Leadership equity in safety to empower workers

Every organisation wants long-term growth and profit. A company’s long-term success - what the Australian Institute of Management* calls ‘corporate endurance’ - recognises the critical necessity of ‘people’ performance. Therefore, a company has a vested interest in looking after the safety and wellbeing of its people. People drive business performance - up or down. People are a company’s key competitive advantage or disadvantage.

Providing safe working environments is fundamental to all companies. If they get safety wrong, their reputation takes a belting. They may recover, but the publicity will impact the share price. Remember Union Carbide’s Bhopal gas plant disaster, James Hardie and asbestos, or Esso’s Longford gas explosion?

Well-managed companies with a reputation for looking after the safety and wellbeing of their employees are most likely to attract and retain the best people and are therefore well placed to maximise business performance.

Business performance is linked to making safety the number one priority at a strategic level. Boards need to ensure comprehensive safety policies, processes and risk management are integrated with the way the company does business. Management then needs to implement, enforce and assess subsequent programs. Delivering the safety strategy needs a systematic management approach. AIM advocates a management and leadership model based on:

• Managing the business - Know the culture, vision, knowledge, management and strategic planning;
• Personal effectiveness - Communication, relationship building and professional development and training;
• Leading and managing people - Lead teams, innovation and change and empower leadership.

Pacesetter companies on safety ensure all employees have the means and authority to deliver on the intent of the company’s workplace safety policies. Employees need to feel empowered and be empowered.

Once an effective safety culture is in place, benefits flow - reduced LTIs, productivity boosts, staff retention and overall business improvements. Safety leadership needs to be regarded as a business driver, shaping a company’s profit, performance and reputation.

What happens when a company gets safety wrong?

Esso’s Longford explosion killed two people, injured eight others and severely disrupted gas supplies in Victoria, causing a $1.3 billion loss to industry. It led to a Royal Commission, coronial inquest, WorkCover criminal prosecution, 10-week Supreme Court trial and class action that saw Esso ordered to pay $32 million compensation.

Poor safety practices and atrocious working conditions at Hardie’s asbestos plant and subsequent management response caused enormous damage to its reputation and business performance. Legal proceedings against former directors and executives for misleading the public on its capacity to meet compensation liabilities, and the eventual $4 billion, 40-year compensation package, spurred public resentment in Australia. The damage to Hardie’s public reputation coincided with its decision to move the corporate headquarters offshore.

Not all publicity is good publicity. Safety should be integral to business performance, not an add-on.

Companies that deliver on safety embrace ‘leadership equity’ to maximise people’s leadership potential by giving them ownership of the leader’s role. A company’s culture should encourage every employee at every level to show leadership. It’s not about pointing to management and assuming leadership starts and stops with them.

However, when it comes to driving safety leadership, expect resistance. No matter how strongly leadership equity is pushed, not everyone sees themselves as a leader. This ‘leadership resistance’ occurs when managers or supervisors don’t step up to fulfil the leadership expectations of their roles. But leadership equity is something to strive for and worth investing in.

Companies need to recognise that their corporate endurance is dependent on knowing the opportunities and risks they face. Safety is a threat every day. A systematic management approach to ensure safety is integrated into business operations is vital. Everyone is a leader when it comes to safety.

* Susan Heron is CEO of the Australian Institute of Management in Melbourne and a Board member of Museum Victoria. Prior to joining AIM in 2004, she held senior corporate management and Board positions including Chief Operating Officer and Head of Corporate Strategy, ANZ Institutional Banking; Executive Director and Head of Banking (Melbourne), Rothschild Australia; and Chief Manager at Westpac. Heron holds an applied science diploma and an economics degree.