Workplace drug testing? What’s my return on investment?

Posted by TDDA

“Every time an employee suffers an injury – even outside the workplace – there will be an impact on your business; resulting in finding someone to fill in, training and replacement, and less efficient use of time. But do you know the real impact on your financial bottom line?”

Accident Compensation Corporation (July 2015)

Workplace drug testing continues to increase in Australasia, as companies respond to the increasing availability of drugs and the requirements of health and safety regulations. In both New Zealand and Australia, Company directors and senior executives have now become increasingly exposed to penalties for failing to ensure a safe working environment. Stricter legislation has been brought in to ensure a duty of care to all employees and the safety of the general public. (See Appendix Notes 1 and 2)

This paper is designed to provide a level of comfort in answering the following questions from Australasian companies wishing to implement workplace drug and alcohol testing programs:

“What return on investment do I get from introducing a drug testing programme in our Company?”

Return on Investment (ROI)

TDDA believe there is a need to for a clear evaluation of the ROI achieved from workplace drug testing programmes. That includes weighing up both the tangible and intangible benefits that are more often than not, overlooked.

Question: What are the costs or risks associated with drug use in the workplace?

There is now well-established and documented research that provides clear evidence of the link between higher incidents of workplace accidents and employee drug or substance use. These include:

  • New Zealand – Ministry of Health report on Cannabis Use (2015)
  • Portugal – Faculty of Science – The effect of alcohol and drug testing at the workplace on individual’s occupational accident risk (2014)
  • Australia- Australian Drug Foundation (2014)
  • U.S DATIA Study (2011)
  • New Zealand – Forrest Owners Association – (2010)
  • U.S An Historical and Economic Examination’ (2010)
  • New Zealand – Business and Economic Research Limited (2009).
  • U.S National Survey on Drug Use and Health (2007)
  • New Zealand – Department of Labour New Zealand (2002)
  • US Postal Service (Dr Craig Zwerling and assoc) (1987)

The key themes to come out of these studies include: Organisations with good workplace policies are associated with lower levels of risk related to alcohol and drug use among employees;

  • Employees who used drugs are 51% more likely to have increased medical claims
  • Regular drug users are 3.6 times more likely to be involved in a workplace accident
  • Testing at the optimal frequency generates net savings of at least 15:1, in onboard personnel
  • Employees who used drugs have a 66% higher rate of absenteeism.
  • 6% of cannabis users reported harmful effects on work.

(See Appendix Note 3 and 4)

Question:  What if one of my employees has an accident caused by simple inattention as a result of immediate or post effects of drug or substance use?

We looked at 2 possible workplace injuries and the cost calculator from the ACC website as of July 2015:

 

Case Study 1:  an employee earning $20.00 per hour who misjudged a step on a staircase resulting in a common back injury ‘Prolapsed disc’.  Including his supervisor’s time at $25.00 per hour, ACC estimate the cost of this particular accident based on the following;

  • Incident costs
  • Investigation costs
  • Replacement costs
  • Productivity costs
  • Total cost to business                       $9170

 

Case study 2:  In a simple incident an employee (on $25.00 per hour) injures themselves by lifting with poor technique, straining their elbow and as a result not being able to carry on with their work and taking 3 days off.  With the Supervisor (on $40.00 per hour) also getting involved, the same ACC formula calculates the cost to the business as follows:

 

  • Incident costs                        $870
  • Investigation costs                $330
  • Replacement cost               $980
  • Productivity costs                 $1160
  • Total cost to business                       $3340

 

Question:  What is the level of investment required to implement a comprehensive drug-testing programme?

Clearly, these examples refer to very basic injuries only.  Let’s now consider the costs of implementing a robust drug-testing programme to try and mitigate the risks of such incidents and the related costs.

The good news is that costs have substantially decreased over recent years as technology has evolved. The AS/NZS 4308:2008 Standard was instrumental in allowing for accredited companies to be able to conduct on-site screening resulting in a more efficient process and less down time for the employer.

On-site screening has resulted in lab costs being dramatically reduced.  In addition, the timely receipt of instant results, (including negative results being produced on the spot) means that stand down periods have been reduced significantly.  The cost to the employer therefore relates primarily to the cost of the collection, materials, compliance management and technician’s time to conduct the test.

 

For example:  Consider the tangible cost of a dedicated and effective random testing programme for a medium sized company (40-60 employees).

Random selection of 8 drug and alcohol tests per month, based on TDDA’s standard rate, resulting in an average positive rate of 6% specimens requiring further lab analysis.

Annual cost                                       $9,120 per annum or $95.00 per test.

To compare this cost with case study 1 above, the break even point is one minor accident resulting in a ‘Prolapsed disc’.

 

Conclusion

Workplace drug testing is an effective tool to prevent accidents within the workplace; there is extensive research available which states the benefits of introducing a testing regime, including reduced accidents and near misses, reduced absenteeism, increased productivity and reduced disciplinary actions. We stress that, only a robust and approved drug testing programme, utilizing proper procedures and conducted in accordance with best commercial practice, will result in reduced accidents, improved safety, less down time, and lower costs to the employer.

Today, management must ask the following questions:

 

  • Does our Company have an effectively managed drug-testing programme?
  • Have we taken all practical and reasonable steps to ensure that we are fulfilling our obligations to our people, customers and society at large by providing a drug free working environment?
  • Can a Company afford not to introduce a effective drug-testing program?

Appendix:

Note 1.  Under Australia’s new nationally harmonised Work Health Safety Laws there has recently been a prosecution of a Canberra Contractor who was fined $1.1million for safety breaches that led to a workers death.

Note 2.  New Zealand’s Health and Safety At Work Act effective 4 April 2016 replaces the Health and Safety in Employment Act 1992 and the Machinery Act 1950. Recent prosecutions for manslaughter, aimed at Company Directors who demonstrate a failure to assess harm and risk, and a lack of conscious safety planning, highlight the challenges that managers will continue to face.

Note 3.  To be able to perform on-site screening and prevent any allegations of discrimination, the testing provider must have ISO 15189-2012 accreditation and should be an independent service provider to be able to withstand legal scrutiny.

Note 4.  With lab-based testing, the cost of confirmation testing is typically bundled together with the other services, whereas, with Point of care testing (POCT), most employers only choose to confirm drugs that cannot be excluded by the POC test in which case, the cost of confirming a POCT result may mean a slightly higher rate, on a per-test basis, TDDA’s national positive rate based on over 100,000 tests average is 6%.

 

About the Author of this paper; Kirk Hardy is the founder and CEO of The Drug Detection Agency.

Kirk, a former Police Detective with 10 years experience and having finished up serving on Drug Squad.  Kirk has been involved in numerous operations, investigating national and international drug dealing syndicates and targeting organised crime groups.

He left the Police in early 2005 and went establish The Drug Detection Agency as a pioneer for on-site testing service providers.  From a one-man operation in 2005 to now having established 42+ businesses operating under The Drug Detection Agency brand throughout Australia and New Zealand. TDDA went on to achieve ISO 15189-2012 accreditation, being the first organisation to achieve this in New Zealand in August 2010 and the fist to having received ISO 15189 in both New Zealand and Australia respectively.

TDDA are now regarded throughout organisations in Australia and New Zealand as the pioneers and industry experts for workplace drug testing. TDDA are a recognised source for reliable drug testing statistical data for government agencies.

TDDA have also been recognised for their innovation creating a worlds first Drug Detection App. Providing managers, supervisors and company employees with up to date information on drugs, signs and symptom’s with 50% of the proceeds generated from this App. donated to Children’s Hospitals in both Australia and New Zealand.

Recently TDDA entered into a joint venture with Omega laboratories to establish a state of the art workplace drug-testing laboratory in New Zealand that will become operational February 2016 with plans to open another in Australia later in the year.

Kirk regularly presents at international conferences regarding the issues with drugs and alcohol use in the South Pacific and the ever-developing drug market.

TDDA also has two of its executive team members on the Australian Standards committee currently reviewing the Oral Fluid Drug Testing Standard.

In 2012 Kirk was appointed a Board member of DATIA ‘Drug and Alcohol Testing Industry Association’ as well as Co-Chairing the International Committee.

 

Author – Kirk Hardy

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