Category: executives

Leadership – research, mental health and what true leadership is.

Scandinavia produces some of the best research into OHS issues.  However, due to the social structure of Scandinavian countries, the research has little direct and practical application outside the region.  The research is best taken conceptually as it will need to be evaluated closely to determine local applicability.

(TIP: whenever an OHS researcher says “recent Scandinavian studies show….” remind the researcher which country they are in and ask them to explain the practical application in the local context)

In early 2009, there was a bit of media attention about research that found, according to researcher Anna Nyberg

“Enhancing managers’ skills – regarding providing employees with information, support, power in relation to responsibilities, clarity in expectations, and feedback – could have important stress-reducing effects on employees and enhance the health at workplaces.”

In October 2009 Anna Nyberg’s thesis on the issue was released.  According to the abstract to her thesis

“The overall aim of this thesis was to explore the relationship between managerial leadership on the one hand and stress, health, and other health related outcomes among employees on the other.”

Nyberg’s thesis details the needs for some adjustments in the research to allow for “staff category, labour market sector, job insecurity, marital status, satisfaction with life in general, and biological risk factors for cardiovascular disease.”  These adjustments are important to remember when reading any of the media statements about Nyberg’s research.

There were five studies within the thesis and, according to the abstract, they found the following:

“Attentive managerial leadership was found to be significantly related to the employees’ perceived stress, age-adjusted self-rated health and sickness absence due to overstrain or fatigue in a multi-national company.”

“Autocratic and Malevolent leadership [in Sweden, Poland, and Italy] aggregated to the organizational level were found to be related to poorer individual ratings of vitality…. Self-centred leadership … was related to poor employee mental health, vitality, and behavioural stress after these adjustments.”

“… significant associations in the expected directions between Inspirational leadership, Autocratic leadership, Integrity, and Team-integrating leadership on the one hand and self-reported sickness absence among employees on the other in SLOSH, a nationally representative sample of the Swedish working population.”

“… significant associations were found between Dictatorial leadership and lack of Positive leadership on the one hand, and long-lasting stress, emotional exhaustion, deteriorated SRH [self-reported general health], and the risk of leaving the workplace due to poor health or for unemployment on the other hand.”

“In the fifth study…a dose-response relationship between positive aspects of managerial leadership and a lower incidence of hard end-point ischemic heart disease among employees was observed.”

But what can be done about the negative affects of poor leadership on health, safety and wellbeing?  The thesis is unclear on this, other than identifying pathways for further research in this area.

The SafetyAtWorkBlog  recommendations, based on our experience, are below

  • Carefully assess any training provider or business adviser who offers leadership training.
  • Ask for evidence of successful results in the improvement of worker health and wellbeing, not just a list of client recommendations.
  • Look beyond the MBA in selecting senior executives.  If you expect executives to establish and foster a positive workplace culture, they need to have to be able to understand people as well as balance sheets.
  • Remember that the issue of leadership as a management skill is still being investigated, researched and refined.  It is not a mature science and may never be, so do not rely solely on these skills.
  • Some say that leadership cannot be taught and cannot be learned.  Some say that leadership, as spruiked currently, is not leadership, only good management.  Leadership only appears in times of crisis and manifests in response to critical need, not in response to day-to-day matters.

This last point needs a reference – page xiii of “Seventh Journey” by Earl de Blonville

“… leadership cannot be taught.  If it is being taught, it may just be management, rebadged at a higher price.  The second discovery was that leadership is not about the leader, which will confound those with a needy ego.  There were two more things that revealed themselves to me: leadership is all about paradox, which is why it resists attempts to tame it into a curriculum, and at its core leadership is lonely, requiring the strength that could only come from a grasp of its intrinsic paradox.”

Kevin Jones

OHS must raise its profile in the debate of directors’ liability and accountability

The global financial crisis has highlighted many business management issues.  Probably one of the most contentious is executive remuneration which is based on the question “should executives receive performance bonuses when the company is not performing well, ie. not returning profits to shareholders?”  But underpinning even this question is one of accountability.

Business leaders, commentators, lawyers and politicians are comfortable in discussing financial and corporate accountability but extend that discussion to other areas of business and they respond with a confused stare or outright dismissal of the proposal.

This week, the Australian Financial Review newspaper ran a page one story: “Revealed: directors face harsher liability penalties.”  [None of the AFR articles are freely accessible online] The article revolved around Australian Government plans to “break an impasse between state governments over proposals to harmonise conflicting commonwealth and state directors’ liability laws.”

As should not be surprising from a business paper, the discussion centred on financial and corporate governance issues but OHS obligations were floating behind all of the business-speak.  This was particularly obvious with this paragraph:

“Federal ministers have expressed concerns that onerous directors’ liability rules increase the cost of directors’ insurance and discourage them from taking board seats.”

This paragraph shows that the first response to any corporate trouble is insurance.  This cowardly response is short-sighted and contributes to the unnecessary growth in litigation which the directors regularly complain and which increases the cost of liability insurance premiums.

It is also an acknowledgement that the introduction of new rules does not address the behaviour intended, it leads to investigating ways of avoiding accountability for one’s actions.

The second point of that paragraph is that people are more likely to refuse to participate than to undertake sufficient education that would allow them to perform the job better and with less risk.  The response should not be “it’s too risky so I won’t do it” but “let’s get better informed so that my decisions are more valid and the risk is reduced”.

It is clear that lawyers are running the agenda when semantics enter the argument.  The AFR article goes one to say “there are fears about confusion over the distinction between executive and non-executive directors”.  This confusion comes from the main concern of directors being to cover one’s arse rather than focusing on the job at hand and the corporate purpose.

The AFR article makes no mention of OHS but the accompanying article “Duty weighs heavily” by reporters James Eyers and Annabel Hepworth does.  Eyers and Hepworth look back through several decades of law reform investigations and reviews to show the history of similar director concerns.

But it is a more recent statistic that is the nub of the article.  A Treasurysurvey of directors from top Australian listed companies, in conjunction with the Australian Institute of Company Directors, found that

“…71 per cent of those surveyed had declined taking board seats mainly because of their fears of personal liability, while 46 per cent had resigned from a board position because of the issue.”

These concerns largely deal with false market rumours, manipulating securities prices, criminal cartels, consumer protection laws and others.  It is this company that the importance of taking responsibility for OHS should be pushed by the safety advocates but it seems that the business and corporate contexts of OHS are only ever discussed by the corporate lawyers.  And yet, OHS professionals complain about not getting heard at Board level.  Perhaps what is needed is one of these OHS professionals to take a business degree so that OHS can be described in terms business understand.

Of course the risk is that OHS may be found to be contrary to all the basic capitalist concepts and that the only way it can be applied in a business is for the application of legal “wriggle room” from the concept of reasonably practicable.

On 6 November 2009, Bob Baxt (a partners with law firm Freehills and the chair of the law committee with AICD) responded to the Eyers and Hepworth article with a personal opinion describing directors and senior managers already in the “firing line” from the corporate regulators.  He seems to see this as unfair but those executives are in the “firing line” because they are suspected of doing the wrong thing.

Baxt describes the “reverse onus of proof” as an “obnoxious device” and he may be right but he needs to consider why such a provision was introduced in the first place – business managers were not complying with their legislative obligations, they were avoiding responsibility, taking short cuts for personal wealth, having workers die and then winding up the company to avoid prosecution.

Too many business professionals focus on “cause and effect” and see injustice.  Yet if they looked a little further back and analysed the “causes” a bit more carefully they may just see that in many cases the regulatory changes have come about as a result of their own misdeeds.

The analysis of capitalism that resulted from the global financial crisis has faded very quickly as the markets rebound.  Companies are applying the same behaviours that led to that crisis.  Most business analysts and executives talk about leadership as the be-all and end-all but we should not be lead in the same direction as in the past as we are likely to end up in the same place.  True leadership is about accepting mistakes and heading in a fresh direction where such mistakes cannot be repeated.

Those who are bleating about how corporate executives are being bludgeoned by regulation and accountability need to get out of the leafy middle-class suburbs and the office buildings with bayside views and take some time to reflect on how we came to be in such an economic mess and why workers continue to get injured, maimed and killed.  It may just be that accepting responsibility is the new foundation required to build a humaneand profitable future.

Kevin Jones

Good corporate advice tainted by poisonous product

In Matt Peacock’s book, “Killer Company“, an entire chapter is devoted to the legacy of the James Hardie chairman, John B Reid.  In Peacock’s talk at Trades Hall in October 2009, he mentioned that Reid had once published a book called “Commonsense Corporate Governance”.  The apparent hypocrisy of an executive of a company that knowingly sells toxic material while advising others on how to manage their corporation responsibly generated chuckles of disbelief in the Trade Hall audience.

Reid book cover 001SafetyAtWorkBlog obtained a copy of John Reid’s book to see first-hand that someone could do such a thing.  A sad part of all this is that the advice in the book is sensible but Reid’s “legacy” now taints all he does and all he says.

One random example of the advice he provides concerns dealing with consultants:

“Where, as with solicitors and auditors, it is imperative for the company to retain them, company staff need to be reminded that the professional advisers are paid for on the basis of the time that they spend on the company’s business. This is not predetermined by the nature of the task. In large measure it is affected by the decisions made and by the homework done within the company. What does this mean?

First, the imposition of new and more demanding, and frequently less precise, legislation on all manner of subjects has made management and, as a result, directors, nervous about things that directors 50 years ago would have dealt with very quickly-and inexpensively. Further, the increasing number of specialists necessary within a company’s own payroll is a result of this legislative epidemic, and has produced a reinforcement of this culture of caution and, occasionally, of fear.”

Safety professionals may want to take particular note of this corporate imperative.

Peacock points to the strict confidentiality clauses that Hardie included in any settlements in the 1970s.  Peacock writes (p 156)

“Secrecy indeed was Hardie’s byword, one endorsed by the chairman, who would later advise aspiring directors to ‘remain silent where there is criticism’.”

Reid recommended this in a bulleted list of ways to handle the media.

John B Reid, whose personal wealth was estimated at $A181 million in 2004, is not unique in advising companies while also having a tarnished corporate reputation.  Some argue that the adjective “good businessman” is a tautology.

There is no doubt that Reid was an active philanthropist and corporate citizen.  He was awarded an Order of Australia for “service to industry” – no citation is available to explain the decision.  In 2006, he received the Goldman Sachs JBWere Philanthropy Leadership Award.

Greek tragedies were full of hubris and examples of the single flaw that made good men do bad things.  If the plays of Euripides, Aeschylus and Sophocles have yet to be analysed for their advice to corporate executives, they should be, for not only do they show human flaws but human corporate flaws.

John B Reid’s book on corporate governance is an easy read and has valuable lessons but it is now a book that makes the reader feel dirty.

Kevin Jones

Management – the importance of what comes before

A special guest for the Safe Work Australia events in Queensland was Matthew Gill, former Beaconsfield Gold mine manager.  According to a media statement from the Government

“Matthew Gill who was the public face of the Beaconsfield mine rescue will speak about how he immediately took control of the emergency and then implemented rescue operations for the three missing miners,” [Workplace Health and Safety Queensland Executive Director, Dr Simon Blackwood] said.  “Mr Gill maintained an unwavering commitment to the safety of the people conducting the rescue and to the trapped miners.

“He oversaw the rescue teams which battled 24 hours a day for 14 days to release the two miners trapped almost 1km underground. Mr Gill will relive the emotional story of finding Larry Knight’s body and having to talk to his family afterwards.

“Previously he has been involved with mine rescue at rock falls at Mt Lyell in Tasmania and in Papua New Guinea, but Beaconsfield was the first time that he had such ‘hands on’ involvement.”

Matthew Gill has a lot of skills to share on disaster management and media handling but a lot of that skill seems to come about after the rockfall in 2006 that killed Larry Knight.

Cover KNIGHT,_Larry_Paul_-_2009_TASCD_25Prior to that time, in 1995 to 1997, Matthew Gill was the Responsible Officer for the mine.  From 1997, Gill appointed other people to undertake the role that is required by legislation.  Sometimes there were three people in the role at the same time.  Professor Michael Quinlan was quoted in the Coroner’s report saying that

“……….the very notion of appointing a Responsible Officer would have little meaning unless that person so appointed exercised overall control of the workplace and could therefore make critical decisions in relation to OHS not simply recommend them, be part of them, or make decisions but not others than might affect safety. For example, as Responsible Officer Mr Ball was a participant in decisions on mine design and mining methods – decisions that have a critical effect on the safety of underground workings – but he was not the only or final decision maker.”

The Tasmanian coroner Rod Chandler,agreed that there should be only one Responsible Officer and that the legislation be amended to reflect this.

Media reports of the inquest into Larry Knight’s death reported that after rockfalls in October 2005 and various risk consultants’ reports Matthew Gill undertook some remedial work on the mine and in February 2006, Gill declared the mine safe to restart mining.  The decisions made on the basis of those consultants’ reports came under close scrutiny in the coronial inquest.

On 10 November 2008, AAP’s Paul Carter reported the following:

Lawyer Kamal Faroque [representing the Knight family and the Australian Workers’ Union] told Coroner Rod Chandler in Launceston that Allstate’s management failures contributed to Mr Knight’s death…. Mr Faroque said mine manager Matthew Gill was ultimately responsible for deficiencies in the mine’s ground supports.  “It is submitted that deficiencies in ground support contributed to the Anzac Day rockfall which killed Mr Knight,” he said.

He also said there was no reasonable basis for Allstate to conclude that it was safe for workers to return to the area after two earlier rockfalls.

“Mr Gill accepted responsibility for the decision to recommence stoping in the western zone following the October (2005) rockfalls,” Mr Faroque said.  Stoping is a mining method in which underground chambers are opened up deep beneath the surface.

Mr Faroque said the risk management process conducted following the October 2005 rockfalls was inadequate.  “It is submitted that these failures are a sound foundation for a finding that Allstate contributed to the death of Larry Knight,” Mr Faroque told the court.

There is no doubt that Matthew Gill was integral to the successful rescue of Brant Webb and Todd Russell but Gill had been employed at the mine for over a decade before the fatal rockfall and therefore was also involved with the decision-making leading up to the rockfall.  The decisions made by the company over many years should be analysed to see the combination of bad, poor, or short-term decisions that ultimately led to Larry Knight’s death and the entrapment of his colleagues.

The rescue of Webb and Russell is an exciting tale with a happy ending and at least one book and several long articles (even a school lesson plan) have been written about this.  The most lasting lessons for safety professionals, mine managers and business operators would be what contributed to the bad decisions leading to Larry Knight, Brant Webb and Todd Russell being in an unsafe working environment during a rockfall.

This is a more complex story that requires knowledge of geology, the stock markets, corporate accountability, OHS and mine safety regulations.  If this story had been Matthew Gill’s presentation during Safe Work Australia Week, it would have been worth travelling to Queensland to hear.

Kevin Jones

Revealing podcast on asbestos in Australia

On 15 October 2009, Matt Peacock, a journalist with the Australian Broadcasting Corporation and author of a new book on asbestos and the James Hardie company, “Killer Company: James Hardie Exposed” spoke publicly at Trades Hall in Victoria.

Killer Company cover 001Peacock has allowed an edited version of his presentation to be used as a SafetyAtWork podcast which can be downloaded.  In the podcast he discusses the conduct of the James Hardie boss of several decades, John B Reid; the pervasive nature of asbestos throughout the Australian community; the surveillance of opponents by the company; the immoral public relations campaigns and, generally, the conduct of a corporation that knowingly sold a product that was toxic and harmful.

One blogger reviewed the book and said

“Killer Company” clearly shows that JH directors were criminally negligent and showed no humanity or compassion for their victims and no remorse for their crimes.

Peacock produced several reports on asbestos recently.  Video and transcripts of his reports can be accessed HERE.

Peacock has also been interviewed extensively about his book.  A video interview is available HERE

Kevin Jones

New approaches on OHS fines and penalties

At the moment Australian OHS professionals, lawyers and businesses are preparing submissions to the Government on the harmonisation of OHS laws.  One of the areas that the Government is seeking advice on is penalties.  The Discussion Paper asks the following

Q17. Are the range and levels of penalties proposed above appropriate, taking account of the levels set for breaches of duties of care by the WRMC?

Q18. What should the maximum penalty be for a contravention of the model regulations?

Q19. The intention is that all contraventions of the model Act be criminal offences. Is this appropriate or should some non-duty of care offences be subject to civil sanctions e.g. failure to display a list of HSRs at the workplace, offences relating to right of entry?

The amount of  any fixed financial penalty is not a big issue in my opinion.  There is an assumption that the threat of a large financial penalty imposed on one company will encourage other companies to improve safety.  Is anyone seriously saying that all of the financial penalties imposed over the decades are in some way responsible for an improving level of safety in workplaces?  The motivation to improve safety comes from elsewhere.

The threat of large financial penalties send companies to seek ways of insuring against having to pay a fine.  Often it is cheaper to pay an insurance premium on the slim chance of being prosecuted and fined.  I acknowledge that this has been a corporate and risk management approach primarily but there are cases where such options are being offered to small business.

Large financial penalties, such as the then record fine to Esso over its Longford gas explosion, are easily paid with little OHS improvement resulting from the fine.  It can be argued that the negative corporate exposure from the resulting Royal Commission, a reulting class action and the media coverage resulting from its unforgivable treatment of Jim Ward were stronger motivators for improvement.

In most Australian States, there is not a crime of industrial manslaughter.  This issue has faded from the political agenda but it remains very much alive in England.  On 27 October 2009, the Sentencing Guidelines Council wrote the following:

“Companies and organisations that cause death through gross breaches of care should face punitive and significant fines, a consultation guideline published by the Sentencing Guidelines Council proposes today.

Fines for organisations found guilty of the new offence of corporate manslaughter may be measured in millions of pounds and should seldom be below £500,000.

The new sanction of Publicity Orders forcing companies and organisations to make a statement about their conviction and fine introduced under the Corporate Manslaughter and Corporate Homicide Act should be imposed in virtually all cases.

The consultation guideline proposes that the publicity should be designed to ensure that the conviction becomes known to shareholders and customers in the case of companies and to local people in the case of public bodies, such as local authorities, hospital trusts and police forces.  Organisations may be made to put a statement on their websites.”

The Council recommends a minimum financial penalty and a publicity order that has teeth. More on the publicity order is below.

Council member Lord Justice Anthony Hughes clearly states the purpose of financial penalties and it is not preventative.  He said in a media statement

“Fines cannot and do not attempt to value a human life – compensation will be payable separately in these cases.  The fine is designed to punish and these are serious offences so the fines imposed should be punitive and significant to reflect that.”

Penalties as a Percentage of Turnover

Hughes says that the Council rejected a Sentencing Advisory Panel proposal that I believe should be floated in the current debate on penalties in Australia, even though it is likely to be similarly rejected.

The Panel recommended the following

“In order to achieve an equal economic impact on offending organisations of different sizes, the proposed starting points and ranges for offences of corporate manslaughter are expressed as percentages of the offending organisation’s average annual turnover during the three years prior to sentencing.  The relevant turnover is that of the company convicted of the offence or, where the offending organisation is a holding company, the consolidated turnover of the group of companies of which it is the holding company.”

Here is the penalty table

Manslaughter table

Lawyers argue extensively about the use of manslaughter in relation to deaths in workplace but the public jumps across the legalese by repeatedly asking how the death of their loved one is not manslaughter when the actions of a director or company led directly to the death?  No level of legal explanation is going to counter this need for accountability, some would say revenge.

Similarly the penalty rate listed in the table above is easier for the public to understand conceptually compared to a judge’s or lawyer’s explanation of why a financial penalty for a workplace death was less than the maximum.

Sentencing options are complex and SafetyAtWorkBlog has no legal contributors but on 30 October 2009 within a public discussion period on national OHS laws and at the end of Safe Work Australia Week, it seem thats penalties imposed from a percentage of turnover may be an attractive concept to many safety advocates and one that needs to be considered in the Australian context.

Publicity Orders

On the issue of publicity orders, many Australian jurisdictions have had this option for a while.  Indeed, the issue of enforceable undertakings is getting a broader hearing after some of the recent actions by Comcare against John  Holland Group and others.

It is always important to look at the most recent actions and decisions in OHS law and regulation from outside one’s own jurisdiction so that innovations are not overlooked.  It seems that the Sentencing Advisory Panel has looked at lots of  jurisdictions in making the following requirements.

The Sentencing Advisory Panel listed specific requirements of a publicity order to be applied within a specified timeframe:

  • a quarter-page advertisement in a local or regional newspaper, in the case of an organisation operating in one area; or
  • an eighth-page advertisement in three specified national daily newspapers, in the case of an organisation operating nationally; and
  • an eighth-page notice in a relevant trade publication; and
  • a prominent notice in the organisation’s annual report (also in electronic format where applicable); and
  • where applicable, a notice on the homepage of the organisation’s website for a minimum period of three months.

The panel also closed a possible (out) for offending companies.

” The making of a publicity order does not justify a reduction in the level of fine imposed on an organisation for an offence of corporate manslaughter.”

The ads on home pages, local newspapers and trade publications (if there are any) seems very reasonable but the media option that may be most influential is the inclusion in the company’s annual report.  Acknowledging a workplace death and expressing regret in an annual report is admirable but “a prominent notice in the organisation’s annual report” goes straight to the shareholders who often have the ear of the corporation.  Just look at the influence being applied by them at the moment on executive salaries.

Now is the right time for Australia to consider alternative OHS penalty options.

Kevin Jones

Australian AGMs mention workplace deaths

Australia’s corporations are busy releasing their annual reports in October 2009.  The outgoing managing director and CEO of Boral Limited, Rod Pearse, provided his comments on the company’s safety performance to shareholders on 28 October 2009.

“Since demerger [January 2000], Boral’s safety outcomes have delivered steady year-on-year improvements and compare well with both ASX100 and industry benchmarks. Employee lost time injury frequency rate of 1.8 and percent hours lost of 0.06 have both improved by 80% since 2000 and are better than those of our competitors in like industries and in the top quartile of companies in the ASX100.”

Boral is, according to the executive statements, “a resource based manufacturing company with low cost manufacturing operations.” Continue reading “Australian AGMs mention workplace deaths”

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