A pre‐intervention benefit‐cost methodology to justify investments in workplace health

Abstract

Purpose

While the rationale for interventions in a workplace to enhance employee health are well documented, practitioners have difficulty making an economic case to justify the investment required and to demonstrate positive returns on that investment. This paper aims to present case study data from an ergonomics evaluation of a call centre to demonstrate a simple, four‐step pre‐intervention methodology which provides an accounting‐based justification for funding workplace health‐related projects.

Design/methodology/approach

Physical and ergonomic assessments of the workplace and employee interviews establish health risk factors. Two direct (discretionary) costs and five indirect (non‐discretionary) operational costs are evaluated. The capital investment to implement the proposed workplace changes is determined. Total net identified benefits are established and used to create accounting‐based financial metrics.

Findings

Application of the methodology to the case study found worker compensation insurance, absenteeism and overtime wages to be neutral. Costs to train new workers, lost call processing time and cost of lost employee productivity were significant, the latter representing two‐thirds of the value of all potential benefits.

Originality/value

The paper creates accounting‐based metrics to mitigate health and safety risk factors, while identifying the potential for productivity gains. Management is provided with a simple decision tool to justify an investment in workplace changes.

Citation

Rickards, J. and Putnam, C. (2012), "A pre‐intervention benefit‐cost methodology to justify investments in workplace health", International Journal of Workplace Health Management, Vol. 5 No. 3, pp. 210-219. https://doi.org/10.1108/17538351211268863