Category: Leadership

Nice comparison on Directors’ complaints

In the Australian Financial Review in October 2009  there was an opinion piece (not available online) from the CEO of the Australian Institute of Company Directors (AICD), John Colvin, expressing concerns about the accountability of directors under legislation including the proposed OHS laws in Australia.

According to a report by Adam Schwab in the Crikey newsletter of 23 October 2009 (also not freely available online), Colvin wrote in the AFR:

“There are more than 660 state and territory laws which impose personal liability on individual directors for corporate misconduct. That is, a director is liable because he is a director, even when he may not have had any personal involvement in the breach…”

Schwab writes

“The AICD noted, the NSW courts have taken a hard-line enforcing the deemed liability laws.  According to AICD data, between 2004 and 2008, 144 company directors were found guilty of OHS offences, of which 115 of those prosecutions occurred in NSW.”

Schwab then provides a comparison of risk that I wish I’d thought of:

“That means the proportion of directors convicted over these so-called onerous laws is 0.0068%.  To compare, there is roughly a 0.04% chance of someone being struck by lightning.  Therefore, based on the AICD’s own data, company directors are six times more likely to be hit by lightning than to be prosecuted.  It also shouldn’t be forgotten, directors’ liabilities are almost always covered by indemnity insurance and most prosecutions result in a mere financial penalty.

While the NSW OHS laws result in occasional harsh results, to extrapolate one set of allegedly ill-advised laws across the country is much like a cry of wolf.”

This perspective will be an important one to remember when considering the submissions being lodged with Safe Work Australia on the OHS model laws by 9 November 2009.   The corporate submissions particularly but also those from the OHS law firms that spruiker the exposure of company directors ruthlessly whenever OHS and accountability is discussed.

Some of us remember the “glory days” when industrial manslaughter was widely considered in some Australian States. (There is a noticeable absence of controversy of the industrial manslaughter law that is operating in the Australian Capital Territory)

Also important is the point that Schwab makes about indemnity insurance for Directors and Officers, a matter that has been discussed elsewhere in SafetyAtWorkBlog.

The amount of “get-out-jail-free” options available for directors should encourage more attention to alternative, non-financial penalties for breaches of OHS law.  Over the last 24 hours the United States has been talking about replacing executive cash remunerations with stocks so that director’s incomes are reliant on the share price of the corporation which, in turn, relates to the quality of leadership from the director.

As long as Australia’s principle OHS penalties involve money, directors can buy their way out of trouble.  If Australia’s Prime Minister, Kevin Rudd, can face an entire country and apologise for the bad behaviour of others, and the bad policies of other governments in relation to the interaction with indigenous peoples, why should company directors not have a similar obligation when their poor management of a workplace kills someone?  If corporate executives are that keen on leadership, let’s see them apply some of the leadership that Rudd showed, and accept responsibility when they should.

Kevin Jones

A consistent approach to developing public policy is required

Australia is a Federation of States.  This does not just mean that each State is a different colour of the schoolroom map.  Each State has its own duties to its citizens from within the overall scheme of running a country.

There has always been a tension between the two levels of government and currently the management of health care facilities is the cause of friction, as reported, for instance, in The Age newspaper on 23 October 2009.   The current tension in this sector illustrates a trend that extends beyond health and into workplace safety legislation, human resources and social policy.

The Victorian Health Minister, Daniel Andrews,  is reported to have said that Canberra’s “health bureaucrats [are] remote and incapable of understanding the day-to-day needs of patients.”

“”You can never take it as a given that decision makers and policy makers at the bureaucratic level in Canberra understand how you deliver care in a bed, in a ward or in a country town, because they don’t do that: it’s not their world.”

This argument echoes some of the concerns being raised over the national harmonisation of OHS laws. In such a large country as Australia there are going to be cultural, demographic and geographical variations that a centralised system cannot service.  The Federal Government is hoping to harmonise workplace safety but it has already taken over industrial relations and is strongly threatening a takeover of health.  Why the inconsistency?

On 22 October 2009 at the HR Leadership Awards ceremony in Melbourne, the CEO of Carnival, Ann Sherry, said that centralised policy makers in Canberra are making important decisions from within a rarified world.  Sherry is a member of a review panel into the Australian Public Service (APS) and she identified several features of the APS, and shortcomings, as the service aims to become “world’s best practice in public administration”.  Amongst them:

  • 42% of public servants are younger than 45 years;
  • a highly educated workforce;
  • senior public service positions are centered in Canberra.

The last characteristic Sherry said has led to a disconnection between service design and delivery, echoing, to some extent, the concerns of Daniel Andrews on health policy.

It seems that there are many reviews and investigations occurring into how various industries and sectors in Australian business and government should be structured for the future, a future that is likely to be very different, climatically, economically and demographically.  But there is not a consistency in approaches, or at least one that is readily understood, even though the Australian Prime Minister, Kevin Rudd, talks repeatedly about “nation building“.

The Australian Government has the best chance in a long time to set the country on a path of sustainable growth.  The United States, under President Barack Obama, has a similar opportunity.  Governments have an obligation to plan for the long-term benefit of their countries ands citizens, not the short-term gains of their political donors, political parties and lobbyists.  This obligation  is as relevant in occupational health and safety as it is anywhere.

Kevin Jones

Singapore’s Prime Minister speaks about business leadership

At last week’s Comcare conference there was considerable discussion about leadership and social capital.  Coincidentally, Singapore’s Ministry of Manpower is running a Human Capital Summit this week.

The summit program indicates how these two concepts are dominating human resources and, through osmosis, other management streams such as OHS.

Mr Lee Hsien Loong, Singapore’s Prime Minister provided the opening address on 29 September 2009.  In the speech he state four principles:

  • “we believe that human capital and talent can be nurtured….
  • we take a broad view of human capital and talent. We recognise that domain expertise is important, and organisations need specialists in fields relevant to their business. But organisations will also benefit from talent who come from unrelated fields, with diverse experiences, who can inject fresh perspectives…
  • we believe that the way to bring out the best in people is by creating a conducive environment. Talented people cannot be motivated by pressure, nor even by financial incentives alone…
  • talented individuals must feel a sense of responsibility to the community. Within their own fields, they have to help nurture the next generation of outstanding achievers.”

One could dismiss as “conference rhetoric” but similar commitments are being made by government officials and politicians throughout the world and the weight of numbers is turning into a movement.

If OHS professionals want to gain the ear of important decision makers, it will be necessary to “talk the talk”, even if that talk is jargon from an unfamiliar discipline, such as human resources.  The challenge is to bring commitment and knowledge to underpin the “talk” because “hollow vessels make the most noise”.

Kevin Jones

Leadership, MBAs and Community

The G20 summit in Pittsburgh, United States, this week will include a lot of analysis of the global financial crisis and various stimulus packages.  Some, such as Professor Henry Mintzberg,  have pointed the finger at business courses, such as the Master of Business Administration, that have encouraged personal greed.  Some in the executive industry describe (rationalise?) this as creating “shareholder value”.  Regardless of which ideological side one takes, MBA’s are getting a makeover.

In a recent article Professor Rakesh Khurana of Harvard University has argued that

“…the shareholder model is too blunt and does not capture the reality of business”.

But before one categorises Khurana as an advocate of the left, Khurana operates within a bigger context.  Khurana argues that

“…a professional ideology of “service to the greater good” is not at odds with the principal of shareholder value creation.  It actually grounds shareholder value morally and integrates it in a richer multidisciplinary context.”

The multidisciplinary approach to management is familiar to anyone who has studied risk management but it seems to be radical in the financial sector.  Professor John Toohey of RMIT University’s Graduate School of business  has said in the same article as referenced above

“We fail as a business school if we don’t excite and frighten our students, and get them to think about the bigger issues, what sort of moral footprint they will be leaving… We do this by emphasising ‘work-integrated learning’, by trying to give our students experience of how complex issues are considered and managed in reality.”

Earlier this year Professor Toohey chaired an event that discussed the role of science and business.

But that integrated approach to business management requires a receptive audience.  Henry Mintzberg, mentioned above, wrote an article on leadership for the  Harvard Business Review for July/August 2009  that seems to talk about workplace culture without using that term.  Mintzberg talks about reestablishing a sense of “community” in corporations.  By community he means:

“…caring about our work, our colleagues, and our place in the world, geographic and otherwise, and in turn being inspired by this caring.”

Some would see this as “engagement”, others could compare this approach to establishing a social consciousness for the workplace.  Many OHS professionals will see elements of community in many of their activities around a workplace safety culture.

The full/longer article is well worth obtaining (it was reprinted in the September edition of the AFR Boss magazine in Australia) as it lists the following lessons, amongst others:

Community building in an organisations may best begin with small groups of committed managers.

The sense of community takes root as the managers in these groups reflect on the experiences they have shared in the organisation.

The insights generated by these reflections naturally trigger small initiatives that can grow into big strategies.

The discussion about “communityship” seems to have strong echoes in other business management strategies.  At the core are the same concepts being discussed in different terms.  The trick is to ignore the competitive claims of ownership or intellectual property to get to the useful truths that lie within.

Kevin Jones

Safety Leadership push in Queensland

Expect quite a few OHS statements coming from Australian politicians as the country approaches Safe Work Australia Week in late October 2009.

On 16 September 2009, the Queensland Attorney-General and Minister for Industrial Relations, Cameron Dick, sought support for a

“…groundbreaking new program to reduce workplace deaths and injuries.”

Groundbreaking? Not sure. Perhaps for Queensland.

According to his media statement the “Zero Harm at Work ” program “aims to reduce the shocking number of deaths and injuries in Queensland workplaces.”  Dick goes on to say

“Ensuring safety in the workplace is one of the most important challenges facing industry in Queensland… Every year around 100 Queenslanders are killed at work and 30,000 people suffer serious injuries or work related diseases.  The cost to our State of these tragic deaths and injuries is more than $5 billion a year.  And worst of all, mums, dads, husbands, wives and children are left mourning the family member that never came home from work.”

Dick hits the right targets in the media statement but does safety leadership, particularly these types of programs, stop incidents from occurring in the workplaces?

Or is the effect of these programs to have senior executives feel that they are reducing injuries because they are talking about safety?

SafetyAtWorkBlog has long believed that safety awareness does not necessarily equal the reduction of workplace injury and illness.  “Zero Harm” cannot be achieved without financial cost and it is unclear whether industry is willing to invest the amount of money required to genuinely achieve this aim.

But then if “zero harm” is only a goal, an aspiration, then it doesn’t matter if it is not achieved “at least we tried”.  (Or the total cynic would say “at least the voters saw that we tried”)

There are sure to be more such statements and launches in the next six weeks.  SafetyAtWorkBlog will be looking for evidence not aspirations.

Kevin Jones

The importance of independent advice at Board level

The recent court decision by Judge Gzell on the previous directors of James Hardie Industries generated considerable media attention in Australia for many reasons; a primary reason is that the company is perceived as making its profits at the cost of its employees’ health.  The social and corporate cost of inadequate workplace and product safety management is now clear to everyone, even public policy makers.

Another area of attention has come from how Judge Gzell’s decision has affected the operation of company boards and the roles of directors.  This is hugely important to the big end of town but the rules apply to boards big and small.  In August 2009 Regnan (Governance Engagement & Research Pty Ltd) identified three major points from Gzell’s decision; the third is the one that is most broadly relevant.

“Non‐Executive Directors – Today more than ever, investors need competent directors from diverse backgrounds, and this case highlights the critical role non‐executive directors play in overseeing and interrogating company management.  While the facts of the James Hardie case are very specific and do not create additional responsibilities for directors, it does underscore the value at risk when non‐executives fail to perform their role and highlights the role of independent directors to satisfy themselves through the taking of advice wholly independent of management.” [my emphasis]

The need for independent advice is regularly identified as an important element of effective risk management for all industry and professional sectors.  A board of “yes-men” can do a disservice to an organisation in a very short time.

The OHS professional often seeks a “devil’s advocate” role at senior management level yet to achieve that level of influence one often has to “sell one’s soul to the devil”.  It may be possible to be an independent director who holds strong OHS opinions but one would never achieve such a position unless one could demonstrate business acumen, and business acumen often requires the dilution of principles.

The environmental movement has shown one pathway to corporate influence but it is hard to identify an environmental advocate who has achieved corporate influence while maintaining a grass-roots credibility.  Similarly, at some point in the OHS professional’s career it is necessary to choose between the ideology from which progression has come and the career progression that requires a reinterpretation of that ideology into the corporate mould.

Is it possible to represent core OHS principles at board level without “joining the darkside”?

Kevin Jones

Challenges for US labor unions and lessons for all businesses

Doug Henwood releases regular podcasts of his radio broadcasting and occasionally there is content that provides an interesting perspective on occupational health and safety, as does the 3CR program, Stick Together.  On August 1 2009 Henwood interviewed journalist, Steve Early, author of “Embedded With Organized Labor”. The podcast is available online. The Early interview clicks in at the 38 minute mark.

(A video interview with Steve Early is also available)

Early talks about how difficult the United States union movement has found it to maintain the enthusiastic momentum from 15 years ago.  He says that several industrial relations programs have slowed due to a lack of support from the grass roots or perhaps the exclusion of this sector in the initial planning of the programs.

As with many policy issues in the early period of the Obama government, a lot of interest is being placed on labour relations.  The government has begun discussions with labour leaders but these leaders face the challenge of gaining the government’s attention during the miasma of policy changes and President Obama has clearly stated to labour leaders, according to Early, that health care is his primary policy area at the moment.  The last month has shown the level of the challenge on health care policy.

Steve Early echoes the thoughts of Tom Bramble, an Australian academic analyst of unions, when he advocates an increased role for the rank-and-file union members.  It is in this sector that the passionate values of industrial relations and trade unionism are felt the strongest, often because it has avoided the political baggage that comes with the upper levels of the union movement.

Early reiterates that the best asset for change is an organisation’s membership.  He agrees that there is often a class-divide between the rank-and-file members and union management.  In many large organisations, senior executives are being encouraged to gain a better understanding of their organisations by jumping across the structure to (re)experience the lot of the membership.

Early says that the union movement in the 1930s resolved this by a major reconstruction of unions.  Corporations and conservative organizations are loathe to deconstruct in order to rebuild because, primarily, the executives get too comfortable.  Executives who genuinely understand their organisation, particularly those organisations that are member-based, can rebuild and remain true.

Kevin Jones

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