Make buying a business a safe choice

A recent prosecution by SafeWorkSA illustrates an odd situation but one of considerable importance.

The media release of 15 December 2010 reports on the the penalties given to Hermes Precisa Pty Ltd (A$24,600) and Salmat Document Management Solutions Pty Ltd (A$22,400) for breaches of OHS law in May 2008.  The circumstances of the offence are:

” A male plant operator was working with a large guillotine to remove the spines from stationery, when his fingertips were crushed by the clamp of the machine, necessitating their eventual amputation. He remains employed by the company.

The investigation revealed that the employee had received only verbal training and instruction on the use of the machine, and was required to use a wooden block to square up stacks of papers that were to be trimmed.

SafeWork SA told the court that the wooden block was insufficient to protect the worker’s hand and neither company provided safe systems of work for the task involved.  A purpose-built blocking tool that did protect the operator’s hand had been lost a year previously. “

The obvious lesson from the incident is in the last paragraph – maintain safety equipment and replace what is broken or lost.

But the curious element of the prosecution is that it is rare for two companies to be prosecuted and guilty for the one offence.  What is not clear in the release is that Salmat purchased Hermes in 2007.  (Hermes is now Salmat BusinessForce.)  Salmat had a more effective safety management system (as, perhaps, indicated by a recent safety award for an engineering control) than Hermes but in the first 12 months of the acquisition/integration phase, Salmat’s OHS management system and approach were not as quickly implemented.

The challenge of raising a level of safety performance in newly acquired companies always seems to be a challenge but it shouldn’t be.

Companies that look for acquisitions should investigate the safety performance of any potential targets.  Look at annual reports.  Ask for safety performance and workers compensation data to be disclosed.  Incorporate workplace safety as more than just an add-on into the financial and governance risk management, perhaps by seeking a safety audit by a safety professional.

In October 2009, Bryan Colburn of SafeWorkSA about this type of hazard in the Adelaide Advertiser (available for purchase through the Newstext archives) and referred to two cases:

“….a business after a crane toppled over while carrying a large concrete tank.

The business had changed hands eight months before the incident and the new owner relied on the knowledge of the existing staff about safety procedures and the integrity of the plant.

Investigations by SafeWork SA, however, revealed the crane had been poorly maintained, had no records or logbooks, was routinely overloaded and its operator had no formal accreditation to use the machine.”

the operator of a suburban butcher shop was fined after a poorly maintained meat tenderising machine injured an employee’s hand, costing him his livelihood.

Having acquired the business only a few months before, the managing director, who also worked full-time at the business, admitted he was inexperienced in the industry and unaware of his safety obligations, relying on the commonsense and experience of his employees.”

Risk management is an important formal element of modern business decision-making but it is not flawless and it seems to be a common failing that workplace safety is assessed as a business disruption cost rather than a life-threatening personal cost.  It is important that safety criteria is understood and valued by those who are assessing businesses for their value.  The three cases above are good examples of the true cost of not buying wisely.

Kevin Jones

reservoir, victoria, australia
Categories business, government, hazards, law, machine guarding, OHS, risk, safety, small business, UncategorizedTags , , ,

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