The Health and Safety Reforms: Ticking more boxes, or an opportunity to create value?

The health and safety reforms are a hot topic of debate. Concerns have been expressed that this is another shift toward a “nanny state”. At the very least, it could become an onerous compliance burden for both large and small organisations – the latter which are well-represented in the high-risk construction, adventure tourism or forestry sectors.

The Health and Safety Reform Bill says one should take “reasonably practicable” steps to minimise harm. “Reasonably practicable” includes an assessment of the cost associated with eliminating or minimising the risk, including whether the cost would be “grossly disproportionate” to the risk. That could be a slippery slope to reputational damage: to argue the cost of a life.

Some have observed “dumb stuff happens” or “nothing is fool proof to a sufficiently talented fool”!  However it could be argued that such a sentiment is an abrogation of directors’ and officers’ obligation to keep everyone safe.

To date, the focus has been on the high risk industries, with the Government’s well-publicised target of reducing deaths and serious harms by 25% by 2020.  Those figures are in the context of 50 – 75 deaths and around 6,000 serious harms per year.  However, a further 600 – 900 die each year due to occupation-related illnesses, and, in the 2012/2013 year, ACC received over 178,000 new workplace injury claims.

It is important to remember that harm includes “mental harm”, which could come from stress caused by workplace bullying or poor job design.

I have heard many people express surprise at discovering that the current Health and Safety in Employment Act 1992 contains a clause that makes it “unlawful and of no effect” (cl. 56I) to take out insurance against fines. A similar clause is contained in the Health and Safety Reform Bill. In general, though, the fines are commensurate with one’s ability to pay.

Ultimately, the best way to indemnify oneself is to have a culture that encourages people to look after themselves and each other. If you achieve such a feat, you will have ticked one important box – the one that is often included in surveys to measure staff engagement, which asks whether your workmates are also your friends.

High staff engagement has a high correlation to productivity. People are more likely to give of their discretionary effort when they have a real connection with their employer. It is also an indication that bullying or stress is not an issue.

It is the organisation’s leadership that sets the culture, aided by supporting systems and processes, but also walking the talk.

The board, as part of the organisation’s leadership, exerts a strong influence on the culture. The Pike River Coal Mine tragedy provides an example: “In the drive towards coal production the directors and executive managers paid insufficient attention to health and safety and exposed the company’s workers to unacceptable risks”[1]. What gets measured gets done.

The new Health and Safety legislation places a duty of “due diligence” on directors and officers. As a result, one might reasonably expect to see the whole board walking the talk along with the CEO, testing and validating assumptions.

A key challenge for larger organisations is likely to come from the SMEs who are in their value chain as contractors or sub-contractors. Organisations that use contractors as part of their business model may need to extend their own health and safety systems and processes into their contractors’ business. Leadership and due diligence will still be required, to ensure the resources to support healthy and safe work practices are adequate and being used. However, when looking through to the contractors’ organisation, it will be important not to cross the line into an employer/employee relationship.

But that is the opportunity: to use the Health and Safety reforms to create a culture that engages staff to keep their workmates and others safe, throughout the value chain. The upside is improved productivity, reduced downtime and a decreased likelihood of running afoul of the legislation. Then maybe, rather than a “nanny state”, we will become a nation renowned for its productivity.

Shelley is Managing Director of Major Consulting Group Ltd, a company specialising in health and safety compliance and culture change. She is a provisionally accredited member and past National Councillor of the IOD. She has also been an elected board member of the Human Resources Institute of NZ and holds professional accreditation with that body.

[1] Royal Commission on the Pike River Coal Mine Tragedy

This article was first published in the Institute of Directors’ magazine, BoardRoom, in June 2014.

Tags: , , ,

No comments yet.

Leave a Reply