Health and safety are long-term investments. How so, you ask? Traditionally, work health and safety have been monitored by the impact on the bottom line of the organization using lag indicators.
Forward-thinking organizations are fighting back, justifying higher investment on strategic grounds such as the impact of performance on reputation, attracting important personnel, and maintaining solid supply chain partnerships.
Get away from the cost-benefit analysis
Business accounting departments should shift their attention from a cost-benefit strategy to justifying higher spending and focusing on strategic grounds. Budgetary concerns are no excuse for failing to ensure workers are supported by a safe system of work and are effectively taught within that system.
Numerous examples of big industrial mishaps demonstrate the disastrous repercussions of cost-cutting, including the loss of lives, long-term environmental impact, and lasting reputation worries.
Injury costs outweigh prevention costs
There is compelling evidence that the cost of an injury or incident caused by a failure to ensure safety greatly outweighs the cost of prevention.
Not only is there a direct cost to rehabilitating an injured worker, there are other costs that can be far-reaching. Negative publicity, decreased stakeholder sentiment, and increased political pressure are all additional expenses associated with workplace injuries.
These can result in costly regulatory penalties, lost sales, increased cost of capital, and strained relationships with employees and suppliers.
Although cost-benefit assessments are likely to be beneficial for identifying the most visible and measurable work health and safety cost implications, they frequently fail due to their inability to determine hidden costs, such as long-term sickness that manifests years after exposure.
Instead of focusing on safe, healthy, and productive work, the trade-off between production and health and safety persists. CFOs and accounting teams frequently have a considerable influence on organizational decisions. As a result, they must comprehend the influence that their budgetary constraints may have on work health and safety-critical issues.
This knowledge is frequently hampered by a lack of shared information between individuals responsible for accounting and work health and safety duties. Furthermore, departments functioning in “silos” can make counter-productive judgments that confine work health and safety to isolated health and safety initiatives beyond regulatory compliance requirements.
Above and beyond compliance investing
Forward-thinking Businesses spend on workplace health and safety above and beyond the levels warranted by quantifiable financial costs and organizational advantages. They include strategic investment in the financial case to highlight a broader variety of relevant economic costs and benefits.
Instead of looking back, they are looking forward. These organizations go beyond health and safety compliance to include interactive training (not just the safety induction), 360-degree feedback, the use of technology, and empowering employees to think creatively and problem-solve.
When it comes to future health and safety spending demands, CFOs and accountants must recognize the fundamental dependency that exists between financial and operational risk and set the strategic investment lens over the balance sheet.