Leadership – Page 63 – SafetyAtWorkBlog

Understanding the new world of the CEO

OHS professionals are very keen on advocating a change in workplace culture as a base requirement for safety improvements. They also regularly quote the need for “top-down” leadership (however that is defined) to generate the cultural change.

SafetyAtWorkBlog has already may some comments about leadership today but an interesting article has been brought to our attention that, although it doesn’t discuss safety, talks about how the role of chief executive officers over the last decade and some of the agents of change.

The Society for Industrial and Organizational Psychology released an article on 23 November 2009 concerning the selection of CEOs and succession planning. The article says that the days of the “imperial CEO” has gone as (US) legislation has required a the process of complaisance to be shared. Perhaps there really is “no I in TEAM”.

Randall Cheloha summarises the variety of forces and obligations that now must be considered when running a corporation. Occupational Safety is not included but could have been.

“There are more constituencies to satisfy. In addition to major shareholders, financial analysts, employees and former executives, some companies, particularly those that received large government bailouts, have directly or indirectly been asked to change directors and add new players to their boards to represent the new constituencies, including the federal government and unions.”

Not only have the constituencies multiplied but the demands have changed as well. Many of the groups suddenly have the ear of the executives and realize from past experience that the window of opportunity may not last. The risk is that they go in too hard and too fast and create their own resistance.

Australian corporations had a habit of always looking overseas for CEOs, implying that the local executive pool was deficient. That has changed recently where well-qualified local candidates are getting serious consideration and, some, appointments. The SIOP article refers to the weakening of corporate culture by feeling the need to look outside for candidates. Cultural continuity is equally valid and safety is part of that.

Hopefully the days of CEOs taking pride in nicknames such as “toecutter” or “the axe” have gone the way of “razor gangs”.

There is the risk of “cronyism” with internal CEO appointments but that risk is minimised if the cultural work on the company has already been undertaken.

Australian conferences have recently been pushing for “CEO days” where CEOs talk about the importance of safety and culture in their organisations. To some extent, the safety professionals in the audience are the wrong audience. Perhaps it is the CEO conferences that need to hear from a safety spokesperson who can use bad OHS management as a case study of how executive decisions created a toxic culture that led to injury and death. Sadly, such case studies are not hard to find.

Kevin Jones

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

Australian Safety Ambassadors

Safe Work Australia introduced a program of safety ambassadors in the lead-up to Safe Work Australia Week 2009. The editor of SafetyAtWorkBlog was chosen as one of this year’s ambassadors. Kevin Jones was also featured in the authority’s newsletter, the Safe Work Australian, that is available for download.

There were no formal requirements of the title other than promoting Safe Work Australia Week. From the list of ambassadors on the Safe Work Australia website, most already have a strong record of advocating safe work practices. Being an ambassador seems to have simply provided a topical focus, or additional motivation, for promoting the week.

Combining safety and RTW awards

Finally, a State-based safety awards night that has both OHS and Return-to-Work awards. On 27 October 2009, Workplace Health & Safety Queensland held its annual safety awards night as part of Safe Work Australia Week. In a media release, the Minister for Industrial Relations, Cameron Dick, said

“The inaugural Return to Work Awards are run by Q-COMP – the statutory authority that oversees workers’ compensation in Queensland – to showcase the state’s top employers who understand the importance of helping injured workers make a successful return to work.”

It is curious that other States do not also have combined awards. The logic of the combination would, perhaps, be easiest for Victoria as the Victorian Workcover Authority handles rehabilitation through VWA as well prevention through WorkSafe Victoria. The combination may be simpler for those States that have a single insurer for workers compensation.

It is noted that one workers compensation insurer in Victoria, xchanging (formerly Cambridge), has conducted its own awards for several years. (The author was a judge of these awards several years ago) The judging process was tripartite with applicants from a pool of the insurer’s clients. Whether an insurer would relinquish such a role is unknown but the opportunity for State recognition of RTW performance should be attractive.

It should also be noted that winners of State OHS awards are also nominated for national OHS awards conducted by Safe Work Australia.

SafetyAtWorkBlog has questioned the plethora of OHS awards nights in the past as Australia has a fairly small industry and as OHS and workers compensation laws are becoming harmonised, it seems sensible for Safe Work Australia, or the Australian Government more generally, to start harmonising the award processes. Just imagine how many corporations would be champing at the bit to receive an award for safety that covers all aspects of their safety management. It would be an award for leadership that may just be warranted.

Kevin Jones

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

Category: Leadership

Understanding the new world of the CEO

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

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

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Australian Safety Ambassadors

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Combining safety and RTW awards

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Nice comparison on Directors’ complaints

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A consistent approach to developing public policy is required

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