Self Insurers of South Australia Conference - Closing the Loop

1. Self Insurers of South Australia Conference - Closing the Loop Closing Compliance Gaps Dr Len Gainsford

2. Today’s Program • A behavioural explanation of the management of an organisation’s OHSW and workplace injury policies and procedures. • An approach to Occupational Health Safety and Welfare through the lens of generational change and interpretive understandings. • Conclusions.

3. OHSW and Workplace Injury Policies and Procedures • “The primary objective for WorkCover is to provide an effective and efficient system that helps employers and employees work together to get the best results in health, safety, rehabilitation and claims management and to achieve continuous improvement in these disciplines.” • WorkCoverSA (2008) Performance Standards for Self-Insured Employers • Management of an organisation’s OHSW and workplace injury policies and procedures involves addressing the individual and collective behaviours of people, especially at work.

4. OHSW and Workplace Injury Policies and Procedures • Related concepts are: • Safety management, safety systems and safety culture (Hudson, 1999; Reason, 2000) • Collective mindfulness (Hopkins, 2000; Weick & Sutcliffe, 2001) • Risk awareness (Hopkins, 2005)

5. Safety Management • “Most people see safety as concerned primarily with the personal well-being of stakeholders, by which I mean all those involved, not just the immediate actors and owners. Some also add the integrity of the business and its assets. While these are necessary preconditions, I view safety and more specifically safety management, in a more active way. I see the creation of a safe environment as allowing dangerous activities to take place successfully, which means without harm or damage”. • Hudson (1999)

6. Safety Systems and Safety Culture • “[There is a] widely spread misconception...that somehow systems sit apart from culture. It is this belief that drives managers’ over-reliance on systems on the one hand, and an insufficient understanding of, and emphasis on, workplace culture, on the other. They believe, mistakenly, that compliance with such rules and procedures can be achieved simply by the imposition of systems, while ignoring the crucial cultural dimension.”Reason (2000)

7. Collective Mindfulness • Collective mindfulness (Hopkins, 2000)requires: • Operator error is not an adequate explanation for major accidents. • Systemic hazard identification is vital for accident prevention. • Corporate headquarters should maintain safety departments which can exercise effective control over the management of major hazards. • All major changes, both organisational and technical, must be subject to careful risk assessment.

8. Collective Mindfulness (cont’d) • Collective mindfulness (Hopkins, 2000)requires: • Alarm systems must be carefully designed so that warnings of trouble do not get dismissed as normal (normalised). • Front-line operators must be provided with appropriate supervision and backup from technical experts. • Routine reporting systems must highlight safety-critical information.

9. Collective Mindfulness (cont’d) • Communication between shifts must highlight safety-critical information. • Incident-reporting systems must specify relevant warning signs. They should provide feedback to reporters and an opportunity for reporters to comment on feedback. • Reliance on lost-time injury data in major hazard industries is itself a major hazard.

10. Collective Mindfulness (cont’d) • A focus on safety culture can distract attention from the management of major hazards. • Maintenance cutbacks foreshadow trouble. • Auditing must be good enough to identify the bad news and ensure it gets to the top. • Companies should apply the lessons of other disasters.

11. Risk Awareness • Risk awareness (Hopkins, 2005) arises “from the impossibility of devising a set of safety rules which adequately covers every situation”. • Risk awareness must operate at both the organisational and individual level. • “The state of mind where we are constantly aware of the possibility of injury and act accordingly at all times”(Minerals Council of Australia). • “Step back five” – the idea that before starting a new job, the employee should take 5 steps back and take 5 minutes to think about what might go wrong and how this might be avoided.

12. OHSW: Injury Management Culture and Climate • A documented program is in place that defines OHSW and injury management behaviours. The behaviours are understood by all measured, reviewed, analysed and actioned. • The program has objectives, targets and performance indicators in line with standard 2.1.3, consistent with the policy objectives of OHSW and injury management. • The program’s objectives, targets and performance indicators are maintained and monitored, in line with standard 4.1. • The program’s objectives, targets and performance indicators are reviewed, analysed and any deficiencies corrected, in line with standard 5.2. • WorkCoverSA (2008) Performance standards for self-insured employers

13. Self Insurers of SA Inc Annual Report 2008-09

14. Evaluation Outcomes • The evaluation process has become more onerous and focussed on compliance. • This has led to higher levels of asserted non-conformances and a rapidly increasing frequency of level 1 outcomes under the natural consequences model. • This trend has brought with it heightened concerns that the growing compliance focus is undermining the value of the performance standards for self insurers, which are focussed on management systems and continuous improvement.

15. Organisational Safety Culture • A reporting culture (e.g. preparedness to and the acceptability of reporting errors). • A just culture (handling duty, responsibility, blame and punishment). • A learning culture (ability to change on the basis of lessons learned). • A flexible culture (varied decision-making processes, depending on the urgency of the decision and the expertise of the people involved). • Reason (1997)

16. Safety Culture Types (Oil and Gas Industry) • Pathological (nobody is informed, no trust, blaming, punishing, denial of wrong doing, dangerous and messy workplace). • Reactive (management demands data on OHSW failures, safety hot issue only after accident, workforce held responsible, basic legal requirements met, taking safety seriously not believed). • Calculative (management command and control, lots of OHSW stats, workforce not understanding problems, safety targets not challenged). • Proactive (management seeks views, encourages feedback, workforce • involvement, management knows risks, safety priority over production). • Generative (management participates/shares activities, management • has to fix systemic failures/workforce has to identify them, management cares). • Hudson (1999)

17. Corporate Culture • Corporate Culture (Schein,1992) is: • A pattern of basic assumptions, invented, discovered or developed by a given group as it learns to cope with its problems of external adaptation and internal integration. • A group’s shared values consist of goals and concerns that shape a sense of “what ought to be”. • While an organisation’s policies and procedures tend to be at the “surface” or “more visible” level, culture lies at a “deeper” or “less visible” level.

18. Compliance Climate • Conditions that affect compliance in the workplace. • Directly influenced by organisational structure, policies and management. • Perceptions of employees regarding compliance and their work environment. • Measured through employee descriptions of how frequently they observe certain compliance conditions to be met in their workplace.

19. Compliance Motivations • Economic – maximising a person’s own economic or material utility. • Social – a commitment to earning the respect of significant people with whom the person interacts. • Normative – the person obeys because of a sense of moral agreement with the specific regulation or a generalised sense of moral duty to comply with regulation.

20. Cultural Change • Most businesses would recognise that whereas “surface” arrangements (such as parts of OHSW compliance programs) can be changed relatively easily, values-based behaviours, giving rise to “deeper” and hopefully more sustainable forms of compliance, may take longer. Compliance Programs Training Programs Monitoring Budgets Certification Behaviours Values Myths Symbols Legends

21. Laughlin’s (1987) Change Model

22. Compliance Gaps • Compliance gaps emerge when an organisation’s compliance regime fails by falling short of the required regulatory goals. • Failure happens when organisational policies and procedures, which are put in place to ensure that laws are not broken, do not work. • Compliance regime failures may happen regularly. • Compliance gaps emerge through interpretive differences between an organisation’s compliance statements (such as those found in the organisation’s Annual Report) and compliance behaviour by individuals in that organisation. • They are where the compliance behavioural reality doesn’t • match the corporate rhetoric.

23. Compliance Gap Relationships

24. Closing Compliance Gaps – a start • Discover what the organisation intends to do with its compliance. • Express that intention in clearly enunciated words. • Make sure the words are correctly contextualised, with particular meaning. • Test that meaning with employees expected to act on compliance. • Adjust the words and expression in organisational compliance statements.

25. Closing Compliance Gaps – a start (cont’d) • Test again the meaning with employees expected to act on compliance. • Measure and chart the differences in outcomes between steps 4 • and 6. • Measure individual behaviour against meanings in compliance statements. • Following measurement, discuss and adjust compliance • statements. • Repeat steps 1 through 10.

26. Compliance Gap Dimensions

27. Regulator Priorities (Parker, 2010) • Formal – laws and regulations, resource allocations. • Informal – interest group pressures, media, social attitudes, political requirements, values. • Certainty and stability. • Accountability and transparency. • Procedural fairness. • Proportionality, consistency and rationality. • Public value – enforcement agency effectiveness in achieving regulation through efficiency, clarity, predictability, flexibility, responsiveness and timeliness.

28. Regulatory Mix – Punishment/Persuasion • Co-operative approach – regulated entity given time to address compliance gaps. • Deterrence requires dealing more harshly with compliance gaps, leading ultimately to prosecution. • Over-emphasis by a regulator on deterrence may encourage behaviours e.g. employees not disclosing potential legal breaches. • SISA has “called on regulators to scan the environment before embarking • on any major review or change project and coordinate their initiatives” • Robin Shaw, SISA Annual Report 2008-09. • “Behaviour and culture do not lend themselves all that well to the • regulator’s black and white view of the world. The degree of trust • required to pursue cultural and behavioural objectives does not come • easily to the traditional regulator”.

29. Compliers Becoming Non-Compliers • Employees of the regulated entity are believed by a regulator to be deliberately not complying, when in fact it is their confusion or misunderstanding of organisational compliance statements which leads to non-complying behaviour. • Employees may wish to comply, but they do not understand when they are “doing wrong”. • It is important to see whether 3 processes are already in place – communicating meaning, adjusting wording in compliance statements and testing of understanding. • Absence of these processes will make it difficult to manage compliance gaps.

30. Generational Change • The impact of generational change on diversity and leadership and admired leadership characteristics (Zemke, 2000; Conger, 2001; Arsenault, 2004; Yu and Miller, 2005). • The effects of generational change on the management of Occupational Health Safety and Welfare. • “Baby Boomers” born 1946 to 1961, “Generation X” born 1962 to 1977 and “Generation Y” born 1978 to 1993.

31. Leadership • Leaders can mobilise the energies of followers by appealing to followers’ moral values, raising followers’ awareness of ethical issues and encouraging followers to rise above self-interest for the sake of a greater good(Burns, 1978). • Leaders may be labelled “transformers”, to the extent that they articulate a compelling vision based on shared values, inspire followers to act and empower followers to move the vision into • reality. • Better quality leader-follower relationships are characterised by mutual support and respect, loyalty, affection and are often • associated with followers having greater autonomy to make decisions.

32. Baby Boomers (1946 to 1961) • Achievement comes after “paying dues” • Value commitment and loyalty (particularly to corporations) • Belief in sacrifice to achieve success • View work as process oriented • Value teamwork and group discussions • Accountability – “organisational loyalty”

33. Generation X (1962 to 1977) • Do not believe in “paying dues” • Value autonomy and independence • Thrive on open communication • View work as “action oriented” • Seek out the “whys” in issues • Loyal to individuals not corporations • Accountability – “transparency”

34. Generation Y (1978 to 1993) • Strong work ethic, entrepreneurial spirit and sense of social responsibility. • Blends collaboration, networking and interdependence to achieve goals. • Comfortable with change and thrives on monitoring and coaching. • Highly educated and “tech savvy”. • Likes a more open and tolerant society. • Accountability – “social responsibility”.

35. Generational Differences • Value systems are different between Boomers and Xers, to the point where “Xers have broken the traditional Maslow hierarchy needs rule and have challenged individual development process schemes” on the basis of insufficient recognition of the diversity of organisational interests and leadership legitimacy. • Whereas Boomers start “from education,career,marriage,promotion (and then move) towards self-achievement”, “Xers squeeze the process together” to achieve “self actualisation”(Argyris & Schon, 1978), but at the same time not allowing work itself to negatively effect • their quality of life.

36. Generational Differences (cont’d) • Arsenault (2004) finds that generation Y takes the Xers’ quality of life position further, through seeing work as a legitimate means of achieving greater societal & corporate goals. • For generation Y, occupational performance may not only include carrying out compliance activities, it may be a means to demonstrate societal values-in-action. • The oldest generation Y person turned 30 in 2008, which is the current average age of an Australian woman having a child. • Newer generations – Zed (born 1994 to 2009) & Alpha (born • 2010 to 2025).

37. Accountability • A relationship involving the giving and demanding of reasons for conduct; reciprocity in rights and obligations (Roberts & Scapens, 1985). • “The principle of accountability is primarily concerned with the process whereby organisations and the individuals within them are responsible for their decisions and actions and how they submit themselves to appropriate external scrutiny” (Victorian Public Accounts and Estimates Committee, 2005). • Defining roles and responsibilities provides a mechanism to clearly assign accountability to those responsible for carrying out a task • at all levels of the organisation (Zachary, 2005).

38. Questions to Consider • How is “accountability” expressed in your organisation’s policies and procedures? • What training do you provide to help people understand your organisation’s need for accountability? • Do you have different generational understandings on who is responsible for the identification, reporting and/or treatment of compliance breaches?

39. Conclusions • Management of an organisation’s OHSW and workplace injury policies and procedures involves addressing the individual and collective behaviours of people, especially at work. • Most businesses would recognise that whereas “surface” arrangements (such as parts of OHSW compliance programs) can be changed relatively easily, values-based behaviours, giving rise to “deeper” and hopefully more sustainable forms of compliance, may take longer. • Compliance gaps are where the compliance behavioural reality doesn’t match the corporate rhetoric – this should be addressed.