The ROI of Safety
Early Adopters of AI Safety Have Achieved 2,000% Direct Returns and More
It is common knowledge today that investing in safety delivers outsized returns for businesses in high-risk industries. The American aluminum giant Alcoa famously quintupled its revenues between 1987 and 2000 by making data-driven safety reforms its ‘keystone’ priority. Researchers found that a stock portfolio rebalanced annually for companies with the highest-ranking safety performance achieved more than 300% returns between 2001 and 2016, compared to the S&P 500’s 105% return over the same period. A 2002 report from the Occupational Safety and Health Administration (OSHA) claimed that every $1 invested in workplace safety returns an average of $4 to $6. But these figures may be obsolete and out-of-date: early adopters of Voxel video intelligence analytics have generated a 2,000% annual return on their investment in safety. When compared to traditional safety interventions, artificial intelligence achieves superior outcomes at a faster pace and a fraction of the cost.
A typical investment in workplace safety involves hiring a consultant to perform a safety audit and implementing their recommendations on an ad-hoc basis. This intervention is usually reactive: it begins after an adverse event has already taken place. Although audits are an important part of a strong safety regime, a reactive approach produces illusory and short-lived results. A human observer walking around a worksite for a few days with a tablet or clipboard cannot make a holistic evaluation of safety practices. Most EHS programs rely on generic rules and guidelines that don’t address the day-to-day idiosyncrasies of specific worksites. Even when an EHS consultant accurately identifies the core systemic issues in your safety protocols, an occasional training seminar is unlikely to produce lasting behavioral change in your employees. After the “novelty” of a safety intervention has worn off, behaviors tend to revert to the mean—then, the cycle starts over again.
A recent survey of American businesses by Intertek found that one out of every three companies is unable to verify if their safety training is effective. More than half of respondents reported that their workers didn’t improve safety compliance after training. Some companies have tried to hire more training staff, adding additional labor costs in an already extremely tight labor market—in 2021, training payroll reached $69 billion, a nearly 30% increase over pre-pandemic levels. Training expenses continue to rise annually as employers experiment with a hodge-podge of generic online learning products that fail to generate consistent and measurable outcomes.
Voxel flags high-risk behavior in real-time to create teachable moments for your team. A 2021 survey showed that using site-specific videos doubled employees’ self-reported engagement with safety training.
Video intelligence is a low-cost, proactive method for creating persistent safety norms. Your existing security camera system is already monitoring safety compliance at all times—but the camera feed is always reviewed in hindsight, and always too late. The camera’s missing link is the “intelligence” to analyze the feed and identify high-risk behaviors in real-time. In place of additional EHS staff periodically hired to review safety policy, artificial intelligence has a steady hand and it’s always on the job. Computer vision algorithms identify bad habits that are likely to cause injuries in the future, and recommend day-to-day adjustments based on a worksite’s specific needs. An operations manager can take these recommendations back to their team while the memory (and the footage) of an incident is still fresh: like a basketball team reviewing film after a game, video intelligence creates a culture of incremental improvement and attention to detail.
Voxel adapts to the needs of specific worksites, targeting safety factors that impose the highest costs. A 2016 study showed interventions to identify postures that cause musculoskeletal injury generate an average of 350% returns from insurance and productivity savings–other studies suggest more than 10:1 returns on ergonomic safety investments. The most common and costly machine injuries, such as crushing and entanglement, are easily avoided through proper use of machine safeguards and personal protective gear. Minor adjustments in safety policy can produce major outcomes: an automobile tire retailer replaced 50-cent pairs of gloves with a more expensive (and safer) brand, driving its annual glove costs up by $200,000, but saving more than $1 million in injury costs.
The overhead cost of video intelligence is minimal because the core infrastructure is already installed: your cameras are running everyday. On the other hand, it’s difficult to estimate the true cost of an accident or injury, because injuries impose significant indirect costs which far exceed the paper costs of claims and premiums. Indirect costs of an injury are inversely correlated to the severity of the injury: frequent, low-intensity injuries cause systematic disruptions in the workplace, generating ‘hidden’ costs more than four times greater than the “line item” cost. For injuries in certain high-risk professions, National Safety Council research estimates ‘true’ costs can be seventeen times higher than paper costs.
Indirect Costs of Injuries:
Lost productivity from missed time
Overtime wages for healthy workers
Administrative time for paperwork
Hiring & training replacement workers
Equipment damage and downtime
Fees for litigation and compliance
Increased insurance fees
Worker morale, pain, and suffering
An improved safety record can substantially reduce indemnities, slashing a major direct cost of injury. But OSHA estimates that the majority of the costs of injury are indirect, uninsured, and unrecoverable. According to OSHA’s injury cost estimator, a machine crushing accident costs, on average, $57,000 in direct losses and $62,000 in indirect costs. A 2011 study at UC Davis Medical School showed that indirect costs typically outweigh direct medical costs by a ratio of 2.7 to 1: if an average back injury has a direct medical cost of $25,000, the real cost of the injury may be closer to $90,000 or more. Depending on your profit margins, your business may require millions of dollars of additional sales to make up the difference.
For every one accident resulting in an injury, there are several accidents that don’t cause an injury. “Near miss” incidents are the foundation of every major injury, and reducing these incidents can protect your business from hidden costs (HSSE World)
The enormous indirect costs of injury create the possibility for large indirect returns on safety. A cultural emphasis on safety is a unifying point between employers and workers, who both benefit from a safe working environment. Improved worker morale results in increased productivity from a collective buy-in to your company’s mission. And long-term worker retention generates compounded cost savings from low turnover: keeping your veteran employees reduces the costs of recruiting and training new employees, and avoids paying inflated wages to compete for scarce workers in a tight labor market.
Creating a safe worksite requires a continuous commitment to improving safety culture and norms. In a recent case study implementing Voxel’s video intelligence solution, cold storage provider Americold Logistics achieved a 77% reduction in injuries in less than one year at their distribution center in central California. In addition to safety-related savings, Americold also used Voxel to mitigate a major inefficiency in their operation, tracking open doors to reduce energy costs in a temperature-controlled warehouse. The result was a direct annual savings of $1.1 million at a single warehouse site: a nearly 2,000% direct return on a $50,000 technology investment.
As we deploy the Voxel platform in more diverse environments and worksites, our intelligence analytics are dynamically adapting and improving. We collaborate closely with businesses to develop novel implementations of the technology, so schedule a consultation to learn more about the ROI video intelligence can deliver for your business.