Protecting boards and their business
ompanies, particularly public companies, are increasingly concerned about reputation, their ’brand’ and the impact of perceptions of the organisation among shareholders, customers and the wider community. In tight economic times when the pressure to perform is really on, reducing avoidable distractions must be a priority. The consequences of a serious safety incident or high-profile prosecution can be as damaging to a company’s reputation as poor performance by a Board in another portfolio area. It is important that within this environment that Boards set clear strategic objectives for improving safety performance. Australia’s OHS (Occupational Health & Safety) laws adopt an approach to occupational health and safety laws based on a UK model which relies on establishing desired outcomes rather than prescribing how risks should be controlled. A system of overarching responsibilities is at the core of this model which ensures everyone in the chain of management and risk control has a role to play. Although the specifics differ around the country, this positive duty requires workplace parties, including company directors, to take an active role to ensure safety standards are maintained. For most businesses, asking “Am I doing what a reasonable person in my position would do to ensure the organisation complies with the law”, should be the basis for overseeing health and safety performance. It can be tempting to consider OHS as another regulatory burden, however, the
advantages of good management of OHS are considerable. In large and publicly listed companies in particular, most Board members will have only a high-level understanding of the company’s management systems and structures. The commitment of the Board and through it, senior management, is crucial to the success of any systematic approach to safety. It can also position the company as a leader or industry front-runner. Boards are key facilitators which must ensure that the system is adequately resourced despite the temptation to cut costs when commercial pressures are being felt. The obvious return is the reduction of downside
Accordingly, there are opportunities for companies to build ‘social capital’ by seeking to improve and promote OHS performance to employees, families, shareholders and local communities. As approximately 35% of total global investment comes from pension and superannuation funds which seek sustainable investments with minimal risk, building OHS into a company’s sustainability initiatives can position it favourably with investors. The Australian Council of Super Investors recently found 71% of Australian super funds take environmental, social and corporate governance responsibility into consideration in deciding on the content of their investment portfolios. Boards that accept the link between safety and productivity will ensure there is a ‘score-card’ which integrates safety with other core business measures. Most progressive companies will ensure OHS measures and accountabilities are integrated into business planning and performance plans for regular reporting. Occupational health and safety can be incorporated into existing risk management frameworks and be reported-on through a board’s Risk Management or Human Resources Committees, or via corporate social responsibility or corporate affairs teams. Whatever the formal reporting line, an effective approach to safety ensures there is systematic management of OHS risks and clear accountabilities for individuals who lead and undertake roles in the system. Regular auditing of compliance ensures this system is rigorous. This will reduce the opportunity for exposure of the business to safety failings and the commercial effects of that. Ensuring safety is part of ‘business-as-usual’ means it is measured along with all other parts of the company’s performance. For boards and
Am I doing what a reasonable person in my position would do to ensure the organisation complies with the law
risks such as incidents, injuries or illness to workers and reduced productivity. Managing a worker injury and their eventual return also has a considerable cost that extends far beyond any premium impact. In many instances, improving OHS performance over time will contribute to improved employee engagement and profitability. The reputational risk of safety incidents, or so-called ‘near misses’, can be considerable in environments where the expectation is for companies to be ‘good corporate citizens’ or where they are under fire in other areas.
senior management these measures can be added to the vital signs of the company’s health along with profit and loss statements, and help them discharge their oversight role. Whatever happens as State, Territory and Commonwealth laws are harmonised, the opportunities for Board members to influence safety performance will remain. The opportunity to insulate the business against avoidable commercial damage is great, but it takes leadership from the top. A By Stan Krpan WorkSafe Victoria Award Magazine | 13
Published on Jan 9, 2009