“How much do I spend on safety? How much does a poor safety performance cost me? How much can I save by investing more resources in safety?

Many motor carriers only consider those safety related costs resulting from a crash or vehicle accident. In some cases, company’s own vehicle damage costs are allocated to maintenance costs. Insurance premiums, both current and anticipated future insurance cost increases, are often handled by a different department and the direct and indirect relationship between poor safety results and insurance premiums are not documented or analyzed in any detail.

Personal injury costs, whether covered by workers compensation or not, are too often slotted under human resources or financial services and may be reflected as wage and salary burden. In Canada, workers compensation is provincially administered and rates for industry groups and specific companies are frequently a percentage of salary or total wages plus administrative charges. Many provinces have taken to offering significant reductions for superior performance or surcharges for inferior performance. In contrast in the United States, workers compensation is handled by private insurers and the process is very similar to vehicle, cargo, property and environmental policies. The insurance marketplace evaluates risk and performance and reflects good and bad performance in the premiums charged carriers.

Labour costs involved in safety are not always identified. Larger carriers tend to have dedicated safety staff. But in most companies, many safety-related processes are performed by line management personnel. Safety training costs are not always tracked. Internal staff functions are often outsourced and the costs of safety consultants or independent contractors performing safety functions are sometimes excluded from total safety costs.

There a numerous indirect costs. For example employees involved in preventable accidents may be terminated while others may be injured to the point that they are unable to return to work This increases driver turnover and all of the resultant costs of hiring, training and retaining new hires. A poor safety record can impact a motor carrier’s reputation as a preferred place to work.

Poor safety performance can also impact securing and retaining business. Carriers who do not meet customer’s high safety performance standards may not be allowed to tender on business. A poor safety record can have an negative impact on a motor carrier’s market valuation and this can impact its attractiveness as an acquisition or investment candidate.

Poor safety performance can also lead to regulatory compliance issues beyond the costs of a ticket. In the extreme, this can entail the loss or reduction of operating authorities or lesser impacts can include cost of fines and time spent on resolving non compliant issues.

Safety can quickly become the most urgent issue of the day and this takes management and executive time away from proactive value added issues that involve process improvement that supports better job satisfaction and reduced costs.

So why go to all the trouble of identifying these safety cost? The investment in safety pays and the cost/benefit analysis is compelling. Ironically those with the best results continue to make the highest investment in safety as it is or has become one of the cornerstones of their corporate culture.

Barry W. Davy
barrywdavy@gmail.com

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