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

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
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