approximately 60 days of lost time for every 1,000 employees, which would result in costs of $262,500 per year, or $262.50 per employee per year.
A Functional Fitness Evaluation costs an employer $175 per evaluation, so the total cost for 73 evaluations is $12,775.
Cost-Benefit / Break-Even Point
Of the 73 candidates evaluated during the course of the year, an estimated 8.5% (or approximately six candidates) will be deemed unfit. Given that a reasonable estimate of the total cost of an injury is $87,500, only one lost-time injury needs to be avoided over an 82-month period for an employer to break even. That means that if even 2% of the unfit conclusions from the Functional Fitness Evaluations (or one out of every 500 Functional Fitness Evaluations) result in an avoided musculoskeletal injury, the program is financially sustainable.
Return on Investment
A functional fitness program properly managed is designed to reduce the chance of a worker being injured and accommodate existing disabilities.
Ultimately, the return on investment is directly proportional to the number of lost-time injuries avoided. Therefore, even if 10% of evaluations identify candidates as being unfit, but an injury is prevented from occurring, employers can expect a return on investment of $3 saved for every $1 spent. In other words, just a single injury prevented over a two-year period results in a 300% return on investment.*
The above estimate is conservative and certainly simplified, but, based on provincial averages, most companies in heavy industry can reasonably expect that every $1 invested in a Functional Fitness Evaluation will save $2 to $4 in total injury costs. The return on investment is higher for companies that have below-average safety performance or that are larger employers, as they typically have higher lost-time injury rates.
*with a workforce of 1,000 and average turnover
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