Monday, April 11, 2011

THE ECONOMICS OF OCCUPATIONAL HEALTH AND SAFETY IN AN EMERGING ECONOMY: THE SRAC MODEL APPROACH. A PAPER PRESENTED BY: EHI IDEN, OCTOBER 2010

INTRODUCTION TO OHS ECONOMICS

In the context of this presentation, we will refer to OHS Economics as a workplace management strategy guided by corporate value to reduce cost, improve health, safety, productivity and increase employees’ morale. Going by the above introduction, we see OHS Economics as a deliberate management plan occupying a very prominent position in organization’s corporate value chain. Nothing would have made provisions for OHS Economics in the value chain a defined and strong leadership commitment in words and in action as a reliable strategy in reducing direct and indirect cost in both short and long term arising from work processes during accidents, medical treatment cost, absenteeism, claims, high insurance premiums, equipment damage and other related costs.

Every success recorded in OHS breakthroughs in our workplaces is credited to the commitment given by leadership and the support of all member staff and even contractors in strict compliance to pre-set operational safety policies and guidelines.

WHY OHS ECONOMICS?
Most countries of the world are growing in different dimensions with the strong hope of being market leaders in various capacities and this has led to movement of capital investment from different parts of the world to meet the economic attraction of such countries. If we must guaranty the security of such investments and sustenance of host environment alongside potential employees, there is a great need for adaptation of such market or investments to the principles of Occupational Health and Safety.

According to the Honourable Minister of Finance of the Federal Republic of Nigeria, Mr. Olusegun Aganga in a paper presented in the open house meeting with the Manufacturers Association of Nigeria (MAN) held in the facility of Nigerian Employers’ Consultative Association (NECA) Lagos in August 2010, he said Nigeria has been rated as the 11th emerging economy of the world and as a result of this growth, it has attracted huge movement of investments into her economy with the bulk of such investments coming from the Asian continent. This brings to our mind the need for OHS operating standards and policies to guaranty safety of this huge influx of capital into the Nigerian economy.

These OHS principles are capable of guarantying the following:

• Security of capital investment
• Security of lives, properties and environment
• Sustenance of corporate reputation
• Mitigating legal consequences

The operating standards will help such business investments wisely in operating to fulfill the following imperatives:

• Social Imperatives
• Fiscal imperatives
• Legal imperatives

THE OHS STRAC MODEL APPROACH

OHS Economics is fundamentally hinged on four cardinal safety principles known as SRAC model, an acronym culled from the following:

• Standard
• Responsibility
• Accountability
• Consequence

Standard: This can be referred as standard for workplace operations and they are provided via enabling legislation and policy formulations to create platforms for healthy, healthful and accident free work processes.

These standards are recorded and used as National information document forming the compendium of workplace standards and requirement that must be met in setting up investments in different geographical locations. These standards are also applied in the formulation of organisation’s corporate safety policies in their attempts to avoid regulators’ penalties and control direct and indirect cost arising from occupational accidents. We refer to this standpoint as the pivot wherein the OHS related benefits and losses revolve.

Responsibility: This is an offshoot of the already created standards in the SRAC model paradigm. The model saddles organisations and investments with the obligation to fulfill task and initiate processes to meet standards that have been set through legislation and policies. Steps to fulfilling these responsibilities are all defined in the corporate safety policy of organizations; roles are assigned with timely evaluation on performance. Task naturally brings about responsibilities and responsibilities bring about expectations.

Accountability: This is the obligation to fulfill a task in line with set standards to attract positive or negative consequence. When you are accountable, your performance is measured against some specific criteria or standards and consequences are applied appropriate to the level of quality of performance. This in summary is the evaluation of your performance upon assigned responsibility using the collectively determined pre-set standards as measure of assessments.

Consequences: This is referred to as the outcome, reward or punishment received upon measurement of performance in line with pre-set principles or standards. Consequences are either positive or negative resulting from your actions upon evaluation; this comes in form of rewards and punishments.

Rewards are the economic gains through strict control of direct and indirect costs, sustenance of healthy and productive workforce, improved corporate reputation and security of capital assets. Punishments are the regulators penalties and fines, number of injuries recorded in the workplace and the cost of managing them, loss of equipment and capital assets, loss of corporate reputation and presentation of poor balance sheet to the discouragement of shareholders at the end of your business fiscal year.

REQUIREMENT IN SRAC ADAPTATION

Training: Provide employees with the required knowledge and skills to work to meet safety requirements. Training is not a one off investment, it is a regular workplace engagement influenced by basic workplace conditions and processes to avoid accidents and enhance productivity. Trainings are required when you employ new employees, when you advance your technology or systems, when there is change in work process, work station and a number of other influencing factors that contribute to meeting safety requirement.

Resources: Provide the employees with physical resources and psychosocial support to comply with safety requirement. Such resources include a well organized workplace or office environment, provision of safe tools and deployment of result oriented human relations mechanism to meet employees’ psychosocial wellbeing which has great influence potentials on workers’ productivity and compliance to safety standards. A tough caring leadership approach is a better formula to realizing this.

Enforcement: If adequate enforcement protocols are not applied when safety standards are violated, all justification for discipline disappears. Penalties must be enforced and precedence must be set to ensure continuous compliance.

Supervision: By definition, adequate supervision means "detecting and correcting hazards or unsafe behavior before they cause an injury or illness” If supervisors are stuck in the office all day it's not possible to oversee the work employees are doing. This again is a leadership responsibility in ensuring funds are not just invested in safety but follow-up to ensure men and materials are properly mobilized and engaged to achieve the desired outcomes.

Leadership: Supervisors must "walk the talk." That means they need to set the highest examples by following all safety policies and rules, and they need to be fulfilling the above four obligations and give the right examples to employees.

WHERE DOES THIS LEAD US?

• Gross reduction in accident and associated cost
• A healthy workforce
• Increased productivity
• Minimum compensations
• Security of investments and assets
• Sustenance of corporate reputation
• Increased quality of outcomes
• Little or no consequences
• A near zero litigation ratio on work related accident claims
• More money saved, happy employees, happy shareholders

IN CONCLUSION

While concluding this presentation, I would want us all to at least go back to our workplaces with the following points as gained in this conference to impact positively in complementing our existing Occupational Health and Safety systems and creating enabling opportunities for our organizations to make profits rather than incurring losses through preventable workplace safety challenges. Be reassured of the following:
•No economy or sector can build security for lives and investments without safety standards and policies
•Consequences should not be what businesses aim at getting, rather focus more on proactive strategies that will alienate you from the weight of the regulators correction sticks
•Learn to periodically evaluate your processes and correct errors where necessary
•Training and supervision are key points to accident cost reduction
•The best OHS strategy is planning (proactive approach), it is a global best strategy

Finally, I say to you “Salus Populi Suprema Lex” -The Safety of the people is the highest law

References:
Steve Geigle: Introduction to Occupational Health and Safety Management – Course 700 Study Guide 2003

American Society of Safety Engineers (ASSE): White Paper Addressing the Return on Investment for Safety, Health and (SH&E) Management Programs June, 2002

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