Thought leaders already embrace these invisible developments
Driverless vehicles, cloud computing, Uber and 3D printing are just some of the disruptive technologies revolutionising thinking and business. McKinsey estimate that the application of just a dozen new technologies they’ve identified could have a potential economic impact of between $14 and $33 trillion a year by 2025.
New ideas are only new until they become mainstream. They change the game for careers and business so fast that winners and losers are now defined by the ability to see and capitalise on opportunities early. The ability for clever people and businesses to look beyond long-established models to create new products and services is the differentiator that will determine reward, or business risk.
Three new ideas taking hold across the globe will transform the way business responds to employee health and safety.
- Investment Analysis
An effective health and safety culture doesn’t just benefit an organisation’s employees; it has a positive impact on productivity and business results. Visionary leaders realise that an investment in safety culture is a sound business strategy.
Twenty five years ago Paul O’Neill, CEO of Alcoa, understood that nothing was more powerful than safety to motivate employee passion for high performance, teamwork, and engagement. He changed Alcoa from an ‘also-ran’ behemoth and increased sales by 5 times to $23billion, increased profit by more than 5 times, and market capitalisation by 10 times.
EY recently conducted 576 interviews with companies around the world and reviewed 2,750 analyst and company reports to assess the maturity of risk management practices. They then worked out the relationship between that level of maturity and financial performance. The best top 20% companies generated three times the level of EBITDA than those in the bottom 20%, and twice that of the middle 60%.
During 2015 Citi Research compiled an in depth analysis of the safety performance of the ASX 100 companies and 26 others in response to strong investor and company interest in their safety research and data. The report summary comments: “A company’s safety performance and approach can provide a window into ‘management quality’. A safe business may also be a well-run, efficient business”.
Fourteen years ago the British HSE commissioned a report: ‘Health and Safety Indicators for Institutional Investors’. The overarching finding even then was: “Institutional investors have a significant level of interest in Health and Safety, and it fits well with corporate social responsibility/socially responsible investment. Investors are generally supportive of the idea that good health and safety performance is an indicator of good management, and are generally interested in finding out more about Health and Safety”.
Today investment analysts, insurance, and financial providers are increasingly interested in injury rates and fatalities, process safety information, safety and executive remuneration, and leading indicators of health and safety culture. Typically most companies devote more space in their annual reports to the pedigree of their directors than to how they keep their employees safe. But now a leading group of smarter companies include details about how every strategic decision effects, and is enhanced by, health and safety considerations.
Boards and Executives will have to report robust health and safety data to satisfy an increasingly aware group of stakeholders. Responsibility is being driven by government regulations, public expectations, digital connectivity, millennial employees, business supply chains, and customers.
The first of the three health and safety megatrends increasingly means no one will want to invest in, or work with businesses that fail to provide transparent and robust health and safety reports, nor those who regularly harm their employees or rely on not doing so, by luck.
The second most fundamental human need is safety and security within family, at work, and within their community. The desire to feel safe is not just an idle ‘want’, it is a compelling sub-conscious ‘need’.
According to Gallup, worldwide engagement levels are extraordinary low, only 13% employees worldwide are engaged, (30% in the US, 24% in Australia and 23% in New Zealand).This is hardly surprising given a widely held belief that the majority of businesses have no ambition beyond profit. Conversely there is an almost universal desire by employees that business leaders place greater emphasis on their wellbeing.
I’ve worked with companies who’ve reported widespread absenteeism, gear failure, plant breakdowns, cost overruns, and even covert sabotage until the leadership team demonstrated that they genuinely cared about the wellbeing and safety of employees. A transformation in the thinking of the most influential leaders about health and safety, also transformed employee attitudes and assumptions about their employer. It engendered a positive sense of reciprocity, and this in turn contributed to the elimination of these events and their associated costs.
Boosted employee reciprocity and engagement are a great start for attracting new hires, but businesses face growing competition for talent in areas like science, information technology, engineering and mathematics. Attracting knowledge workers with higher-level skills is becoming critical for businesses wanting to fast-track success, but today employees are becoming more informed about what is being offered in areas other than financial rewards, and they are increasingly selective about who they want to work for.
The ability to demonstrate that the employer/employee relationship is more than just a transactional one, based on the exchange of labour for money is a trend already embraced by Gen Y Millennials. Along with them, fewer and fewer high quality employees will be attracted to, or tolerate, workplace cultures that only pay lip-service to health and safety.
3. Public Expectations
As well as publicised efforts to encourage individuals to make sure that they get home safe to their families every day, workplace accidents continue to disrupt lives and cost billions of dollars.
In New Zealand our Accident Compensation Commission accepted 193,991 claims for injuries while at work (2014-15) costing $3.5 billion; Australia recorded over 500,000 workplace injuries (or one every working minute) at a cost of over $60 billion (greater than 4% of GDP); USA chalks up 8.4 million workplace injuries (23,000 every day), and kills another 15 workers a day. An estimated cost of $192 billion.
Year after year these numbers are tolerated as part of doing business in developed nations, but they are only a fraction of an endemic toll around the world. The ILO (International Labour Organisation) estimates a worker dies every 15 seconds, and during the same time a further 153 workers suffer a work-related accident. (That’s 5,700 dead, and 64,000 injured per day).
So far it has taken events with news-worthy loss of life and injury to be the catalyst for improved workplace health and safety.
- In New Zealand the avoidable explosion of methane gas at the Pike River coal mine killed 29 men, and was the catalyst for the Government to introduce new legislation, establish a new Worksafe Department, and employ a fleet of inspectors. Investors lost about NZ$400 million, but the biggest loss was to the West Coast Community where the mine operated. They lost their men, economic sustainability, and endured feelings of impotence when they raged against the culture of profit verses safety by big business.
- In Bangladesh the collapse of the garment manufacturing factory in Savar, on the outskirts of the capital Dhaka, killed 1,138 and injured more than 2,000 employees. This single event was reported as the catalyst for western retailers to demand factory inspections which identified 80,000 safety hazards in the 1,106 inspected. (An estimated 4,500 garment factories produce US$24.5 billion worth of clothing every year).The question asked was whether western retailer ‘hand-wringing’, and the safety investigations called for, were driven by concerns about reputation and loss of sales back home, or a genuine care for Bangladeshi workers. It might be reasonable to conclude that if the latter was true, safety audits would have been carried out prior to awarding business to the factories offering extremely cheap deals.
- In China where 200 workers are killed at work every day, a giant double explosion in Tianjin killed 150 people and injured more than 700.
While authorities ordered an immediate investigation many members of the public protested, ostensibly, as one commentator wrote, because of the high level deception and carelessness it exposed. Others called loudly via the media, when they could, for prompt change and a new culture of transparency.
Each of these examples signal an approaching tide of public reluctance to accept the status quo. We are all shocked by multiple deaths from a single incident but have until now accepted that it’s OK for the equivalent of seventy-five A380 plane-loads of workers to be killed every day in one-by-one workplace accidents.
Social responsibility is a growing force across the world (Social responsibility is an ethical framework and suggests that an entity, be it an organization or individual, has an obligation to act for the benefit of society at large). A megatrend fuelled by the social matrix means that aware consumers are starting to boycott businesses that do not act ethically. Exposure about inadequate safety practices; a campaign against employee harm; and the power of internet connectivity are each ingredients that combine to rapidly cause a titanic shift in perception towards a brand, product, or company.
Like transformation everywhere, megatrends are easy to miss or ignore.
- Historically investors have been ambivalent about the implications of effective corporate health and safety, but the destruction of business value and public outrage, along with unavoidable conclusions about management capability, has meant a shift in thinking has already stared.
- Recruiters are experiencing a shift from the historical attitudes of “What can this prospective employee bring to the business” to prospective employees asking “What will this potential employer do for my career and my wellbeing?” Employing and retaining the best and brightest has always been a critical business issue, but today’s prospective employees are better informed and are choosing to avoid workplaces that eschew their wellbeing and safety responsibilities.
- The public and customers across the world are now all part of the social matrix that comments on ethical issues that interest them. The vast majority of consumers are beginning to understand the need for corporate social responsibility and while much of that concern is based on ‘green’, their way of sending a powerful message to businesses that injure or kill employees is to simply avoid purchasing their products or services.
The health and safety of employees (and other stakeholders) is coming of age, and while the transition for some leaders and businesses will be difficult, ignoring it will be at their peril.