Businesses should take risk management compliance seriously

As the downturn continues and businesses across the UK look at ways of reducing costs in order to remain competitive, Martin Smith, Chief Executive of the Alcumus Group, warns that reducing spend on compliance, certification and controlling risks to workplace health and safety could endanger lives and cost companies significant reputational damage.

Whether a global business or an SME, every business organisation needs to ensure that it invests in developing its own compliance culture.  Directors and Managers must understand that this should not be seen as an additional activity to the core business but an integral part of the way the business functions and operates.  Building compliance into your business operations is about designing and building practices into all business operations, capturing and storing all relevant documentation and ensuring a compliance culture by enforcing adherence to compliant practices.  Many SME businesses are starting to see the real benefits of compliance and certification investment, thus bringing organisational change, significant risk management improvements, cost reductions and an improved reputation in the marketplace.  However, there is little value in adopting regulatory standards if the individuals within an organisation are not shown how to apply them.

No joke

For instance, health and safety management often gets a very bad press and is used as an excuse for not doing things. Why does anyone joke about health and safety at all? If a plane crashed and killed 152 people, it would be taken very seriously. Yet that’s the number of people who die every year in accidents at work, not counting the 233,000 that get injured(1).

Currently there are around 4.7 million SMEs (employing nearly half the workforce). They are present in all industry sectors, including those associated with the highest risks of injuries and ill-health.

The health and safety sector is still struggling to get to grips with what this huge number of employers need from their consultants and other advisers.  When you are worrying about whether you are going to be able to pay your employees, or take a salary yourself; when it’s 2am and you’re just getting around to doing your accounts, then worrying about your health and safety procedures and compliance is not top of your list. HSE research shows that most small and medium sized businesses do want to comply with health and safety. It also shows that most believe they are complying although realistically, research asking someone to incriminate themselves, even anonymously, is likely to be flawed.

The issue is that the laws are the same whether you employ two people or two hundred so there is a disproportionate burden on small companies.

Within the health and safety sector, there has developed a tendency to use these laws as a big stick. Consultancies looking to make a fast buck have resorted to scare tactics, supported by an ever-helpful media. For small firms, therefore, health and safety has become a ‘must do’ compliance issue rather than a culture that can genuinely deliver business success.

Three drivers

For SME managers there are three drivers to adopting better H&S practices:

  • compliance
  • business cost
  • moral obligations

Far too much is made of the first and not enough of the second and third.

It also makes sense from a business standpoint. The benefits of an effective health and safety culture are well documented: accidents avoided, fewer working days lost, improved recruitment and staff retention, improved customer confidence, reduced insurance premiums, and the ability to tender for large corporate and government contracts.

As if that wasn’t enough, working in a healthy and safety-conscious environment can have a hugely positive impact on staff morale, attendance and productivity.

Common sense tells us this is true but when it comes to dealing with the law, then a certain level of competence and confidence is also needed. A manager who has been given the responsibility without support and advice will inevitably take a ‘belt and braces’ decision and that’s where health and safety falls into disrepute.

Certification to Standards

Another way of keeping one step ahead of the competition is to gain certification to certain management system standards, such as Quality (ISO 9001), Environmental (ISO 14001) or Health and Safety (OHSAS 18001).   In some cases there may be a requirement to obtain certification to specific standards before tendering to offer certain services.  Certification can provide small and medium size businesses with a differentiator and proof that the business is complying with best practice.

Today all organisations face an increasing number of challenges relating to their environmental performance.  The burden of environmental legislation has increased, together with pressure from business partners and other stakeholders to be able to demonstrate positive environmental management.  ISO 14001 is an internationally recognised Environmental Management standard which can be applied to all organisations, whatever their size.  Achieving this standard can help to reduce costs and win new business.  In some cases it could lead to lower insurance premiums, green consumerism opportunities, a reduced risk of fines or legal action and the opportunity of winning new work with clients due to better risk management and an improved PR image.

ISO 9001 is the internationally recognised standard for the Quality Management of businesses. It applies to the processes that create and control the products and services an organisation supplies, it prescribes the systematic control of activities and is designed to apply to virtually any product or service, made by any process anywhere in the world.

Registration to ISO 9001 by an accredited certification body shows you are committed to quality and to your customers. It demonstrates the existence of an effective quality management system that satisfies the rigours of an independent, external audit.  An ISO 9001 certificate enhances the company image in the eyes of customers, employees and shareholders alike and it gives a competitive edge to an organisation’s marketing.

Implementing a Quality Management System will motivate staff by defining their key roles and responsibilities.  Cost savings can be made through improved efficiency and productivity, as product or service deficiencies will be highlighted. From this, improvements can be developed, resulting in less waste, inappropriate or rejected work and fewer complaints. Customers will notice that orders are met consistently, on time and to the correct specification. This can open up the marketplace to increased opportunities.

Business Process Management

With the increased volume of compliance requirements there is a need for businesses of all sizes to deploy a systematic approach to implementing, enforcing and reporting on the regulatory processes.  More businesses are recognising that compliance technologies can help reduce administrative overheads and the effort required to comply with regulation.  Efficient record management and reporting will enable a business to adhere to critical compliance obligations. Often replacing a myriad of ‘local’ spreadsheets, databases or legacy systems, can help organisations deliver accurate and timely data.  Specialist consultants will work with businesses to understand their business processes and configure a tailored environment that allows them to efficiently record, track and report on key business data – often delivered via a secure, hosted service easily accessible by many users from any location.

There is an important message for any Director or Manager that by making risk management, compliance and certification an enterprise-wide culture, small and medium size firms can reap enormous benefits.

Ref:

(1) Health and Safety Executives Statistics 2009/10

  • Noson Mikoto

    Savvy commentary ! I learned a lot from the insight , Does someone know
    if my business could obtain a sample UK Skandia Disinvestment Request
    copy to fill in ?