Can safety be profitable?

The ‘law of diminishing returns’ needs to be considered if profitable safety is to be achieved.

At the start of 2015, all states and territories - with the exception of Western Australia and Victoria - adopted the Model Workplace Health and Safety (WHS) Act. While this legislation is in many ways a restatement of the previous OHS risk management obligations, the model WHS Act does refocus private and public sector organisations to actively think through their approach to workplace health and safety. There is also an extended leadership team view, which is defined in the duties set against the term ‘person conducting a business or undertaking (PCBU)’.

All tiers of leaders in the organisation - from the board to the executive, from senior management through to the frontline supervisor - must clearly demonstrate how they have eliminated, as far as reasonably practicable, workplace health and safety risks. Where this is not possible, they must show how they have minimised the risks through applying the same standard. The duty to manage risk as far as reasonably practicable stretches to include the work environment, maintenance of plant and structures, provision of adequate facilities, handling and storage of plant, structures and substances, provision of information, training and supervision, and health monitoring.

The leaders also have to show how they have exercised due diligence in ensuring their duties and obligations as defined under the Act are met. This means leaders must play an active role in acquiring and keeping up to date with WHS knowledge, have a thorough understanding of the operations and associated risks, ensure there are adequate resources and process to eliminate or minimise health and safety risks, and ensure that adequate processes are in place for dealing with information and other obligations within the Act.

The challenge in responding to the changes in the WHS legislation and regulation is not to revert to earnestly doing more of the same and somehow expecting a different safety outcome. If we rely on a ‘single approach’, we are in danger of falling into the classic economic trap of the ‘law of diminishing returns’. In economics this is a principle where, after a certain point is reached, by increasing the investment in one area the rate of improvement or return will not progress, or may even diminish, if the other variables remain constant.

Frank Guldenmund, from the Safety Science Group at the Delft University of Technology in the Netherlands, argues that if an organisation is going to sustainably improve its safety performance, it must pay attention to structure, culture and processes, as well as the dynamic relationship that exists between the three. He goes on to argue that within the dynamic context of these three elements, safety behaviours are formed and expressed. The law of diminishing returns can be avoided if structure, culture and processes form part of a well articulated, integrated, resourced and executed strategic plan.

Here are a few thoughts worth exploring against each of the three elements.

Structure is the formal framework that describes how work will be efficiently and effectively undertaken and by whom, and the role leadership plays; in particular the division of authority, accountability and responsibility within the workforce.

Structural questions to consider include:

1. Does your organisation have a clear accountability and responsibility framework, which leaders understand and operationally embrace?
2. In your organisation, is the structural undertaking appropriately resourced?
3. Can leaders in your organisation effectively and consistently demonstrate transformational and transactional leadership capabilities?

Culture is the shared values and basic assumptions that influence and shape the way an organisation operates and behaves. It can be likened to the layers of onion, where the perceptions form the outer layers, commonly referred to as climate, and the core is where the deep culture values, assumptions and artefacts reside.

Cultural questions to consider include:

1. Does your organisation have a well-defined culture maturity model in place that maps the end goal and the steps required to get there?
2. Is there a mechanism in place for your organisation to measure your organisation’s safety climate?
3. Are your leaders trained in how to build genuine workforce and contractor safety engagement and empowerment?

 Processes make up the management system and are in part the means by which an organisation realises defined objectives.

 Process questions to consider include:

1. How does your organisation deal with the inevitable gap between the way work is imagined and the way work is actually done? Is this observed performance variability valued or constrained, and under what circumstances?
2. How do your leaders and the architects of your management system determine that the processes are moving the organisation closer to the end state and are perceived by those who use them to be adding value?
3. Do you processes promote both ‘protective safety’ - those activities which reduce incidents and injuries - and ‘productive safety’ - those activities that focus on what is being done right and making sure this is replicated?

If safety is truly going to be profitable then all three elements need to be in the gaze of leaders and the workforce, and growing trust needs to be nurtured.

A study undertaken by Safe Work Australia estimated “the total cost of work-related injuries and illnesses for the 2008-09 financial year … to be $60.6 billion, representing 4.8% of GDP for the 2008-09 financial year”. Meanwhile, a recent Deloitte Access Economics report estimated a staggering $249 billion (equivalent to 16% of last year’s GDP) is spent every year in Australia on compliance-related activities. The most sobering figure is that $155 billion is directly attributed not to government red tape, but to organisations following self-imposed rules.

If careful consideration is not given to structure, culture and processes, not only will behaviour remain unchanged, but the worrying costs associated with harm and spiralling self-imposed compliance will continue to erode organisations’ social and financial bottom line.