Most organisations do what they can to keep their employees safe from injury. They train staff on correct posture and safe lifting techniques and buy them ergonomic chairs and monitor stands. But that all costs money and you can’t blame business owners for wanting to know if they are getting a return on their investment.
They are also curious whether or not there is a positive impact on turnover, absenteeism, employee satisfaction and morale. In its report, Return on Investment for Ergonomic Interventions, Humanscale argues that it is possible to make a business case for ergonomics with hard numbers included for proof.
The Cost of Injured Employees
In the five year period to 2014, Australian workplaces recorded 360,180 cases of musculoskeletal disorders (MSD),which equates to 60% of all serious injuries. The most common types of MSD were soft tissue disorders (29%), trauma to muscles or tendons (21%) and trauma to joints and ligaments (14%). If ergonomic equipment and training could prevent a tiny percentage of injuries, the cost savings to business and the Australian economy would be enormous.
One in 100 people in the US suffered an overexertion injury during a 12-month period. The average cost of a case is $27,700.
What Can We Measure?
The return on investment from ergonomics is a more difficult to calculate than other types of investments. While there are easy-to-calculate direct costs, there are several indirect costs and benefits that are more difficult to quantify.
There is the injury cost which includes workers compensation and medical costs. Other indirect costs can include lost productivity and decreased work output, turnover, new staff costs, replacement of damaged materials and property, increased insurance premiums after a claim and administrative costs after an accident. While it’s difficult to calculate the indirect costs, it’s important they are considered as they often outweigh the direct costs by a ratio of 3:1.
Another difficult component to calculate is the goodwill an employee feels towards their employer for the organisation’s commitment to health, safety and wellness. Employees who appreciate the effort their employer makes in keeping them safe are less likely to complain, have a higher volume and quality of work, and better productivity. Job satisfaction and retention rates are also likely to be higher. The difficulty in calculating these benefits means the ROI value often exceeds quantifiable data. Conducting a pre and post intervention survey of employees can show whether satisfaction and commitment levels have declined, stayed the same or improved.
Formula to Calculate ROI
If an organisation wanted to calculate the impact of ergonomics interventions on injury costs, it can use the following simple formula:
Injury cost pre-intervention – Injury cost post-intervention - cost of intervention = Total cost of savings
To help calculate ROI, benefits of ergonomic activities can be classified into three categories – costs saved, costs avoided and new opportunities.
Ergonomics Case Studies
In a 2013 case study, a two-prong approach of training and ergonomic equipment proved to have a better outcome than offering only one. The study involved giving 200 government office workers a 90-minute ergonomics training session while the second group received the training and an adjustable task chair. After one year the group that received the new chair and training had a 17.8% increase in productivity. The average increase in production equated to $25,398 each. The outlay was $200 for the training and $800 for the chair so the benefit to cost equated to almost 25 times greater than the cost of intervention. Not a bad investment in anyone’s book.
In other case studies a work station redesign in an assembly factory resulted in a 15% increase in productivity which totaled more than $2,250 per worker per shift. Another company invested $100,000 in a low-cost ergonomic solution which resulted in a positive ROI within three months.
For organisations to warrant spending money on ergonomics, they need to show it has a positive return on investment. Calculating the direct and indirect costs of preventable injuries and comparing it to the investment in ergonomics is possible. Include the proposed ROI in all business cases for ergonomic spend to ensure management knows of the significant savings ergonomics can bring to the organisation.
To find out more about ergonomic furniture and equipment, visit the Ergolink showroom, call us on (08) 9240 7066 or contact us online for personal advice.