Workplace Injuries Rise When Companies Under Financial Pressure

Posted by on Aug 7, 2017 in Workplace Safety | Comments Off on Workplace Injuries Rise When Companies Under Financial Pressure

* At a steel mill located in Seguin, Texas, a worker suffered burns to an area greater than 60% of his body after molten steel splashed onto him. He tragically died in a hospital three days after the accident.

* A 21-years old plastics worker was hospitalized for severe burns to his hand. He eventually had four fingers removed after he had an injury on his first day of work at a manufacturing facility in Elyria, Ohio.

* 400 employees at a factory in La Porte, Texas were killed after a toxic chemical was released due to a broken network of pipelines in the workplace.

These three examples are a few of many workplace injuries and even fatalities that have recently occurred. The question that crops up in these situations is whether companies sacrificed safety in exchange for profits.

The Journal of Accountancy and Economics recently released a study on this topic. In the research, they tested whether there was a connection between safety in the workplace and corporate management’s efforts to meet profit goals. To perform the study, researchers used workplace injury information gathered by the Occupational Security and Health Administration (OSHA) in the years from 2002-2011. They matched safety information to the reported earnings information. The study included a sample size of 35,350 findings for 868 companies. (Financial services companies and other companies in regulated sectors were excluded.) The study focused on businesses that barely met their goals and found that there were greater workplace injuries in these businesses in particular.

The study’s findings were notable. Injury and illness rates for these firms are 5-15% higher than firms meeting or exceeding their forecasts.

The study found that increased stress to meet profit projections could be associated with workplace safety in two primary ways:

* Larger workloads per worker.

* Cost cutting, particularly around safety-related activities.

When managers think their business is close to missing financial targets, they try to boost productivity by pressuring workers into working faster or for extended periods of time. Additionally, workers can harm their own health by being tired or not following safety procedures that slow down the workflow. All of these actions pose a threat to employee safety.

Managers may also cut corners or ignore recommended safety procedures. This includes not following the recommended maintenance on equipment. This can also include cutting employee safety training and monitoring protocols. When managers fail to follow through on these areas, safety in the workplace quickly goes downhill and the risk of injuries increases.

What exactly does this mean for the average worker though? According to the workplace injury information gathered from OSHA, the ratio of injured worker to total workers is 1:27 in companies that meet or exceed financial goals. For firms that miss their targets, the ratio is 1:24.

Some surprising statistics were revealed as a part of the study.

Companies with unions tended to have lower levels of injuries than those without unions. It is believed this is due to unions negotiating mandatory protections for employees. It is also believed unionized employees have ways to report safety problems to union reps without fear of reprisal.

Companies located in states with high Worker’s Compensation premiums tend to have fewer injuries than those in states with relatively low rates. It is believed companies in high-cost states put a premium on safety to help keep their Workmans’ comp costs as low as possible.

Companies that perform a lot of work for State or Federal governments tend to perform better than those who strictly work in the private sector. This is believed to be a result of state and federal pass-through safety mandates that are often not present in private contracts.

As OSHA only collects information related to serious physical injuries, the report authors believe the information may represent the “tip of the iceberg”. The belief is that if the culture prizes profits at all costs over worker safety, the company may indeed face future additional financial pressures.

When managers and employees forget safety in the work environment and instead focus on short-term business targets, the results can extreme. At the business level, the costs of forgoing safety include penalties, lawsuits, expensive insurance rate increases, costly settlements, and negative press that can damage the business reputation. For employees, the cost may be higher and include injury, loss of wages, or, in the worst case scenario, their death.

If your business is under financial pressure, be sure to reach out to us on ways you can ensure you’re meeting safety requirements. We’ll help you evaluate your risk exposure and we’ll make sure you have the right insurance products for your budget.

Your workers will feel better knowing you place their safety first. That positive feeling can create productivity dividends of its own.

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