Directors must set the tone

Institute of Directors chief executive Simon Arcus in their Wellington office. Photo / Mark Mitchell

Boards need to move from being reactive to proactive, says Simon Arcus, chief executive of the Institute of Directors.

No-one wants New Zealanders to literally work ourselves to death. It's estimated that every week, at least one New Zealander is killed at work, 600 to 900 a year die prematurely from occupational diseases, while the financial cost of work-related injuries and death is estimated to be more than $3.5 billion a year.

The new Health and Safety at Work Act 2015 focuses on creating a healthy workplace culture and requires directors to take ultimate responsibility for the health and safety of their business. That includes a commitment to health and safety and a demonstrable plan to make the workplace as safe as it can be.

The director's role is to provide leadership by setting the tone for the entire organisation. That means ensuring health and safety is a priority. Contrary to some beliefs, directors are not expected to be health and safety experts to satisfy the Act. But health and safety risk management must take a firm seat at the board table, along with traditional concerns such as financial performance and strategic planning.

The effect of the new legislation is that boards need to move from being reactive to proactive. That means directors should be able to show evidence they turned their minds to health and safety and demonstrate the steps they took to ensure it was a business priority.

The message from the Government is trust, but verify. Boards are encouraged away from being satisfied with simple metrics and assurances, to asking the right questions and ensuring that health and safety is appropriately resourced.

Follow-through is important. Directors need to be sure that what they have asked is being done and there's a beneficial impact on the safety of the business.

With the legislation imminent, the IoD has been thinking of the impact on New Zealand SMEs. Some smaller business owners are concerned that they do not have the muscle of larger companies to focus human and capital resources on comprehensive, enterprise wide health and safety programmes.

We would be concerned if SMEs bore a disproportionate cost to implement the new legislation or were targeted for sanction rather than help. We need to catch the real wrongdoers.

The way courts and regulators interpret the due diligence provisions of the Act will be critical. The approach has to be thoughtful and practical. It should not use 20/20 hindsight. Perfection cannot be the litmus test. It should avoid setting unrealistic expectations that will simply cause business owners to disengage.

The IoD has worked with WorkSafe throughout the process leading to the legislation. We are confident that the regulators' primary goal is about good outcomes for New Zealand business and not an unreasonable, punitive regime. We need to hold them to account.

SMEs may have distinct advantages in making health and safety changes real in their workplaces. Small business owners work alongside their workers. They understand the challenges of the business and have direct relationships with their teams. Therefore, SME owners are closer to the day-to-day business and understand the true operational risks that workers face.

The Act is clear -- that directors, managers and workers will get the best from the law by working together.

With WorkSafe we released updated guidance for directors and SME owners and directors to support them ahead of the legislative changes. Directorship in health and safety is not about responsibility for the day to day granular operations, but about ensuring appropriate systems and processes are in place. So what is the role of directors?

1: Policy and planning

Directors have to determine the health and safety policy and strategy, the board's charter and structure for leading and hold management to account for its implementation.

2: Delivery

Clear expectations need to be set, exercise due diligence and ensure sufficient resources are available. It is important to be informed about your organisation's risks and know whether your system is fit for purpose. What is its risk profile?

3: Monitoring

Data on incidents, near misses, work-related ill-health and compliance should be on the board agenda. Set expectations about what needs to be reported to the board. Seek independent expert advice when required to gain assurance.

4: Review Periodic formal reviews to determine effectiveness need to be undertaken.

There are still questions about the way the Act will work. In some senses, safety is easier to grapple with than health and wellbeing. Mental illness at work, and other wellbeing challenges, gets little airtime. Mental wellbeing is usually more complex than safety processes. Psycho-social factors inside and outside the workplace can weigh on how a worker feels and whole-of-office safety can be a factor in an individual's mental wellbeing.

Directors are people first. They don't want to live in a world where workers, who are their family and friends, are unsafe and expendable. Valued workers support and contribute back to businesses they care about. Nationally, we spend many hours and billions of dollars focusing on how to improve corporate culture, but it is simple business sense that having safe and valued workers makes for a better workplace.

Finally, business owners should not underestimate the signals they send to workers. How often do you ask your team about their safety? Where is that question in the list of your priorities? I spoke to a business owner recently who said she realised her first questions were always about productivity and profit. Never health and safety. A little self-reflection changed the whole nature of her approach.

ON THE WEB: The IoD's guide to the new Health & Safety law.