Making Companies Safe - what works? (CCA ... - Unite the Union

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Chapter Nine The business case for improving health and safety? Evidence discussed in chapter seven suggests that the impact of education and campaigns are limited. There is however an argument, which is discussed here, that employers could be persuaded to make positive occupational health and safety (OHS) changes if only they knew of the negative impacts – both in terms of costs and in terms of reputational damage - of failing to comply with health and safety law If these arguments could be shown to be persuasive, then – assuming that you could make them widely known, which as we have seen above is not altogether easy – they could prove to be an effective motivating factor for change without the need for inspectors to enforce the law. The HSE has, for a number of years, put considerable effort into persuading business of the economic case for improved OHS performance, primarily through the ‘Costs of Accidents’ survey and the ‘Good Health is Good Business’ campaign. And the HSC/E have recently confirmed that this strategy is to remain an important part of their future activity, 1 stating that one of the ‘early deliverables’ under the new strategy will be: “The collection of further evidence to demonstrate the business case for health and safety and its publication, with case studies, on a new website in summer 2004.” 2 In the following sections we will review the various business factors that HSE consider might act as levers on employers to improve OHS, evidence relating to the likely impact of these levers and consider whether attempts to persuade industry of the business benefits of improved OHS performance have been successful to date. Economic Benefits Most of HSC/E’s efforts to persuade employers of the business case have, to date, emphasised the economic and productivity benefits to be gained from improving occupational health and safety performance. However, confidence in the likely usefulness of such a strategy is seriously undermined by the bulk of the international and national research, which has shown that: • There is no evidence that UK employers are motivated to improve OHS due to potential business benefits. • There are numerous situations where safety does not pay. Even where improved health and safety may make economic sense, there are a number of reasons why employers will either not recognise this or will not choose to pursue this benefit. 69
When safety does not pay (or does not pay fast enough) In an overview of the literature, Wright found that whilst the research indicates that employers in the United States are motivated by the need to reduce the costs of ill-health and injury under certain circumstances, this finding is not replicated in the UK. 3 Similarly, Hillage et al. conclude, after their review of the evidence, that “Compliance with the law is generally a bigger motivator for employers than achieving business benefits.” 4 For instance, an evaluation of the ‘Good Health is Good Business’ campaign, which aimed to persuade employers of the business case for occupational health improvements, reported that: • only 1% of respondents cited the wish to avoid loss of business as a reason for initiating health and safety improvements; • only 1% cited ‘productivity’ as a reason; • no respondents cited evidence of adverse commercial impacts; • and only 1% cited reducing costs. 5 Wright concludes that: “These contrasting findings can be related to differences in health care insurance and compensation arrangements. USA organisations directly incur a high proportion of the cost of injury and ill-health in the form of health and worker compensation insurance premiums.” 6 By contrast in the UK, the costs of occupational injury, death and ill-health are borne mainly by victims, their families and the state, and not by employers. 7 So whilst there may be isolated cases where safety pays, 8 there will be numerous instances where safety does not pay. 9 Wright therefore argues that: “the economic model of voluntary self-compliance is unlikely to be of general relevance in the UK without a substantial change in the level and/or allocation of financial liabilities.” 10 Also, where the costs of injury or ill-health do outweigh the costs of measures needed to prevent them, Johnson and Kaplan have shown how current accounting practices, which are designed to calculate ‘return on investment’ over a period of only one or two years, fail to accurately calculate the savings to be made from health and safety improvements, since such savings often only accrue over a period of several years. 11 Moreover, accounting practices simply reflect the fact that corporations are judged principally on a short-term basis. Thus it is not just accounting practice, but the short-term thrust of capitalist markets in general that further reduces the likelihood of long-term investment in health and safety – even where this would be economically rational. 12 Organisational decision-making The research suggests that there are two further reasons why – even in circumstances where safety does pay – we cannot assume that managers will make, or are in a position to make, rational decisions concerning investment in health and safety. First, managers do not have access to perfect information, and even if they did they would not be able to process this information perfectly. This is referred to as ‘bounded rationality’. Hopkins argues that a consequence of bounded rationality is that managers “are not in a position to make decisions which are rational in any global sense. Instead they evaluate the information readily to hand, and choose from among the options already known to them. Decision making is rational within these bounds.” 13 70
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Making companies safe: What works?
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Acknowledgments: Courtney Davis wou
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Contents INTRODUCTION 7 MAIN FINDIN
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So for example, the new Strategy do
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“In recent years, there had been
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Chapter eight is a short chapter lo
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• The only sector-specific data o
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PART ONE Legal Regulation v Volunta
Page 19 and 20: self-regulation through the adoptio
Page 21 and 22: • A number of studies evaluating
Page 23 and 24: Gap in the law Yet despite the impo
Page 25 and 26: By September 2002 the Government ha
Page 27 and 28: Conclusion In conclusion, the Green
Page 29 and 30: effectiveness of safety representat
Page 32 and 33: Chapter Four Conclusion There is ve
Page 34: PARTS TWO & THREE Strategies to sec
Page 37 and 38: A recent HSE discussion paper illus
Page 40 and 41: Chapter Five The Health and Safety
Page 42 and 43: Support for these findings comes fr
Page 44 and 45: Gray and Scholz attempt to understa
Page 46 and 47: perceived low level of current fine
Page 48 and 49: Chapter Six The Implications for th
Page 50 and 51: five times greater than if one had
Page 52: Select Committee on Work and Pensio
Page 56: The evidence reviewed in part two s
Page 59 and 60: health risk management between “a
Page 61 and 62: The relationship between knowledge
Page 63 and 64: Conclusion Whatever factors prompt
Page 65 and 66: 16 This was at an aggregate level.
Page 67: - the year that the initiative was
Page 71 and 72: Similarly, firms might make an econ
Page 73 and 74: However, even in the context of mul
Page 75 and 76: does, exert a negative influence on
Page 77 and 78: to cost “a little” or “nothin
Page 79 and 80: For instance, when BP Grangemouth r
Page 82 and 83: Chapter Ten ‘Earned Autonomy’ T
Page 84 and 85: A similar experiment in self-regula
Page 86 and 87: Whilst the original focus of TQM wa
Page 88 and 89: “the more firms incorporate ethic
Page 90 and 91: “In Norway the mandated model is
Page 92 and 93: odies, pressure groups and/or the m
Page 94 and 95: Health and Safety Management System
Page 96 and 97: Gunningham and Johnstone argue that
Page 98 and 99: Conclusion Proposals that some comp
Page 100 and 101: 37 The Norwegian Internal Control R
Page 102 and 103: PART FOUR Conclusion 103
Page 104 and 105: Chapter Eleven Conclusion The Healt
Page 106 and 107: Appendix Select Committee on Work a
Page 108 and 109: References Alder A., Tipping A. and
Page 110 and 111: Health and Well-Being’, in Frick
Page 112 and 113: Honey S., Hillage J. et al. (1997)
Page 114 and 115: Nichols T. and Armstrong P. (1973)
Page 116 and 117: Wokutch R.E. and VanSandt C.V. (200
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