The survey results of the inaugural Directors Sentiment Index have been around for several months but recent breakfasts discussing the findings have generated renewed media interest.
The survey provides a useful profile of how directors see their role and lists forecasts of trends but in none of the recent media reports does workplace health and safety receive attention although it is mentioned in the survey results.
The survey, conducted for the Australian Institute of Company Directors (AICD), lists occupational health and safety (OHS) as one of the components of what is described as Environmental, Social and Governance (ESG) issues (page 64).
(Curiously “Work Health & Safety” continues to be abbreviated to OH&S showing the persistence of OHS).
The chart shows that 54% of respondents believe that the importance of OHS issues will increase a little. This can be interpreted in many ways – directors do not know what they are talking about, the OHS profession has a bloated sense of its own importance, a survey over time may provide a better reflection of perception or that the work of Safe Work Australia on OHS and corporate governance is not gaining traction on the agendas at board meetings.
A comparison of the OHS figures with those of Climate Change is more interesting as almost half of the respondents believed that climate change will increase in importance substantially over the couple of years. OHS is an established workplace issue and business cost with analysis having extended over many decades. It is a “known”. Climate change is comparatively new in terms of business management and governments are giving the issue considerable regulatory attention.
As with many business attitude surveys it pays to look at the data as much as possible. Page 65 summarises the data as
“Over 60 per cent of directors have a documented policy on business ethics within their organisation and more than 80 per cent of directors address ethical considerations at board meetings.”
This is relatively comforting except that the second figure indicates that 20 per cent of board meetings do NOT consider ethical issues. Of the 80 per cent, only 53 per cent discuss ethical issues SOMETIMES. Several of the findings in this report require similar attention.
Having said that, there are some statements that do impinge on OHS and OHS may be seen in the corporate world.
“More than two-thirds of directors believe the level of “red-tape” increased within the last 12 months and expect it to increase further in the future.”
Red tape has been a regular feature of discussions on OHS and the process of harmonisation in Australia but the statement above is likely to be more reflective of the general perception of government “interference”.
“Almost 80 per cent of directors believe the Federal Government lacks understanding of business.”
This is more likely to relate to considerations of economics but OHS advocates could make similar claims.
“Most directors believe director liability and compliance requirements negatively impact their willingness to serve on a board.”
New OHS legislation in Australia has increased obligations on company executives and there could, again, be some element of OHS concern in this finding.
“Most directors expect increases in the regulation of Environmental, Social and Governance (ESG) issues in the future. Female directors place greater importance on ESG issues, compared to male directors.”
The second sentence in this quote is interesting as it may indicate that ESG could be construed as one of the “soft business arts” along with OHS and Human Resources. The ramifications of this sentence require more thought.
As with other business attitude surveys, more useful data may come from repeating these surveys over several years but this is not always the case as the Safety Institute of Australia and Australian Institute of Management surveys have shown.
OHS discussions at board level get very little public attention in the media or even in Annual General Meetings. It is necessary to infer many of the attitudes from surveys such as that of the AICD above. Occasional academic studies appear about corporate attitudes to OHS but few of them seem to take the findings at the corporate end of a business to the shopfloor to see how these approaches apply. The survey above is interesting as far as it goes, but that’s not very far.
There seems to be a view that if directors, CEOs and senior managers showed more interest in Safety, then we would see a significant reduction in workplace injury. On the surface this seems a rational assumption, after all they are the architects and financiers of their businesses.
Acting an incentive for change, we have relied heavily on ever increasing fines and penalties for non performance including a further upgrading of punitive and compliance measures required under the new act.
I wonder, however, whether we are treating the symptom and not the cause.
To a certain extent, business reflects what is important in the communities in which they exist. We hear constantly from politicians, business groups, trade unions, media, investors etc on mainstream business issues such as industrial relations, environment, health and wellbeing (particularly obesity and diabetes), carbon tax, and mining tax and so on. The barrage of debate in public arenas and information on these issues is immense.
I read the papers and watch programs such Business Lateline, Q&A, 4 corners and others and find myself wondering whether we will ever see an entire program dedicated to the debate on Safety. Why are we so apathetic about an issue that does more damage than road trauma, yet we are continuously bombarded with messages about driving fatality rates, speed and drink driving?
If we want to change Director thinking, perhaps we need the community, through our politicians and media, to make more noise. The old saying applies, what interests my boss fascinates me. If politicians, shareholders, media and the community demand more, then maybe we would see greater momentum for change though business. I am not suggesting business is absolved from its obligation to provide a safe working environment, we need to keep that pressure on. But we should broaden our influence from just the boardroom to the wider community.
Maybe someone needs to say a great big Safety tax and then we might wake up from our slumber!! But that would be silly.