Calculating Your Ergonomic Cost Benefits

According to Liberty Mutual’s 2021 Workplace Safety Index, the top 10 causes of the most disabling injuries on the job cost U.S. employers more than $1 billion per week. Among those 10, three represent the type of tasks associated with manual material handling in manufacturing, wholesale, transportation, and warehousing. They are:

  • Handling objects such as heavy boxes ($13.3 billion per year in direct costs),
  • Awkward postures such as stretching or reaching ($4.71 billion per year in direct costs), and
  • Repetitive motions involving microtasks such as hand- and shoulder-intensive work ($1.66 billion per year in direct costs).

Those are just the direct costs of a workplace injury—specifically workers’ compensation payments, medical expenses, and costs for legal services. The Occupational Safety and Health Administration (OSHA) notes that indirect costs—such as training a replacement worker, lost productivity, overtime costs, wage costs due to work stoppage, administrative time spent by supervisors and safety personnel, and more—can be up to five times higher than direct costs. That can significantly impact the bottom line.

Research published by the Journal of Occupational and Environmental Medicine examined the connection between organizations with a deeply ingrained health and safety culture and their market performance. The survey compared the stock performance of those companies against those included in the Standard and Poor’s (S&P) 500. The findings? Companies who emphasized health and safety saw a 325% appreciation in stock values over a 14-year period, compared to just 105% growth among the S&P companies’ stock values—more than three times higher performance for the companies that prioritized ergonomics and safety as part of their workforce health focus.

To help companies determine the potential impact of injuries on profitability, as well as to help them develop a business case for an investment in safety and ergonomic equipment, OSHA has created a free online estimator as part of its “$afety Pays” program. The site allows a user to get a better idea of both the direct and indirect costs associated with an occupational injury. It factors the company’s own profit margin, the average costs of a broad range of injuries or illnesses, and a multiplier of indirect costs to estimate the amount of sales needed to offset those expenses.

Also available to help companies justify an investment in ergonomic systems and practices, the Puget Sound Chapter of the Human Factors and Ergonomics Society and the Washington State Department of Labor & Industries have developed a return on investment (ROI) calculator.

Available as a free download online, users input their own injury data into an Excel spreadsheet and the calculator estimates the costs associated with a variety of different musculoskeletal disorders. Included are back strain, sciatica, neck strain, shoulder strain, rotator cuff injury, elbow strain, bursitis, carpal tunnel syndrome, and more. Users can also input up to three different types of ergonomic intervention investments—including both injury prevention and productivity improvement equipment—and the calculator will forecast the anticipated benefits and payback periods for each in both calculation and graph formats. This makes it easier to project the outcomes of an ergonomic equipment purchase more accurately.

The Puget Sound/Washington State calculator was built based on an analysis of 250 different case studies shared by companies that reported the outcomes of their safety and ergonomics investments. Of those, organizations reported median average improvements of:

  • A 56% reduction in workplace musculoskeletal injuries
  • An 80% reduction in lost workdays
  • A 70% reduction in workers’ compensation costs
  • A 20% increase in productivity
  • A 75% reduction in scrap, waste, and errors
  • A 48% reduction in employee turnover
  • A 60% reduction in absenteeism
  • A payback period of 0.4 years
  • A cost:benefit ratio of 1:10

Need more help in assessing your operation’s ergonomic risks and which equipment solution will most cost effectively mitigate them? The members of the Ergonomic Assist Systems & Equipment (EASE) Council of MHI are always available to consult, answer questions and make recommendations. Learn more about EASE.