Are employers sacrificing workplace safety to meet earnings expectations?

May 31 2017

You don’t need to have a doctorate in economics or a master’s degree in business administration to know that the primary objective of any private sector enterprise is to turn a profit in a given year. As painfully obvious as this is, what might not be quite so obvious is the method that organizations use to determine their annual financial success.

While avoiding losses and meeting last year’s earnings are important, experts indicate that the benchmark by which more and more businesses are now measuring performance in a given year is their ability to meet earnings expectations or analyst forecasts.

Interestingly enough, a group of researchers recently published a study in the Journal of Accounting and Economics, in which they sought to determine if there was any correlation between attempts by managers to meet earnings expectations, and the rate of serious work injuries and illnesses.

As part of their efforts, they compared earnings data to information collected by the U.S. Occupational Safety and Health Administration on establishment-level injuries from 2002 to 2011, an undertaking that produced a data pool of 35,350 establishment-year observations for 868 entities.

After examining the results, they determined that the rates of work injuries and illnesses were indeed 5-15 percent higher for those outfits that either just beat or satisfied earnings expectations, and that these rates were significantly higher than those outfits that either comfortably beat or outright failed to meet earnings expectations.

In other words, they found one in 24 workers was hurt in outfits that either just beat or satisfied earnings expectations versus one in 27 workers in outfits that comfortably beat or outright failed to meet earnings expectations

These results, said the researchers, suggest that when managers are facing the possibility of narrowly missing analyst forecasts, they might be increasing employee workloads, compelling them to move at a faster pace, work longer hours and/or discount safety protocols that otherwise slow down work.

Similarly, managers feeling the pressure might try to save funds by cutting spending on such safety-related measures as equipment maintenance and/or employee training.

In addition, the researchers were able to identify three common traits among many of the “benchmark beaters” that saw low work injuries/illnesses:

  • Many were in industries with high levels of unionization
  • Many were in states with higher workers’ compensation premiums (i.e., places where workplace injuries are more expensive for employers)
  • Many did a substantial amount of business with the federal government, which has exacting work safety standards

This is a truly eye-opening and frustrating study, as it shows how many businesses still don’t understand just how shortsighted it is to compromise employee safety for the sake of short-term profits.

Always remember to consider speaking with a skilled legal professional if you have suffered a serious workplace injury and would like to learn more about your options concerning workers’ compensation.