The Business Impact of Poor Health and Safety Management

All employees are legally entitled to work in an environment where health and safety risks are properly controlled and the responsibility for this lies with their employer.

Of course, no reasonable business wants to be responsible for the poor health of its workers, but despite best efforts, accidents still happen. The HSE’s Labour Force Survey shows that 555,000 workplace injuries were reported during 2017/18.

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The impact of these accidents can run far beyond an employee visiting the hospital or taking a few days off work. According to the HSE, workplace injuries cost the UK economy around £5.2 billion in 2016/17. In this blog, we’ve covered some examples of the considerable costs – both direct and indirect – a business could face when its health and safety management isn’t up to scratch.

The Consequences of Poor Health and Safety Management

1. Legal Ramifications

Companies that fail to comply with the legal obligations of health and safety can be liable for prosecution by regulators, such as the HSE. What’s more, deliberate malpractice can lead to an unlimited fine and possibly a prison sentence. Businesses can also be served with a prohibition notice, which requires the organisation to cease activity associated with the incident in question. The damage this could do – both financially and in terms of company reputation - is immeasurable.

2. Claims for Compensation

Legal ramifications aside, perhaps the most obvious financial cost of poor health and safety management comes in the form of compensation. Depending on the circumstances, an employee may be able to make a claim under civil law against their employer in the event of an accident in the workplace. Additionally, if the employer is found to be negligent in their duty of care to the employee, they may be liable for covering that employee’s legal fees – which could amount to a hefty sum.

3. Higher Insurance Premiums

If an unsafe work environment leads to more accidents and injuries, so too will it lead to more insurance claims. Fulfilling these claims can be costly, and the more claims that are made on a company’s insurance, the higher its insurance premiums will become, eating into its bottom line. What’s more, a history of workplace accidents will make it harder for businesses to obtain reasonably priced liability insurance in the future.

4. Productivity and Profitability

There are also the productivity costs to consider. The majority of employees who have suffered an injury due to poor health and safety management will need to take time off work to recover. Not only will they be eligible for sick pay, but their employer may source a temporary replacement for their role, leading to additional costs for recruitment and training.

Ultimately, long-term injury can lead to a reduced and less efficient workforce, resulting in an inability to deliver at full capacity. Business productivity will suffer and, in turn, profitability can be affected too.

5. Lack of Motivation

Should an organisation fail in its duty of care to its employees, the inevitable drop in staff motivation can cause productivity to suffer. The implications of this are significant; a report carried out in the US revealed that disengaged employees could cost businesses up to $550bn a year in lost productivity. If employees don’t feel enough consideration is being given to their health and safety, they’ll quickly lose faith and loyalty in their employers. As a result, productivity will drop, and it won’t be long before these employees start looking for work elsewhere.

6. Reputational Damage

In some cases, a company’s reputation can be at stake. Employees will talk about their own experience of poor health and safety management, and not in a good way. Word of mouth is a powerful weapon – particularly in the age of social media. For example, should an injured employee take umbrage with the way a business has handled their particular case, they can very quickly spread negative sentiment across a very wide network.

Soon enough, word is out that this particular company is unable to adequately handle its management responsibilities. This could potentially colour how a company is perceived by its partners, suppliers and customers; damaging business relationships and sales.

How Can Employers Improve Health and Safety Management?

Every employer has a duty to ensure the health and safety of its workers. In addition to meeting legal obligations, a failure to provide this duty of care can not only be harmful to a company’s employees but can also prove costly to the business itself – both financially, and in terms of legality, reputation, and productivity.

We’re just scratching the surface here, of course. In fact, a poorly managed health and safety policy can become a ticking time bomb. When there's so much at stake, effective health and safety management in the workplace is in the best interest of both employees and the employer. It’s important, therefore, to ensure employees enjoy the best possible protection while in the workplace. Otherwise, the consequences don’t bear thinking about.

If you'd like to learn more about how you can improve health and safety management in your business, try the Safetybank solution for free, here.

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