Taking health and safety on board: can the IoD pull it off?

Draft guidance on directors differs from its predecessor more in style than substance, but that may not be a bad thing, suggests Howard Fidderman.

Six years after the HSC first issued guidance for directors on how they should be addressing occupational safety and health1, a new version is nearing completion. This time, however, the development of the guidance is being led by the Institute of Directors (IoD), which released a first draft of the text - for public consultation - in May2. The consultation period was just six weeks, closing on 22 June. The IoD hopes to finalise the text in July; subject to the HSC's approval at its September meeting, the HSC and the IoD should "jointly" publish the guidance in autumn 2007.

The 12-page draft is aimed at directors and governors, trustees, officers and equivalents in organisations of all sizes in all sectors. The IoD advises, however, that it intends to develop a separate version for smaller organisations.

The draft adapts the standard HSE wording about the legal status of guidance to advise that while "following the guidance is not in itself obligatory", directors who do so "will normally be doing enough to help" their organisation meet its legal obligations. But it goes further to add that the guidance may be "relevant" to the forthcoming offences of corporate manslaughter and homicide, under which an organisation will be guilty of a gross breach of duty of care if it can be shown that it failed to comply with the relevant OSH legislation and guidance. "This guidance," advises the draft text, "may be considered 'relevant', depending upon the circumstances of the particular case."

A "compelling" case

The guidance offers a forthright insistence on the reasons for boards "championing" occupational safety and health (OSH) - it is "an essential part of risk management" that carries a "compelling" business case, with "catastrophic results" arising from OSH failures. Nor does it shy away from pointing out that directors can be personally liable when their organisations fail.

The draft sets out three principles that should underpin OSH performance:

  • "strong and active leadership from the top", comprising "visible, active commitment from the board, clear 'downward' communication [and] the integration of good
    • OSH management with business decisions";

  • worker involvement; and

  • assessment and review.

    • The guidance offers a quick checklist for directors, an all-too-brief list of key resources, quotes from anonymous "health and safety leaders in the public and private sectors", and a résumé of the legal liability of individual directors for OSH failures. The bulk of the guidance, however, looks at what directors should be doing in terms of planning, delivering, monitoring and reviewing OSH. For each of these four areas, the guidance sets out:

  • a standard of "core actions" for boards that concern the legal duties of an organisation; and

    • good-practice principles for use in realising the actions.

    Planning

    The first area involves planning the direction for OSH policy. The guidance advises that the chair or CEO should "set the direction for effective" OSH management, with all board members "seen to be taking a lead" in communicating OSH duties and benefits throughout the organisation.

    Core actions comprise a policy that sets out the role of the board and its members in which they are "leading" their organisation's OSH. The policy should be an "integral part" of the organisation's culture, not merely a document. The board should "own and understand the key issues involved" and "decide how best to communicate, promote and champion" OSH.

    Good practice would see the regular appearance of OSH on board agendas. The draft is less insistent than its predecessor on the need to appoint an OSH director. Whereas the 2001 guidance recommended such an appointment, the new draft contents itself with pointing out that some boards find it useful (see box 1). A CEO, adds the guidance, "can give the clearest visibility of leadership", while a non-executive director can act as a scrutineer, making sure that there are "robust" processes to support boards facing significant risks.

    Delivery

    Core board actions for "delivering" OSH require it to ensure adequate resources for OSH arrangements and that appropriate risk assessments are carried out. The board should consult competent OSH advisers and ensure that OSH is a factor when deciding senior management appointments. It should also ensure involvement of employees and their representatives when making decisions affecting their OSH.

    Good practice includes: a procurement standard for equipment and services (posited in terms of preventing "the introduction of expensive health and safety hazards"); assessing the OSH performance of suppliers and contractors; establishing a board committee on risk management or OSH that is chaired by a senior executive; being seen on the shop floor to lead by example; providing OSH training to some or all of the board; and involving workers beyond an employer's legal duty.

    Monitoring

    Core monitoring involves the board: giving "appropriate weight" to active and reactive information gathering; ensuring periodic audits of the effectiveness of management structures and risk controls; receiving a rapid report on any failures or the impact of change; and ensuring that there are procedures to implement new legislative requirements. Good practice would comprise effective monitoring of absenteeism and workplace health, the collection of OSH data for benchmarking, appraisals of senior management that assess their contribution to OSH performance, and regular reports to the board on the OSH performance of contractors.

    Review

    A review - at least once a year - will allow the board to check that the principles are embedded in the organisation and whether the risk management system is effective. The review should ensure that: the OSH policy reflects the organisation's priorities; risk management and other OSH structures have been effectively reported to the board; OSH shortcomings and the effect of all board decisions are reported; and actions address weaknesses and that there is a system to monitor their implementation.

    Good practice would see: the inclusion of OSH performance in annual reports to investors and stakeholders; "extra" visits by board members to the shop floor to gather information for the formal review; and celebration of good OSH performance at central and local level. Larger organisations need to have formal procedures for auditing and reporting OSH performance, and the board should ensure that an audit is "perceived as a positive management and boardroom tool". The guidance points out that there are helpful guides and codes (HSB 359 p.7).

    Individual liability

    The new guidance is slightly more strident than its predecessor about the liability of individual directors. Both centre around a restatement of s.37(1) of the HSW Act, ie that directors can be prosecuted where an organisation's offence has been committed with their consent or connivance or is attributable to their neglect. But the new guidance goes further to spell out the sanctions for failure - usually a fine, although prison is an option for a small number of offences. It also flags up the possibility of disqualification under s.2(1) of the Company Directors Disqualification Act 1986.

    The new guidance does not point out, however,that disqualification is rare and the use of prison rarer still (a handful of such sentences, usually for breaches of a prohibition order or licensing requirements). Nor does it mention that directors may still be prosecuted for an individual offence of manslaughter after the new offence of corporate manslaughter reaches the statute book.

    Not so different after all

    The IoD has had to balance the need to provide meaningful information on the most important issues for directors with the need to be brief, avoid OSH-speak and write in the language of the board. Nevertheless, there are some potential improvements that could arise from the consultation:

  • the final version needs to emphasise that the "performance indicators" extend well beyond injury and ill-health statistics to encompass inputs, outputs and outcomes;

  • the draft guidance describes the costs of poor OSH in terms of overall lost working days, societal costs and health tolls, rather than what it means for individual businesses. Statistics such as "£30 billion cost to society" mean little to a director on the ground; and

  • the desire to steer clear of OSH jargon may inadvertently have resulted in the omission of important references, most notably to the HSE's seminal HSG65, Successful health and safety management, and a practicable linkage with the most important elements of the Management of Health and Safety Regulations 1999.

    Strangely, the guidance is not so different in style or content from its predecessor. The five action points of the earlier guidance (see box 2) have significant parallels with the three principles and four sets of core actions and good practice of its successor. And, for all the claims that the new guidance would speak the board's language, both documents look like close relations.

    Nor has the intention to align OSH with the overall board strategy to a significantly greater extent than its predecessor fully materialised. For large organisations, the guidance recommends that the board integrates OSH into the main corporate governance structures and that, in some cases, it might be appropriate to create an OSH subcommittee to sit alongside those on risk, remuneration and audit. It also points out that the Turnbull guidance requires companies to have robust systems of control that cover OSH risks (HSB 359 p.9). The 2001 guidance similarly - and rightly - placed the management of corporate risk within the context of effective corporate governance, referring to the Turnbull recommendation for an annual review of the systems of control.

    Will it work?

    The most important question, of course, is will it have a greater effect than its predecessor? The above shortcomings are neither insurmountable nor fatal - this, after all, is the purpose of consultation. Far more problematic is the decision of the HSC not to recommend imposing duties on directors - the only real stick that may have made less willing directors take notice (HSB 351 p.1). Despite this, there are grounds for optimism.

    Michael Large, the IoD vice-president who chairs the group developing the guidance, told a RoSPA conference in May3 that although many boards did address OSH, there was still a perception that "OSH is for OSH specialists". The old guidance, he believes, was too couched in safety jargon, whereas the new guide has been "produced by people who don't know about safety". Although this is somewhat of an overstatement, given that the working party lists an IOSH official and a union safety specialist among its membership, and an HSE secretariat, there is truth in his self-deprecation and this has resulted in guidance that will lend itself more readily to directors.

    There are other pointers as to why the new guidance might enjoy some success:

  • it may be appearing in more conducive times, with a greater acceptance by many organisations of the imperatives of corporate responsibility, not to mention the awareness, and fear (regardless of the reality), of the new offence of corporate manslaughter;

  • the "scarier" references to the law are refreshing (not to say surprising) in the post-Hampton era;

  • it differs from its predecessor in that it distinguishes between executive and non-executive members;

  • having a small number of brief core requirements, with many actions put back into a good-practice section, should facilitate use;

  • it offers case studies, although it is debatable whether anonymised examples of 100 or so words are helpful or add anything to the more detailed case studies that are available online;

  • it is easier to read, understand and use (though there has been a tendency to exaggerate the complexity of the previous 12-page guidance); and

  • the use of web-based and non-HSE references, rather than a list of HSE publications, for further information is likely to prove helpful.

    But above all it may not be so much what the guidance says, or how it says it, but the fact that the IoD has steered its development and badged the publication that will be the most important change and incentive for the IoD's 52,000 members and directors everywhere.

    1 "Directors' responsibilities for health and safety", HSC, www.hse.gov.uk .

    2 "Leading health and safety at work: actions and good practice for board members", Institute of Directors, HSC, www.iod.com .

    3 Directors' health and safety responsibilities, NEC, Birmingham, 22 May 2007.

    Howard Fidderman is a freelance journalist and editor of HSB.


    BOX 1: Should there be an OSH DIRECTOR?

    The draft guidance is less insistent than its predecessor as to the need for a director of OSH , pointing out that some boards find it useful to nominate a director as "the champion of health and safety". Further, it argues that an OSH director can give a "strong signal" that the board takes the issue seriously and understands its strategic importance.

    The 2001 guidance "recommended" that boards appoint an OSH director, so that there would be a "board member who can ensure" that OSH risk management issues are properly addressed by the board and in the wider organisation. The OSH director could be the chair or chief executive. It also cautioned that the presence of an OSH director should not detract from the responsibilities of other directors for specific areas of OSH risk management or from the board's responsibilities as a whole.


    BOX 2: THE 2001 ACTION POINTS

    The earlier HSC guidance sets out five action points:

    The board needs to accept formally and publicly its collective role in providing OSH leadership in its organisation.

    Each member of the board needs to accept their individual role in providing OSH leadership for their organisation.

    The board needs to ensure that all board decisions reflect its OSH intentions, as stated in the policy.

    The board needs to recognise its role in engaging the active participation of workers in improving OSH.

    The board needs to ensure that it is kept informed of, and alert to, relevant OSH risk management issues. And: "The HSC recommends that boards appoint one of their number to be the health and safety director."