The Cost You’re Not Counting: How Safety Can Become a Strategic Advantage

 By DAVID SIMS, SR.

Many of us spent December staring at spreadsheets, looking for the numbers that would inform our decisions for 2026. It’s a familiar rhythm: identify missteps, look for opportunities and carve out a plan for stronger profitability. But come January 1st, it’s time to turn that plan into action.

Buried among your profit margins, bid competitiveness, labor costs, productivity rates and market forecasts, there’s one driver of profitability that’s often underestimated: your safety culture.

Let me give you an example. One contractor I worked with operated on a 4 percent net profit margin. After two years of investing in a proactive safety program built around leading indicators, the company saved $861,000 directly on accident-related costs. Even though its TRIR (total recordable incident rate) looked “good enough” on paper, it wasn’t telling the contractor how much it was losing. Its president put it best: “Saving that $861,000 had the same effect on our bottom line as billing an additional $21 million.”

Treating safety as a business investment can generate significant, measurable financial returns. In a time of economic uncertainty, labor shortages and rising operational costs, companies that go beyond required metrics in 2026 and focus on leading indicators can transform safety into a competitive advantage and a profit engine.

The Danger of “Good Enough” Safety

Many leaders assume they’re in good shape if their TRIR is below the industry average. But that “good enough” mindset could be quietly draining millions in direct and indirect costs. Although TRIR is a familiar metric that’s easy to understand and relied upon by decision-makers, it was never designed to indicate whether your company is truly safe or whether your safety program is profitable.

TRIR is a lagging indicator, meaning it only measures what has already happened. It ignores severity and doesn’t track the near-misses and unsafe conditions that drive costly incidents. Academic studies published in ASSP’s Professional Safety journal have questioned its statistical validity. Leading safety experts have long warned that managing to a number can be dangerous, both for your people and your profits.

A company can look safe on paper and be one failure away from billions in losses. The 2010 Deepwater Horizon disaster remains the most infamous example. On the day executives visited the rig to celebrate it as the safest in the fleet, 11 workers were killed and 17 were injured in an explosion caused by a series of preventable failures.

If TRIR can’t tell you where your costs are headed, what can?

The Power of Leading Indicators

If lagging indicators are black and white, leading indicators paint the full-color picture of your culture’s health. They identify what workers are experiencing, find hazards and catch serious incidents before they happen.

Key leading indicators include:

•       Near-miss reporting: investigating events where harm or damage could have happened.
•       Job hazard analyses:identifying unsafe conditions before work begins.
•       Training and education: building employees’ awareness and safety skills.
•       Employee engagement:measuring participation in safety initiatives.
•       Performance recognition:observing work and providing feedback that promotes safe habits.

These simple actions are what take safety from feeling like a compliance burden into a business asset. Safety professionals know what moves the needle, but safety strategies that drive results must start at the top.

Safety Must Be a Strategic Priority in 2026

As we move into 2026, contractors face tighter margins, more competitive bidding environments and ongoing workforce challenges they can’t control. Safety is one of the few costs you can influence. Prioritizing safety doesn’t create a new expense; it simply turns an existing one into a source of savings.

A strong safety culture means lower workers’ comp and insurance costs, reduced rework and schedule delays, higher worker retention and a competitive edge with clients who scrutinize contractor performance more than ever. Long-term research supports this. A 17-year study by Foster Wheeler of 19 projects in the U.K. found a 63 percent positive correlation between safety performance and productivity.

Contractors who improve productivity and profitability in 2026 will collaborate with their team to create conditions for safe, efficient work. When executives and operations work together, they can prevent costly errors, address production issues and create a stronger culture.

Together, leaders can:

• Set the expectation that leading indicators are part of the workflow.
• Fund safety programs the same way you’d fund productivity, quality or sales.
• Record data that shows emerging risks, not just TRIR snapshots.
• Reward hazard and near-miss reporting, which is essential to preventing costly incidents.
• Hold managers accountable for resolving hazards, not just compliance.

For the companies I’ve worked with, savings result when leaders treat safety like an asset – not an obligation. When companies invest in safety, they often unlock savings that can be reinvested into their business.

The experience of the contractor mentioned at the outset reflects a growing body of evidence that indicates a strong safety culture can save millions and improve productivity. Anyone can look good on paper, but not everyone can create a workplace that’s as safe as it is profitable.

David Sims, Sr. is executive vice president of The Bill Sims Company, located in Columbia, S.C.