The majority of businesses focus on KPIs (Key Performance Indicators) that relate to profit and growth. Planning, therefore, centers on factors such as improving market share and forecasting future shortages and surpluses.
Whilst it can be more difficult to measure, the adoption of solid workplace health and safety (WPHS) practices can also have a significant effect on your bottom line. There are both quantitative and qualitative benefits to be gained by implementing an effective WPHS policy. In fact, your company’s future resilience and success may depend on it.
“Directors must have an understanding of the role safety performance plays in the performance of their business. In accepting corporate responsibility for health and safety, directors need to be proactive in developing a positive safety culture for their workplace. In the long-term this leads to an internal cultural shift that can have an indirect impact on external brand affinity and brand loyalty.” according to David Rowland, Head of Marketing at Effective Software
Studies carried out by the World Health Organisation and International Labour Organization indicate that the economic costs of workplace illness and injuries average 4% of GDP for countries across the world. For an individual business, this equates to the loss of production, sick leave costs, and increased liabilities. By making WPHS a priority, companies can ensure that employees are:
- more productive and produce a higher quality of work
- less likely to take sick leave which lowers costs and reduces disruption
- able to work at their best due to optimized equipment and fewer WPHS risks
- less likely to require insurance payouts
These considerations can ultimately contribute to improved gross profit margins and positive outcomes for shareholders.
Businesses that are unwilling to improve WPHS practices can ultimately face consequences that ate not immediately obvious. In the industrialized world, employees, investors, and consumers are making decisions that are not solely based on financial factors.
Employees: Businesses thrive when they hire the best employees for the job. Whilst workers usually demand a fair salary, a solid WPHS program will also attract employees who are seeking good working conditions and happy colleagues. A motivated, experienced workforce ultimately results in higher productivity.
Investors: Long-term resilience, as well as dividends, is important for investors when deciding where to put their money. A safe, productive workplace with a stable employee base would be an attractive option.
There is also an emphasis on ethical considerations when making long-term financial commitments since poor publicity about WPHS can quickly destroy a business’s profit margins.
Customers: Brand loyalty is very important in ensuring consistent profit margins and growth. Having a reputation for caring about employee welfare is one part of the mix in retaining brand loyalty. Just as poor publicity about a business’s WPHS practices can affect investments, it can also affect consumers’ willingness to engage with your product.
WPHS and the Bottom Line
Businesses ignore the importance of a well-implemented WPHS strategy at their peril. Skilled employees, high production levels, good quality, and a positive brand image are vital for a business to survive long-term. In addition, it only takes one critical incident for a company’s reputation and profits to plummet.
A salutary example comes from an Australian theme park. The previously profitable park estimates losses of at least A$84 million in 2017/18 due to poor WPHS practices which resulted in the deaths of four customers. The park is also facing psychological damage payouts to the employees involved.
WPHS and Your KPIs
When the time rolls around to make your annual plans, make sure that you build in ways to measure the effects of improved WPHS practices on your KPIs. By assessing both quantitative and qualitative factors, you will be pleasantly surprised.