International Journal of Occupational Safety and

Ergonomics

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The relationships between OHS prevention costs,

safety performance, employee satisfaction and
accident costs

Metin Bayram, Mustafa C. Ünğan & Kadir Ardıç

To cite this article: Metin Bayram, Mustafa C. Ünğan & Kadir Ardıç (2017) The relationships
between OHS prevention costs, safety performance, employee satisfaction and accident
costs, International Journal of Occupational Safety and Ergonomics, 23:2, 285-296, DOI:
10.1080/10803548.2016.1226607

To link to this article: https://doi.org/10.1080/10803548.2016.1226607

Published online: 26 Sep 2016.

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International Journal of Occupational Safety and Ergonomics (JOSE), 2017
Vol. 23, No. 2, 285–296, http://dx.doi.org/10.1080/10803548.2016.1226607

The relationships between OHS prevention costs, safety performance, employee satisfaction and
accident costs
Metin Bayram, Mustafa C. Ünğan ∗ and Kadir Ardıç
Sakarya University, Turkey

Little is known about the costs of safety. A literature review conducted for this study indicates there is a lack of survey-
based research dealing with the effects of occupational health and safety (OHS) prevention costs. To close this gap in the
literature, this study investigates the interwoven relationships between OHS prevention costs, employee satisfaction, OHS
performance and accident costs. Data were collected from 159 OHS management system 18001-certified firms operating
in Turkey and analyzed through structural equation modeling. The findings indicate that OHS prevention costs have a
significant positive effect on safety performance, employee satisfaction and accident costs savings; employee satisfaction
has a significant positive effect on accident costs savings; and occupational safety performance has a significant positive
effect on employee satisfaction and accident costs savings. Also, the results indicate that safety performance and employee
satisfaction leverage the relationship between prevention costs and accident costs.
Keywords: OHS costs; OHSAS 18001; employee satisfaction; safety performance

1. Introduction is an important cost element for a company.[4] How-

In today’s modern society, occupational˛e accidents cost
much.[1] There are many more occupational accidents
involving death in developing countries in comparison
with developed countries. This is because developed coun-
tries attach much more importance to occupational health
and safety management (OHSM) practices based on a pre-
ventive (proactive) approach. Comparing the occupational
accident data of Turkey with those of developed coun-
tries, Ceylan [2] reports that Turkey ranks first in terms of
deaths.
Standard No. OHSAS 18001:2007 [3] is the most com-
mon standard across the world for providing a structural
approach to occupational health and safety management
systems (OHS MSs), and organizations which wish to
have an OHS MS that conforms to this standard can offi-
cially be certified by certification bodies. Standard No.
OHSAS 18001:2007, which is an occupational health and
safety (OHS) standard, is widely accepted throughout the
world. Companies from a wide range of sectors and having
different sizes implement this standard.
The total cost of occupational accidents consists of
the expenses made to prevent occupational accidents, all
kinds of expenses made after the occurrence of occupa-
tional accidents and the losses these accidents cause. The
loss of human resources that occurs when employees do
not take part in production processes permanently or tem-
porarily because of accidents taking place in a workplace
ever, prevention costs have a potential to prevent occu-
pational accident injuries, decrease employer’s costs and
increase employer’s profits.[5] A number of authors and
organizations state that accident costs resulting from not
taking OHS measures are much higher than OHS preven-
tion costs, and economic reasons justify spending on the
prevention of occupational accidents.[6–8]
Since they have a positive effect on the performance
of companies, the implementation of OHS MSs is not an
economic burden, but an opportunity for companies. As
a matter of fact, the countries with the highest occupa-
tional safety are the countries with the highest competitive
power.[9] It is realized more and more that providing
safer and healthier workplaces increases labor produc-
tivity and job satisfaction and yields stronger balance
sheets.[10–12] Like the total quality management (TQM)
system, OHS MSs are regarded as an element assur-
ing employee satisfaction.[13] One of the reasons for
the increased importance of employee satisfaction for
establishments is the close association between this con-
cept and employees’ health and productivity in work.[14]
Occupational safety may remove a lot of adverse effects
(e.g., rising economic costs or unproductive working
caused by increased work stoppage, absenteeism and
turnover rate due to employees who are worn out in
terms of health and social relations).[15] When non-wage
factors are considered, it is seen that job dissatisfaction

*Corresponding author. Email: ungan@sakarya.edu.tr

© 2016 Central Institute for Labour Protection – National Research Institute (CIOP-PIB)
286 M. Bayram et al.
results in labor turnover, absenteeism and occupational
accidents.[16]
Although a limited number of case studies and anec-
dotal evidence suggest that prevention costs do have a
positive impact on safety performance, employee satisfac-
tion and accidents costs, Fernández-Muñiz et al. [17] in a
study conducted in Spain observe that employers consider
prevention costs unnecessary and think that they do not
contribute to the production objectives of companies and
thus have negative effects on profitability and competitive
power. Thus, the aim of the present study is to empiri-
cally prove whether prevention cost is an extra burden or
not on companies by analyzing the interwoven relation-
ships between OHS prevention costs, employee satisfac-
tion, OHS performance and accident costs. The research
findings may encourage those managers who are reluctant
about investing in OHS.
The most important contributions of this study to the
literature are twofold. First, new scales were developed
for accident costs and prevention costs. Second, it is the
first survey-based study dealing with the effects of pre-
vention costs on safety performance, employee satisfaction
and accident costs.
The article proceeds as follows. In the literature
review section, we present the previous studies high-
lighting prevention cost, accident cost, safety perfor-
mance and employee satisfaction. This is followed by the
research model and hypothesis development section, where
we develop related arguments concerning the conceptual
model comprising the interrelationships between preven-
tion cost, accident cost, safety performance and employee
satisfaction. The research methodology is then introduced
with a detailed explanation of the measures and sample.
The results are then presented with a thorough descrip-
tion of the empirical analysis, including explanatory factor
analysis (EFA) and the measurement and structural mod-
els, using structural equation modeling (SEM). Finally, a
discussion and implications are presented along with lim-
itations; the article concludes with suggestions for future
research.
2. Literature review
2.1. OHS costs
The standard mathematical model for OHS cost is as fol-
lows: safety cost (SC) = prevention cost (PC) + accident
cost (AC).[18] Although some studies have been con-
ducted to determine accident costs, Panopoulos [18]
observed that there are few studies which adopt a system-
atic approach to prevention costs. Panopoulos [18] incor-
porated costs related to administrative fees, criminal fines,
lawsuit processes, loss of corporate image and administra-
tive failure into the aforementioned formula. Behm et al.
[19] developed a cost model that measures and assesses
trends in total occupational safety costs by time.
2.1.1. OHS prevention costs
Failure costs decrease as OHS prevention costs increase
because more expenses are made to eliminate risks.[19]
For Van den Broek et al.,[20] investing in OHS has pos-
itive effects. Similarly, the American Society of Safety
Engineers (ASSE) recommends enterprises to invest in
OHS as part of their business strategies to reduce injuries
and occupational diseases, increase profitability and cre-
ate new lines of business.[7] Research and statistics show
that investment made in OHS and prevention costs yields a
profit of approximately 1:1–1:10 in return.[7,9] Research
on the construction sector in England reports that the
total benefit gained by preventing occupational accidents
is three times as much as the expenses incurred by
accidents.[6]
Zou et al. [21] listed the benefits of investing in occu-
pational safety as cost saving as a result of a decrease in
the number of accidents, fewer interruptions in produc-
tion and increased productivity. According to the European
Agency for Safety and Health at Work,[22] the benefits to
be gained through investment in health and safety fall into
two groups: direct and indirect. Among direct benefits are
reduced insurance premiums, reduced sue charges, reduced
sick pay costs, improved production and productivity rates,
reduced product and material damages, and reduced acci-
dent costs and production lags. Some indirect benefits, on
the other hand, are reduced absenteeism, reduced person-
nel, improved corporate image, convenience in winning
tender, and improved job satisfaction and morale. This
finding clearly shows that OHS prevention costs do have
a positive influence on safety performance, accident cost
savings and employee satisfaction.
Van den Broek et al. [12] mention that poor OHS per-
formance is a factor motivating company management to
invest in OHS. Lin and Mills [23] indicate that company
size and thus financial power are important factors influ-
ential on OHS performance, and that OHS (prevention)
costs play an important part in decreasing accidents and
increasing productivity. Noweir et al. [24] found out that
small and medium size enterprises (SMEs) display poor
OHS performance because of inadequate financial support,
management and occupational safety knowledge and cul-
ture. Similarly, Shalini [8] determined that the enterprises
which have the highest accident rates are the small enter-
prises which do not allocate enough financial resource to
OHS. López-Alonso et al. [25] carried out research on 40
building sites in the construction sector and found that the
average number of accidents is inversely proportional to
accident prevention costs and is directly proportional to the
total number of employees, the average number of subcon-
tractors and the OHS budget. Many other authors report
that investing in occupational safety has positive effects on
OHS performance and accident rates.[17,23,26–29] All of
these findings imply that occupational safety should not
be regarded as a financial burden, but rather it improves
 International Journal of Occupational Safety and Ergonomics (JOSE)
the profitability of a business by reducing accident-related
costs.
2.1.2. Accident costs
In general, accident costs are classified as economic vs.
non-economic, insured vs. non-insured, direct vs. indi-
rect, fixed vs. variable, internal vs. external and as illness
costs.[18,30] Economic costs resulting from occupational
accidents may include not only direct costs such as finan-
cial damage, lost time, financial losses arising from rising
insurance premiums and health expenses, but also indi-
rect (hidden) costs such as overtime required by acci-
dents, retraining costs, loss of prestige, worsening indus-
trial relations, decrease in production quality and fall in
profitability.[8]
The research conducted by Austria’s Allgemeine
Unfallversicherungsanstalt (Social Insurance for Occupa-
tional Risks) (AUVA) in 2010 reveals that the occupational
accidents taking place in the construction sector bring a
direct and indirect cost of EUR 1.6 billion to the Austrian
economy.[9] It is estimated that indirect costs are several
times as much as direct costs (sometimes 20 times as much
as direct costs) at enterprise level.[8,9]
UK Health and Safety Executive (HSE) statistics
[31,32] reveal the human and financial costs resulting
from unsuccessful OHS practices in the United King-
dom. According to Miller,[5] US employers have to spend
approximately USD 200 billion for occupational accident
injuries every year – that means over USD 1700 per
employee; and injury costs are mostly preventable. The
cost of injuries and occupational diseases mostly resulting
from the existing working conditions to the English com-
munity in the 2012/13 period is estimated to be GBP 14.2
billion.[33] It is estimated that total cost of occupational
accidents and diseases in Turkey, which is a developing
country, was nearly USD 28 billion in 2010.[34] Shalini [8]
measured the economic cost of the occupational accidents
taking place in Mauritius, which is a small island country,
using quantitative and qualitative approaches, and found it
to be MUR 168 million.
2.2. Employee satisfaction
Besides investing in an occupational safety management
system, organizations should also win the minds and hearts
of their employees to prevent and reduce occupational acci-
dents and improve occupational safety performance.[27]
Increased employee satisfaction means improved produc-
tion quality, productivity, profitability, competition, qual-
ified staff and quality of life.[15] When employee satis-
faction is low, health problems become widespread, which
brings about a serious cost burden for establishments and
governments.[14]
Employee satisfaction has widely been focused
on because of its important effect on organizational
287
performance.[35] However, the occupational safety liter-
ature contains few studies that deal with the effects of
OHSM practices associated with employee satisfaction
on occupational accidents and diseases.[36] Fernández-
Muñiz et al. [4] empirically showed that employee sat-
isfaction has a positive effect on a company’s competi-
tiveness. Gupta and Upadhyay [37] indicated that taking
safety measures has a positive effect on employee satis-
faction. Omusulah [38] concluded that there is a strong
relationship between OHS practices and job satisfaction.
Nahavandi and Malekzadeh [39] report that lack of occu-
pational safety and bad working conditions lead to stress
which brings about certain organizational results such as
increased absenteeism, rise in labor turnover rate, fall in
performance, decrease in productivity and quality, and
increased complaints and uneasiness among employees.
According to Torp and Moen,[40] employees have
higher satisfaction and participate more in OHS activities
when improvements are introduced. According to Graw-
itch et al.,[41] healthy workplace practices are effective
in predicting emotional commitment, emotional exhaus-
tion and employee welfare, which reflects employee sat-
isfaction.
Grant et al. [42] lay emphasis on a series of important
methods for increasing the welfare of employees and orga-
nizations. Öğer [14] determined that employee satisfaction
level is influential on employee performance, absenteeism,
behaviors harming the enterprise and employee health.
Kanoğlu [16] empirically detected that occupational safety,
which is a non-wage factor, has a higher influence on job
satisfaction in comparison with wage.
Wachter and Patrick [27] empirically showed that there
is an evident negative relationship between accident rates
and the emotional and cognitive participation levels of
occupational safety-oriented employees.
2.3. Occupational safety performance
Previous studies have not reached any consensus on
the components of occupational safety performance.
Researchers use different criteria in measuring OHS perfor-
mance. Among the most widely used criteria are accident
rates and fatal accident rates.[28] Performance indica-
tors of this sort are called lagging indicators.[43] It is
stated that traditional indicators such as accident statis-
tics indices do not precisely represent companies’ safety
performance.[44] Factors based on accident severity rates
are effective indicators for the management of accidents
resulting in employee injury, but they are ineffective for
bringing major hazard risks under control.[45] Another
group of indicators consists of positive or leading perfor-
mance indicators. Being an important feedback tool, these
indicators help to identify the existing defects and deficien-
cies before they cause any event, accident or injury and
allow organizations to correct such deficiencies in their
OHSM processes.[46] For Fernández-Muñiz et al.,[17]
288 M. Bayram et al.
the near-miss rate is an important numerical indicator of
occupational safety consciousness in an industry.
Agwu [29] concluded that when employees have a
better occupational safety performance, accidents, liabil-
ities, financial damages, statutory payments and medical
costs decrease; and when a company has a better occupa-
tional safety performance, productivity, profitability, effi-
ciency, quality, corporate image and innovative capacity
are improved. Fitzgerald [47] introduced an occupational
safety climate evaluation approach for allowing an organi-
zation to make cost-effective evaluation. The relationship
between employee satisfaction and safety performance
can be taken two ways. For example, Fernández-Muñiz
et al. [4] found out that safety performance has a positive
effect on employee satisfaction. Some other researchers
– Gyekye and Salminen,[48] Gyekye [49] and Rundmo
[50] – determined that employee satisfaction has a pos-
itive effect on occupational accidents. In our study, the
impact of safety performance on employee satisfaction was
investigated. There are two reasons for this. We were more
interested in the effect of safety performance on employee
satisfaction since we would like to draw the attention of
employers to a safer workplace for satisfied employees.
The second reason is that in the literature the effect of
satisfaction on safety performance is studied more com-
pared with vice versa. We wanted to contribute to the
less studied and more recent area of the research. Apart
from those already mentioned, there are various studies on
OHS performance in the literature, including: Arezes and
Miguel [44] who summarize the occupational safety per-
formance measurement process and analyze the potential
role of safety culture in this process; Idoro [28] who com-
pares the OHS performances and administrative efforts of
Nigerian building contractors; and Cagno et al. [51] who
suggest a systematic and intervention-oriented model of
safety performance designed for SMEs.
3. Research model and hypothesis
Based on the literature review, a research model (Figure 1)
and the following hypotheses were developed:
H 1 : The higher the OHS prevention costs, the higher the
savings in accident costs.
Figure 1. Research model.
H 2 : The higher the OHS prevention costs, the higher the
OHS performance.
H 3 : The higher the OHS prevention costs, the higher the
employee satisfaction.
H 4 : The higher the OHS performance, the higher the
savings in accident costs.
H 5 : The higher the employee satisfaction, the higher the
savings in accident costs.
H 6 : The higher the OHS performance, the higher the
employee satisfaction.
4. Method
4.1. Data collection and sampling
There are many steps in the methodology, as presented
in Table 1. A questionnaire approach was used to vali-
date the research model. The questionnaire was created
following an intense literature review. Opinions were then
taken from the experts of the Ministry of Labor and
Social Security, the industry and three certification bodies
granting OHSMS 18001 certification.[3] With their rec-
ommendations, a draft survey form was generated. This
draft was completed by 12 authorized managers. Both
experts and managers were chosen because they are the
most knowledgeable about safety performance, cost issues
and employee satisfaction. Based on their feedback, the
questionnaire was finalized. After developing the ques-
tionnaire, we adopted the parallel-translation method in
developing the questionnaire in Turkish. Items were first
translated from English into Turkish by one person and
then back-translated into English by a second person. The
two translators then jointly reconciled all differences.
The target group for data collection was companies
certified with Standard No. OHSAS 18001:2007.[3] The
reason for including OHSAS 18001:2007-certified firms
was that only OHSAS 18001:2007 was granted to the com-
panies requesting OHS MS certification in Turkey. The
survey form was sent to 570 OHS MS-certified firms. A
total of 162 survey forms were filled in and sent back by
companies, of which 159 survey forms were subjected to
analysis because three of the survey forms were unusable.
The response rate was 28% (159/570) which is superior
to those usually obtained in survey-based studies. We fol-
lowed Armstrong and Overton [52] to test non-response
bias. The adopted method tests for significant differences
between early respondents (i.e., those responses received
before the first follow-up letter) and late respondents (i.e.,
those received after the first follow-up letter). Concur-
rently, the first 20 surveys received were compared with the
last 20 received and the t test using randomly selected mea-
sures was conducted, resulting in no significant difference
between the two sets of responses.
All types of manufacturing and service companies were
included in the survey. The questionnaire was mailed to the
general manager or managing director of each organization
 International Journal of Occupational Safety and Ergonomics (JOSE) 289

Table 1. Methodological steps.

Step Activity

1 Questionnaire was developed to test the hypothesized relationships among the constructs.
2 Pilot study was conducted with practitioners to make sure that the content is valid.
3 Target companies for the data collection were determined.
4 Data were collected.
5 Factorability of data and sampling adequacy for factor analysis were assessed.
6 Explanatory factor analysis (EFA) conducted to assess whether the items for each construct shared one underlying factor.
7 Confirmatory factor analysis (CFA) was conducted to assess the convergent validity of the measurement model. Convergent
validity was used to show that measures which should be related are in reality related.
8 CFA was conducted to assess the discriminant validity of the measurement model. Discriminant validity was used to show that
measures which should not be related are in reality not related.
9 Quality of the structural model was assessed to determine the predictive relevance of the model.
10 Explanatory power of the structural model was assessed.
12 Goodness of fit of the structural model was assessed to see whether there is a significant difference between observed and expected
correlations among constructs.
13 Multicollinearity between independent variables was assessed to make sure that it does not affect the hypothesis testing results.
14 Hypothesis testing was conducted to see whether the proposed relations between the constructs are supported.
15 Mediating effects and indirect effects between certain constructs were assessed

to ensure respondents’ thorough knowledge of the firms’
safety-related costs, safety performance and employee sat-
isfaction. The covering letter outlined the objectives and
importance of the study. It was requested from the partici-
pating companies that the survey forms would be filled by
the most knowledgeable people about the survey questions.
The majority of respondents filled positions with titles such
as OHS management representatives, OHS managers and
OHS experts. The respondents’ titles were concerned with
OHS-related costs, safety practices and employee satisfac-
tion; thus, they were likely to pay careful attention to the
measures used in this study. We concluded that the survey’s
respondents did possess the knowledge required to answer
the questions appropriately.
Although the organizations that make up the sam-
ple represent various manufacturing industries and service
industries (e.g., transportation, wholesale, financial and
health care), the sample is skewed toward manufacturing
firms. Twenty-six percent of the sample is comprised of
service firms. The most well-represented industries in the
manufacturing sector are fabricated metal (15.1%); rubber
and miscellaneous products (10%); chemical and pharma-
ceutical (8%); energy (8%); and glass and ceramic (9.8%).
Our cross-industry sample is appropriate; as the service
industry is included in the category of less hazardous work-
places and companies in this industry are less likely to
have OHS MS certification, there were more companies
participating in the study from the manufacturing sector.
Similarly, companies from hazardous and very haz-
ardous categories that need to attach more importance to
OHS participated more. Approximately 38%, 47% and
15% of the participants belong to the very dangerous,
dangerous and less dangerous hazard class, respectively.
Approximately 13% of the firms had <50 employ-
ees, 15% of the firms employed 50–99 workers, 19% of
the firms had 100–249 on the payroll, 15% of the firms
had 250–500 employees, and 38% of the firms had >500
employees.
4.2. Scale development
Five scales were developed for this study, two of which are
new in OHS literature. The new scales are OHS preven-
tion costs and accident costs. Participants were requested
to express their perceptions of change on each scale in the
last three years. All scales except for OHS prevention costs
were measured with a 5-point Likert-type scale: 1 = I
strongly disagree, 2 = I disagree, 3 = I neither agree nor
disagree, 4 = I agree and 5 = I strongly agree. For OHS
prevention costs, a different 5-point Likert scale was used:
1 = no expense, 2 = as little expense as possible, 3 = as
much expense as required for fulfilling minimum legal
requirements, 4 = as much expense as required for com-
pletely fulfilling legal requirements and OHS MS require-
ments and 5 = as much expense as required for achieving
zero accident target besides fulfilling legal requirements
and OHS MS requirements.
The safety literature contains a couple of studies on
OHS prevention costs.[18,21] However, there were no
available scales in the survey-based research. The 8-item
scale for OHS prevention cost (PRV) was therefore devel-
oped based on the aforementioned studies.
Another newly developed scale for this study is acci-
dent cost. The 6-item scale for accident cost (ACC) was
developed based on the studies of the European Agency
for Safety and Health at Work,[53] HSE,[31] Aaltonen
et al.,[54] Abiuso and De La Figuera,[55] Rikhardsson and
Impgaard,[1] Lahiri et al. [56] and Battaglia et al.[30]
The 4-item employee satisfaction (SAT) scale was
developed based on the work of the European Agency for
Safety and Health at Work,[53] Van den Broek et al.,[20]
Fernández-Muñiz et al. [4,17] and Öğer.[14]
290 M. Bayram et al.
Table 2. Questionnaire items.
Prevention costs
PRV1: Costs for OHS personnel
PRV2: Costs for the OHS training of employees
PRV3: Technological investment costs
PRV4: Costs for the collective protection of employees
PRV5: Costs for personal protective equipment (PPE) and
other occupational safety equipment
PRV6: Costs for occupational safety signs and boards
PRV7; Outsourcing costs
PRV8: Costs for fire and emergency management
Accident costs
ACC1: Treatment costs reduced
ACC2: Payments to employees reduced
ACC3: Administrative costs reduced
ACC4: Costs resulting from labor loss reduced
ACC5: Losses of production reduced
ACC6: Costs resulting from failure in the timely delivery of
orders reduced
Employee satisfaction
SAT1: Employee performance improved
SAT2: Employee absenteeism reduced
SAT3: Employee behaviors harming the enterprise reduced
SAT4: Employees’ physical and mental health statuses
improved
SAT5:Employee turnover rate improved
Safety performance
PER1: Accident frequency rate improved
PER2: Accident severity rate improved
PER3: Accidents involving death and/or loss of limb reduced
PER4: Tangible losses reduced
PER5: Near-miss rate improved
Note: OHS = occupational health and safety.
All five of the OHS performance (PER) scale items
were taken from occupational accident statistics such as
the accident frequency rate, accident severity rate, number
of accidents involving death and/or loss of limb, tangi-
ble damages and near misses. The questionnaire items are
presented in Table 2.
5. Results
We followed Anderson and Gerbing [57] in examining the
scales with regard to unidimensionality, internal consis-
tency, composite reliability and convergent and discrim-
inant validity. Results were categorized into two main
phases: exploratory and confirmatory. For the exploratory
phase, SPSS version 18 was used. For the confirmatory
phase, partial least-squares structural equation modeling
(PLS-SEM) was then undertaken using SmartPLS ver-
sion 3.[58] PLS-SEM was selected because it is able to
identify the key driving constructs and deal with a non-
normal data set, and it has minimum demand for sample
size.[59] A bootstrapping estimation procedure, in which
500 random observation samples with replacements were
generated from the original dataset, was used to examine
the significance of the scale factor loadings in the mea-
surement model and that of the path coefficients in the
structural model.[60]
5.1. Exploratory phase
In the first step, we performed an EFA for each construct in
order to assess whether the items for each latent construct
shared one underlying factor. Based on the procedure by
Lumpkin and Dess,[61] we performed an EFA using a vari-
max rotation. Before EFA, we performed Bartlett’s test of
sphericity [62] to investigate the factorability of the data,
and the Kaiser–Meyer–Olkin (KMO) test [63] to measure
the sampling adequacy. Results indicated a significant test
statistic for Bartlett’s test of sphericity, p < 0.000, and a
KMO value of 0.880, meaning that the data were suitable
for structure detection. Items with a factor loading below
0.4 and items strongly loading on more than one factor
(>0.400) were excluded. This procedure finally resulted in
4 factors with an eigenvalue >1 which explained 72.08%
of the total variance.
The first factor called PRV, with an eigenvalue of 9.09
and accounting for 37.76% of the total variance, included
8 items. The second factor called PER, with an eigenvalue
of 4.446 and accounting for 18.61% of the total variance,
included 5 items. The third factor called SAT, with an
eigenvalue of 2.084 and accounting for 8.683% of the
total variance, included 5 items. Finally, the fourth factor
called ACC, with an eigenvalue of 1.652 and accounting
for 6.883% of the total variance, included 5 items. To test
the common method bias, Harman’s one-factor test was
used.[64] If the measures were to be affected by common
method bias, then they would have tended to load on a sin-
gle factor.[65] The factor analysis resulted instead in four
factors, which confirmed that common method bias was
not a problem in this research.
5.2. Confirmatory phase
After the EFA the remaining items were entered into
SmartPLS version 3 for assessment of the measurement
and structural models.
5.3. Measurement model
Confirmatory factor analysis (CFA) was used to assess the
convergent and discriminant validity of the measurement
model. Convergent validity of the scales is contingent on
the fulfillment of three criteria [66,67]: (a) all indicator
loadings should exceed 0.703; (b) composite reliabilities
should exceed 0.8 or alternatively Cronbach’s α should
exceed 0.65 (α can theoretically take values from 0 to 1)
[68]; and (c) the average variance extracted (AVE) for each
construct should exceed 0.5. Psychometric properties of
constructs and items are presented in Table 3. As Table 3
shows, all of the indicator loadings except for SAT5 are
 International Journal of Occupational Safety and Ergonomics (JOSE) 291

Table 3. Psychometric properties of constructs and items.

Variable M SD Factor loading t Cronbach’s α CR AVE

ACC 0.95 0.96 0.80

ACC1 3.79 0.95 0.90 42.61
ACC2 3.73 0.99 0.91 42.88
ACC3 3.65 0.96 0.90 35.78
ACC4 3.72 0.93 0.92 55.73
ACC5 3.75 0.89 0.90 37.83
ACC6 3.56 0.95 0.86 30.99
SAT 0.86 0.91 0.70
SAT1 3.72 0.86 0.81 23.08
SAT3 3.41 1.07 0.80 19.38
SAT4 3.86 0.89 0.84 29.09
SAT2 3.69 0.93 0.84 29.06
SAT5** 3.22 1.07 0.67
PRV 0.93 0.94 0.65
PRV1 4.23 0.81 0.71 11.80
PRV2 4.15 0.85 0.83 26.47
PRV3 4.01 0.89 0.85 32.25
PRV4 4.04 0.93 0.80 19.45
PRV5 4.43 0.81 0.83 23.33
PRV6 4.40 0.75 0.82 22.66
PRV7 4.33 0.79 0.80 19.62
PRV8 4.25 0.82 0.82 24.92
PER 0.93 0.95 0.77
PER1 2.81 1.30 0.93 79.65
PER2 2.87 1.28 0.92 45.07
PER3 3.10 1.64 0.83 23.22
PER4 3.00 1.37 0.91 65.16
PER5 2.64 1.36 0.80 18.91

**Item deleted due to low factor loading.

Note: See Table 2 for the variables. AVE = average variance extracted; CR = composite reliability.

above the recommended threshold. Therefore, SAT5 was addition, the CFA shows that the loading of each indica-
removed from further analysis. After dropping SAT5, CR tor is greater than all of its cross-loadings, which indicates
ranges from 0.91 to 0.96, and AVE ranges from 0.65 to discriminant validity on the indicator level.[69]
0.80. All three conditions for convergent validity thus hold.
To evaluate discriminant validity, Fornell and Larker [66] 5.4. Structural model
suggest that the square root of AVE of a latent variable
Prior to the hypotheses testing, the quality of path model
should be greater that the correlations between the rest of
can also be evaluated by calculating the Q2 statistic.
the latent variables.
The Q2 statistic measures the predictive relevance of
Table 4 presents the correlation of latent variables
the model by reproducing the observed values by the
and the square root of AVE. A comparison of all of the
model itself. Q2 > 0 means the model has predictive rel-
correlations and square roots of AVE on the diagonal indi-
evance; whereas Q2 < 0 means that the modal lacks pre-
cates adequate discriminant validity for all constructs. In
dictive relevance.[70] In PLS two kinds of Q2 statis-
tics are estimated. The cross-validated communality (CV-
Table 4. Correlation of latent variables and square root of communality) measures the capacity of the model to pre-
AVE. dict the manifest variables (MVs) directly from their latent
variables (LVs) by cross-validation. It uses only the mea-
ACC SAT PER PRV surement model. The prediction of an MV of an endoge-
ACC 0.900 nous block is carried out using the MVs of the same
SAT 0.561** 0.795 block. The cross-validated redundancy (CV-redundancy)
PER 0.564** 0.421** 0.881 measures the capacity of the path model to predict the
PRV 0.287** 0.280** 0.178* 0.808 endogenous MVs indirectly from a prediction of their
*p < 0.050, **p < 0.010. own LV using the related structural relation, by cross-
Note: See Table 2 for the variables. AVE = average validation,[71] and serves as a sign of the quality of the
variance extracted. structural model. For this study, both the measurement and
292 M. Bayram et al.

Table 5. Quality of measurement and structural model. of the structural model analysis, showing the path coeffi-
cients along with their significance levels and the R2 values
CV-communality CV-redundancy
of endogenous constructs. Based on the scores of R2 , it can
PRV 0.724 0.346 be interpreted that the model explains 44% of the vari-
ACC 0.497 0.137 ance (R2 ) of the ACC. The R2 value is moderate and if
SAT 0.661 0.024 certain inner path model structures explain an endogenous
PER 0.545 – latent variable by only a few exogenous latent variables,
Note: See Table 2 for the variables. CV = cross-validated. ‘moderate’ R2 may be acceptable.[69]
Henseler et al. [72] introduce the standardized root
mean square residual (SRMR) as a goodness-of-fit mea-
structural models demonstrate a good quality since both sure for Smart PLS. The SRMR is defined as the difference
CV-communality and CV-redundancy values are positive between the observed correlation and the predicted correla-
(Table 5). tion. Thus, it allows assessing the average magnitude of the
Besides the examination of cross-validation CV- discrepancies between observed and expected correlations
communality and CV-redundancy indices, the explana- as an absolute measure of (model) fit criterion. A value less
tory power of the proposed model can also be assessed than 0.10 or of 0.08 – in a more conservative version view;
by observing the coefficient of determination (R2 ) of the see Hu and Bentler [73] – are considered a good fit. For this
endogenous latent variables. Figure 2 displays the results study, the SMRM value of 0.056 indicates that goodness of
the model fit is above the threshold criteria.
No serious problems of multicollinearity exist between
the independent variables because the variance inflation
factors of all items ranged between 1.000 and 1.260,
which are far below the common cut-off threshold range
of 5–10.[74]
The results of the statistical model offer support for all
hypotheses (Figure 2). Detailed results of the hypothesis
testing are presented in Table 6. Although all hypotheses
are supported, we see stronger support for H 4 , H 5 and H 6 .
In addition to the direct effect of prevention costs on
accident costs, mediating effects of safety performance and
employee satisfaction were assessed. We first verified the
Figure 2. Structural model.
*p < 0.050, **p < 0.001. correlations between mediating variables and both PRV

Table 6. Structural properties of the constructs.

Hypothesis Link Path coefficient t p Supported?

H1 PRV-ACC 0.127 2.147 0.032 Yes

H2 PRV-PER 0.178 2.195 0.029 Yes
H3 PRV-SAT 0.189 2.560 0.011 Yes
H4 PER-ACC 0.400 5.835 0.000 Yes
H5 SAT-ACC 0.337 4.005 0.000 Yes
H6 PER-SAT 0.380 5.743 0.000 Yes

Note: See Table 2 for the variables

Table 7. Results for mediating effects.

Root mean Root mean
Independent Dependent Path without square Link with square
variable variable Mediator mediator Coefficient residual mediator Coefficient residual Result

PRV ACC PER PRV-ACC 0.289** 0.061 PRV-ACC 0.126* 0.056 Partial
SAT PRV-PER 0.178*
PRV-SAT 0.259**
PER-ACC 0.401**
SAT-ACC 0.336**

*p < 0.050, **p < 0.001.

Note: See Table 2 for the variables.
 International Journal of Occupational Safety and Ergonomics (JOSE)
Table 8. Significance of indirect effects.
Independent Dependent Indirect
variable Mediator variable effect
PRV PER ACC 0.071*
PRV SAT ACC 0.081**
*p < 0.050, **p < 0.001.
Note: See Table 2 for the variables.
and ACC. In this regard, as shown in Table 4, the corre-
lation analysis provides evidence that necessary conditions
for the mediation effects apply: both prevention costs and
accident costs are correlated with safety performance and
employee satisfaction.
To test the mediation effect, we built two different SEM
models as suggested by Little et al.[75] In our first model,
we removed the mediators of PER and SAT from the struc-
tural model and assessed the significance of the coefficients
on direct paths from PRV to ACC. As reported in Table 7,
both of the path coefficients were significant. Next, we
added the mediators to the model and examined the signif-
icance of several path coefficients to test mediation effects.
While the magnitudes were decreased, the coefficient on
the direct path (PRV to ACC) remained significant. The
path coefficients from PRV to PER, from PRV to SAT,
from PER to ACC and from SAT to ACC were significant.
Taken together, we concluded that the effects of PRV on
ACC are partially mediated through PER and SAT.
Additionally, we assessed the indirect effects of PRV
through SAT and PER on ACC. As reported in Table 8, the
indirect effect of PRV on ACC through PER and SAT pres-
sure was significant (p < 0.050, p < 0.010 respectively).
6. Conclusion
This study aimed to analyze the relationships between OHS
prevention costs, employee satisfaction, OHS performance
and accident costs.
The relationships between OHS prevention costs and
accident costs; between OHS prevention costs and safety
performance; between prevention costs and employee sat-
isfaction; between safety performance and accident costs;
between safety performance and employee satisfaction;
and between employee satisfaction and accident costs
were empirically tested. The findings confirm all these
relationships. Another important finding of this study is
that there is an indirect relationship between prevention
costs and accident costs. Safety performance and employee
satisfaction partially mediate the relationship between
those two.
A direct positive relationship was found between OHS
prevention costs and decrease in accident costs. This find-
ing is consistent with the findings of Ikpe et al. [6] and
Falkner et al.[9]
293
OHS prevention cost was found to have a direct effect
on safety performance. This finding is consistent with the
findings of López-Alonso et al.[25]
A positive relationship was found between preven-
tion cost and employee satisfaction. This finding is sup-
ported by the European Agency for Safety and Health at
Work.[22]
OHS performance was found to have a positive effect
on employee satisfaction in the present study. This finding
is consistent with the findings of some other researchers.[4]
Employee satisfaction was also seen to have a pos-
itive effect on accident costs. This finding is consistent
with the findings of Fernández-Muñiz et al. [4] that show
the positive effect of employee satisfaction on company
competitiveness.
It was determined in the present study that improve-
ment in OHS performance leads to decrease in accident
costs. This finding is consistent with the findings of the
study carried out by Agwu.[29]
Findings of this study prove that, contrary to the com-
mon belief of managers, there is a good return of invest-
ment on OHS, and it is hoped that the findings of the
present study will encourage the employers to invest in
OHS.
Readers should treat these results with caution, because
the study was only conducted in Turkey and is the first
survey-based research of its kind. It is quite possible that
the findings could differ from one country to another
depending on their OHS MS maturity level. In other words,
spending on OHS MS may not have the same effect on
safety performance and employee satisfaction in different
countries (or companies) with different OHS MS applica-
tion levels since once OHS spending reaches a limit it may
not increase or leads to a marginal increase in safety per-
formance and employee satisfaction. It should be noted that
besides monetary factors, factors such as the motivation of
management and their willingness to lead, set measurable
targets, provide resources and establishing accountabil-
ity at all levels are very important determinants of safety
performance and employee satisfaction.
Some interesting research avenues emerged as a result
of this study. One area of research should test the relative
importance of monetary and non-monetary factors in safety
performance and satisfaction. It is also worth question-
ing whether there is any difference between the attitudes
of employers of the economically developed and develop-
ing countries in terms of prevention costs. Future studies
may also focus on the specific sectors and SMEs with a
poor safety performance. In addition, comparisons may be
made between companies having OHS MS certification
and those not having it.
Disclosure statement
No potential conflict of interest was reported by the authors.
294 M. Bayram et al.
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