Many employers look on health and safety in the workplace as being, essentially, the rough equivalent of insurance cover. Basically spending a little money on protecting employees from workplace hazards can actually save you a lot of money as compared to the cost of recovering from them. For example, looking into noise surveys for health and safety isn’t a big task, however causing damage to an employee’s hearing can cause major issues regarding insurance and compensation. It really is as simple as that. This becomes even truer when you start to take into account the hidden costs of health and safety errors in the workplace. Be it the incorporation of hazmat gloves and nuclear masks in the event of an unsafe incident, or to understand the motivational levels of the staff – everything needs to be taken into consideration! Here are some of them.
Some of your staff-related costs will potentially be covered by insurance, although in this context it would be fair to point out that making a claim on your insurance may well result in your premiums being raised. Other, staff-related costs, however, will typically have to come out of your own budget. For example, you may have insurance to cover the payment of a missing employee, but it will not necessarily cover paying someone else overtime to ensure that their work is done.
In fact, if you want to stretch this even further then, over time, by its very definition, involves people working extra hours, and if this involves keeping even part of a building open for longer than it needs to be then you need to factor in the cost of this as well.
Inability to fulfil/take on contracts
Small losses can wind up having major repercussions. The temporary loss of one employee can filter on through the entire work chain to the point where it poses challenges to the fulfilment of existing contracts and/or the company’s ability to take on new work, even if desperately needs to do so in order to stay cash-flow positive. It can also pose a rather more subtle threat to a company’s wellbeing.
In short, if senior management is focusing their time and energy on dealing with the impact of health and safety errors, then they are not going to be able to focus on contract negotiations. This creates the possibility that the company will end up taking on work on unfavourable terms and therefore, at best, not making the profit it should have done and, at worst, actually winding up at a net loss. This isn’t to say that management shouldn’t be concerned about the consequences of health and safety violations; in fact, the management could be responsible enough to order safety signs from a company like Safeshop so that these errors do not occur again.
Out of everything mentioned so far, reputational damage is possibly the single, biggest hidden cost there is and it is highly unlikely that any company could really consider itself either large enough or small enough to be immune to pressure from the general public (that’s a lot of people).
Consumer power is nothing new, but the internet has made it possible for it to be taken to a whole new level. Prior to the internet, mobilizing people meant working at the speed of analogue communications, in particular, getting the interest of the media against competition from many other potential stories.
Now, any motivated individual can mobilize large numbers of people very quickly with the result that the mainstream media is forced to follow the story. The internet has also made it possible for consumers to apply indirect pressure on a company, for example, by approaching its customers, or its suppliers, including recruitment agencies.
Peter Watson, Director at Watson & Watson Health and Safety Consultants. Watson & Watson are experienced health and safety consultants, providing health, safety and risk management solutions throughout the UK.