The cost of workplace injury is far more than business executives realise. In a given year, workplace injury and disease cost nearly $62 billion. This represents over 4% of Australia’s Gross Domestic Product (GDP).

The risk to companies is even graver amid the coronavirus pandemic. Now, employees may get Covid-19 at work and suffer from long-term health consequences.

Workplace injuries and disease pose a significant risk to your company. Not only does productivity suffer, but your company incurs worker’s compensation costs.

Read on to learn why every CFO needs to pay attention to workplace injuries. Explore topics such as workplace injury statistics and the economic cost of workplace injuries.

What Are the Direct Costs?

Injuries in the workplace are a direct drain on cash flow. CFOs must be aware that there are direct expenses associated with injury management.

For starters, the company carries worker’s compensation insurance. This insurance covers medical expenses, salary, and other costs incurred by the employee.

There are other direct costs that may result from a workplace mishap. A significant number of injuries are due to vehicle collisions. These collisions cause damage to the vehicle, necessitating repair or replacement.

Also, there are administrative costs associated with injury management. Your staff needs to report the incident and process any claims related to it.

What Are the Other Cost Impacts?

There are other cost impacts related to injury management. For example, Human Resources may need to hire additional workers. Without replacing the employee, company productivity is sure to decline. Before the injury, this employee was responsible for producing an output. This is no longer happening in the wake of an injury.

To keep producing at the same rate, the company needs to bring on additional resources. This results in administrative work to onboard a new employee.

Also, the new employee needs to be trained. It takes time before the employee is up-to-speed and contributing at the same rate as an experienced worker.

For these reasons, the CFO needs to consider injury management in financial planning and forecasts. An injury is certain to occur at some point and has the potential to significantly disrupt operations.

What Do Case Studies Say About Injury Management?

Experts in this field perform extensive research to help quantify how injury management affects a company’s bottom line. This is critical information for CFOs as they prepare short and long-term budgets.

Take a back injury claim as a perfect example. On average, the injured employee loses 91 days of work. It also costs the employer $44,000 from the onset of injury to the employee's return to work.

There are also case studies performed for specific companies. In one example, a mining company spent $4.2 million on worker’s compensation claims. In another example, a transportation company shelled out $2.3 million in claims.

The data shows that financial planning for employee injuries is necessary. Injuries and illnesses may cost your company millions per year, depending on the size. The good news for CFOs is that there are solutions to mitigate risk and reduce costs.

What Are the Solutions to Reduce Costs?

It comes as no surprise that CFOs are interested in reducing injuries and costs. It is their primary job function to increase profit, and this is achieved by reducing operating expenses.

One potential solution is to bring in third-party expertise for injury and claims management. They are experienced in reducing costs and expediting injured workers' return to the workplace.

In the case of the above mining company, workplace injury costs declined from $4.2 to $1.8 million in just three years. In only two years, the aforementioned transportation company reduced costs to $100K.

You are probably wondering how a third party is so effective in reducing costs. For starters, they use their expertise to prevent injuries from happening in the first place proactively.

This includes integrating steps like pre-employment screening solutions. Here, prospective employees are screened for injury risk. It is critical to ensure a job candidate can safely perform their roles and responsibilities before hiring them.

Injury management also includes an emphasis on employee wellness. Promoting wellness programs helps reduce the likelihood and severity of the injury.

CFOs need to budget for injury management expenses. However, it is important to recognise the positive return on investment for hiring a third party to manage it. Your company can achieve cost savings of 40% to 60% on injury claims within one year.

How Are Cost Savings Achieved?

You may be wondering how bringing in an injury management team can achieve such significant cost savings. Perhaps most important is that a specialist handles injury claims so that your employees do not have to.

Your Human Resources department does not need to hire a temporary employee or replacement. Administrative staff does not need to follow up on claims and the employee’s status. This frees up resources to continue working on output and keep productivity up.

Also, the injury management team works as an advocate for the employer. Advocates focus on getting injured employees the best medical care.

Their goal is to get the employee back to work as quickly as possible. They are known to reduce claim processing time and the potential for a lawsuit.

Advocates have a proven track record of getting employees back to work sooner. These objectives all serve to reduce cost.

Another benefit is that injury management specialists help you comply with government rules and regulations. This helps you reduce injury probability. Common risks and hazards are proactively addressed as the company acts to comply with legislation.

It also decreases the chances of incurring litigation costs. Your company is more vulnerable to a long and costly lawsuit if not following government legislation.

CFOs Are Wise to Highlight Workplace Injuries

Clearly, worker’s compensation claims and extended absences hurt a company’s bottom line. The good news is that there are proven methods to getting employees back to work.

With an injury management team in place, your company can reduce costs and get employees back to work faster. If you are interested in reducing the cost of workplace injuries, contact us today for a free portfolio analysis.

Your blog post content here…