Return on Safety Training
68 Pages Posted: 22 Jul 2021
Date Written: July 20, 2021
Firms devote significant resources to safety-training programs with the aim to mitigate financial loss due to safety incidents and create customer value. From both practical and theoretical perspectives, it is important to know (1) whether safety-training programs mitigate financial loss, so that senior management can maintain the support for them, and (2) whether safety-training programs contribute to firm sales so firms can use them as a critical marketing lever to communicate value to customers. Yet, there is a lack of empirical evidence on the return on safety-training programs. The authors establish a consistent set of links between safety-training programs and financial outcomes in different settings across three studies. Study 1 shows that a 10-percentage-point increase in safety-training completion mitigates financial loss by 6% to 13% using safety reports from 1,199 locations of a business-to-business oilfield services company. Study 2 shows that firms emphasizing safety training in their Form 10-Ks are associated with 4% to 15% higher sales among 8,824 publicly traded companies between 1998 and 2018. Study 3 finds a positive association between safety investments and sales among 4,236 workplaces based on a national survey in South Korea. These effects are more pronounced among smaller locations, firms, and workplaces, suggesting that firms need to tailor safety-training programs to maximize their financial return.
Keywords: safety, safety training, financial loss mitigation, return on investment, observational data
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