Safety at Work: Policy meets performance

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???????????????????????????????????????????????????????????????????????????????????????????????????????????????????????discussion of Dr Sharron O’Neill’s research with Safe Work Australia in late 2014 – by WHS consultant Kevin Jones – highlighted how better WHS accounting might improve both work, health and safety (WHS) policy and performance.

Jones reported on the 2014 annual Australian Council of Trade Unions (ACTU) conference on occupational health and safety, which was held in Melbourne last October. The conference was addressed by the ALP Shadow Minister for Employment Relations: Brendan O’Connor MP.

According to Mr O’Conner, the Royal Commission into the Home Insulation Scheme risks distracting attention from broader deficiencies in the WHS laws that should ‘protect the interests of working people, particularly young workers’.

Whether legal reform can improve WHS outcomes is a matter of debate. Jones’s view is that the needed changes are:

unlikely to come through laws, particularly as OHS/WHS laws remain a State responsibility. Change will need to be attempted through modifying the public services’ processes of consultation and collaboration of safety-related matters.

However, the Shadow Minister also discussed the economic argument for improving WHS policy and performance, which suggests that WHS accounting has a critical role to play:

If you look at the costs that are borne by a community because of bad health and safety laws, on economic grounds you win the argument, leave aside the fact that you’ve torn a family or community apart because of injury or death.

If the economic grounds of WHS are indeed central to the public policy argument, then accounting needs to be able to bring the costs of WHS into both public policy discussions and organisations’ reports in a clear and comparable way.

As Dr O’Neill’s presentations on WHS reporting have shown, both financial and non-financial accounting has some way to go to adequately recognise either the community or organisational costs of WHS practices, or to effectively communicate good WHS practices to stakeholders.

But if the current standard of WHS reporting is part of the problem, then new WHS reporting mechanisms, which Dr O’Neill’s research is helping to develop, have the capacity to be an important part of the solution.

For more information on this research, or on improving WHS performance in your organisation, contact Dr O’Neill at: sharron.oneill@mq.edu.au.

Communicating Safety: Avoiding common mistakes

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???????????????????????????????????????????????????????????????????????????????????????????????A discussion by James Harkness (for Zenergy Recruitment), headed Reporting on WHS: where companies go wrong, illustrates how IGAP’s Dr Sharron O’Neill’s research on work health and safety (WHS) can improve how organisations communicate their safety practices.

Harkness cites Dr O’Neill’s presentation at Safe Work Australia’s Virtual Seminar Series in October, which found a large gap between the WHS information stakeholders want and what annual reports provide.

Some common mistakes organisations make are:

  • Providing a generic statement of commitment to WHS, but without detailed information on WHS governance;
  • Failing to provide key lead and lag indicators, which can deliver important evidence on whether WHS practices are effective;
  • Providing limited evidence on whether audits and training sessions are effective;
  • A lack of consistent indicators and evidence e.g. Using different names for the same indicator, failing to define their indicators or failing to stick to their definitions;
  • Being reluctant to talk about the severity of injuries, effectively hiding the impact of gaps in companies’ health and safety systems; and
  • Building inaccurate narratives around their data.

By contrast, for best-practice WHS reporting in annual reports, organisations should:

  • Recognise who the users of the report are;
  • Clearly articulate their WHS vision;
  • Identify their critical risks;
  • Outline how risks are being managed; and
  • Acknowledge the consequences of failure;
  • Provide analysis where there has been a serious injury or illness: What happened, what was the cause, what is the lesson, what is being done to prevent this occurring again.

Where poor WHS reporting can be confusing or misleading, Dr O’Neill’s address highlighted how best-practice WHS reporting in annual reports can help instil confidence in an organisation’s WHS performance and practices in its stakeholders.

For more information on this research, or on improving WHS performance in your organisation, contact Dr O’Neill at: sharron.oneill@mq.edu.au.

Why governance can’t ignore safety

A recent Four Corner’s report (screened 3/2/2014) on road safety and the heavy vehicle transport industry in Australia revealed the human toll of work-related accidents: 242 people killed in truck-related accidents, and many more injured, in just one year. According to Four Corners, safer work practices might have avoided many of these tragic events.

The Four Corners exposé highlights, in two interrelated ways, the fundamental importance of work health and safety (WHS) to all businesses.

truck_givewayphot1. Effective business governance includes effective governance of WHS.

The new WHS Act (enacted in all States but WA and VIC) requires all officers of a business or undertaking (PCBU) to exercise due diligence so as to ensure the health and safety of workers. The Act explicitly requires all businesses to provide safe systems of work – including safe equipment, safe processes and work methods (such as appropriate rosters, supervision, instruction etc.).

The Four Corners program drew particular attention to the potential health and safety implications of deferred maintenance. This is especially relevant to accountants, given their role in allocating budgets for maintenance programs. Moreover, recent research suggests that accountants are less likely than operational personnel such as engineers to perceive maintenance as even having been ‘deferred’.

2. Health and safety risks requirement management along the entire supply chain.

The Four Corners program also documented how a fatal incident on Sydney’s North Shore in October 2013 prompted an external safety investigation into the Cootes transport fleet. Impacting along the supply chain, this incident resulted in retail fuel shortages along the east coast while road safety checks were carried out on hundreds of Cootes vehicles. For example:

Frustrated Melbourne motorists again faced empty bowsers for some types of fuel or complete service station shutdowns today because of disrupted deliveries, with about 25 Caltex, 30 per cent of BP and a number of Shell ­outlets affected. BP spokesman Jamie Jardine said the company would have difficulty maintaining fuel supplies until all of the [Cootes] trucks were back on the road. (Herald Sun, October 10, 2013)

The vehicle checks identified more than 200 defects, many being major defects in safety critical systems such as brakes, steering and suspension. Three months on, the transport company has this week announced the loss of a major contract with Shell to distribute its fuel. The potential for safety issues to pose a risk to the well-being of workers’ and bystanders is clear. These events further demonstrate the potential for poor safety to also impact on the financial performance of both suppliers and purchasers.

Safety and Corporate Responsibility: Systemic Issues

Concerns over the role of payments, subcontracting, incentives and safety are not new. Similar issues raised by the NSW Staysafe Inquiry into Road Safety almost a decade ago, formed the basis of a research note published in the Accounting, Auditing and Accountability Journal in 2007 by IGAP researcher Dr Sharron O’Neill.

The pervasive nature of this problem raises serious questions, explored by Four Corners, about the sustainability of heavy transport business model and the corporate responsibility of business practices. Low wage rates for contractors and drivers coupled with increasing fuel and other transport costs were reported to still be providing incentives for long hours and excessive speed.

Four corners identified two factors motivating these unsafe behaviours.

1. Some drivers reported being directed by transport managers to meet “impossible deadlines”. Importantly, prosecutions and fines for subsequent speeding and log book infringements were falling on the drivers rather than those employers and companies who direct the systems of work. This alludes to a critical disconnect in enforcement processes that appears at odds with the legislated accountability of PCBUs under both the WHS Act (as outlined above) and the chain of responsibility legislation introduced by the National Heavy Vehicle Regulator. The latter suggests,

All parties in the road transport supply chain can be held responsible for their actions (or inactions) relating to breaches of the road transport, fatigue, speed, mass, dimension and load restraint laws.

If you consign, pack, load or receive goods as part of your business, you could be held legally liable for breaches of road transport laws even though you have no direct role in driving or operating a heavy vehicle.

2. Four Corners reported that unsustainably low wage rates lead drivers to work long hours to make a reasonable income. The Road Safety Remuneration Tribunal, established under the previous federal government in 2012, had proposed to examine pay and conditions and ensure ‘safe rates’ for heavy vehicle drivers. However, the future of ‘safe’ remuneration is already in doubt following a Federal Government review of the Tribunal which is due to be handed down by April 2014.

All in all, heavy vehicle safety is a complex problem with significant accounting and corporate social responsibility implications. We now wait to see the outcome of the government’s inquiry, and the response by the retail and transport industries to the Four Corners report. One would hope appropriate changes can be implemented before more lives are lost.

– Dr S O’Neill and Dr D Tweedie.

Work, Health and Safety: What ‘Lost Time’ Doesn’t Tell You.

IGAP researcher Dr Sharron O’Neill argues that ‘Lost Time Injury Frequency Rates’ (LTIFRs) – traditionally the ‘gold standard’ in workplace safety reporting – can mask worrying trends in the severity and incidence of occupational injuries. Her analysis of injury data was recently reported in the cover article of the March 2013 issue of Inside Safety – ‘Losing Faith in Lost Time Injuries’ – by journalist Richard Collins .

????????????????????????????????????????????????????????????????????????????????????The article draws attention to three important limitations of LTIFR measures:

1. LTIFR only captures a subset of work-related injuries. By definition, lost time injuries are work-related injuries that prevent a worker from performing their usual work duties for at least one day. Hence, even serious injuries such as permanent loss of hearing are excluded where they involve no loss of work time.

2. Counting injuries does not measure safety risk – dangers at work and the possible consequences – or the effectiveness of hazard identification and management.

3. Research demonstrates that LTIFR performance can fall even when the incidence of severe injuries is rising. This explains how companies can experience a blowout in workers compensation costs despite workplace injury rates appearing to decline.

Given these limitations, Dr O’Neill raised concerns about the way the LTIFRs are being used as a proxy for anything from workplace safety to workplace culture and performance, and then used to inform a vast array of organisational decisions from workplace health and safety (WHS) strategy and policy to resource allocation and executive remuneration. She suggests that the divergent uses of LTIFRs is: “…part of the reason behind claims that [LTIFR] is so manipulated and produces dysfunctional outcomes – it’s like a square peg being forced into too many round holes.”

Instead, Dr O’Neill identifies a number of alternate measures that may be preferable in particular circumstances and urges decision-makers to look to those measures that best suit the context. For instance, lost time measures may be suitable for capturing the financial and productivity costs of workplace injuries. However, the effectiveness of an organisation’s safety policy and systems is better captured with metrics that reflect the control of latent risks and / or quantify both the severity and incidence of workplace injuries.

The importance of evaluating work health and safety in a valid and reliable way is underscored by both the human and economic consequences of poor safety management. Recent Australian Bureau of Statistics (ABS) statistics show 640,700 Australians sustained workplace injuries and illnesses in the 12 months preceding the (2009-10) survey, which equates to about 53 in every 1,000 people in work. Furthermore, Safe Work Australia estimates suggest workplace injury and illness is costing the Australian economy $60.6 billion per year, or approximately 4.8% of GDP.

The need to improve both the measurement and governance of WHS in Australia is a key driver for the WHS performance and governance research being conducted by the IGAP research centre. IGAP is currently working with the Safety Institute of Australia and the Institute of Chartered Accountants, Australia to develop a WHS reporting guide that can help organisations measure, report, interpret and improve their safety performance. In a separate study, IGAP is bringing together CPA Australia, Safe Work Australia and the Safety Institute of Australia to undertake a detailed examination of the role of accounting in WHS governance. Please refer to the IGAP Projects website or contact Dr O’Neill for further details.