A Royal Commission of Inquiry established in relation to the Pike River Coal Mine tragedy found that there were significant shortcomings in the company’s corporate governance and management. The failure of the company’s board of directors to provide effective health and safety leadership contributed to the operational causes of the explosions that killed twenty-nine men.
In response to the corporate governance issues raised in the Commission’s report, the Institute of Directors and the Ministry of Business, Innovation and Employment have recently released a new guideline for company directors on leading and managing health and safety in the workplace (“Good Governance Practices Guideline for Managing Health and Safety Risks”). This guideline provides directors and senior management with practical advice for implementing and maintaining a positive health and safety culture within an organisation, as well as a “Director Health and Safety Checklist” and a list of resources offering further information.
Although some of the recommendations may not apply to every industry, the underlying principles and responsibilities are relevant to all workplaces. These are discussed further below.
Principles of Health and Safety Governance
The fundamental principle underlying a directors’ role in health and safety management is leadership. The guideline makes it clear that leadership includes:
- Setting the policy direction for health and safety management. These policies should reflect the organisation’s responsibility to provide a safe and healthy work environment not just for its workers but for contractors, visitors, customers, and anyone else who may be affected by the organisation’s activities.
- Ensuring that the board’s behaviour is aligned with the organisation’s health and safety goals in order to encourage a positive workplace culture. Financial and production targets should not be of higher priority than addressing health and safety concerns.
- Engaging with workers and management to ensure that workers are encouraged to contribute to improvements to system development and that management is held to account for meeting expectations. Worker participation in health and safety risk management leads to better health and safety outcomes.
- Ensuring that the board’s leadership is “informed leadership”. Directors cannot measure health and safety performance without an understanding of the organisation’s hazards, safety risks, and hazard control methods.
In addition to providing leadership, an organisation’s officers and directors must always comply with relevant laws and regulations and ensure their organisation’s compliance. It is important to note that directors can be held personally liable for an organisation’s failure to comply with the Health and Safety in Employment Act 1992 if they are held to have “directed, authorized, assented to, acquiesced in, or participated in” a failure to comply (section 56(1)).
Directors’ Responsibilities
The guideline sets out four core responsibilities for directors in their health and safety management role: policy and planning; deliver; monitor; and review. Under each of these headings, the guideline sets out a discussion of each responsibility; a series of questions to be used by directors as a tool to determine whether the organisation’s practices are appropriate; and a list of director actions. The actions for directors are divided into two categories – baseline actions and recommended practice. The guideline also sets out responsibilities of managers.
Below is an overview of the general responsibilities for directors as set out in the guideline.
Policy and planning
- To determine the board’s charter and structure for leading health and safety.
- To determine high level health and safety strategy and policy, including providing a statement of vision, beliefs and policy demonstrating the board’s commitment to, and beliefs about the management of health and safety.
- To hold management to account for implementing strategy.
- To specify targets that will enable them to track the organisation’s performance in implementing board strategy and policy.
- To manage the health and safety performance of the CEO, including specifying expectations and providing feedback.
Deliver
- To lay down a clear expectation for the organisation to have a fit-for-purpose health and safety management system.
- To exercise due diligence to ensure that the system is fit-for-purpose, being effectively implemented, regularly reviewed and continuously improved.
- To be sufficiently informed about the generic requirements for a modern, ‘best practice’ health and safety management system and about their organisation and its hazards to know whether its system is fit-for-purpose, and being effectively implemented.
- To ensure sufficient resources are available for the development, implementation and maintenance of the system.
Monitor
- To monitor the health and safety performance of the organisation.
- To outline clear expectations on what should be reported to the board and in what timeframes.
- To review reports to determine whether intervention is required to achieve, or support organizational improvements.
- To make themselves familiar with processes such as audit, risk assessment, incident investigation, sufficient to enable them to properly evaluate the information before them.
- To seek independent expert advice when required to gain the required degree of assurance.
Review
- To ensure the board conducts a periodic (e.g. annual) formal review of health and safety to determine the effectiveness of the system and whether any changes are required.
- To ensure the board considers whether an external review is required for an independent opinion.
Overall comments
The guideline is intended to demonstrate how directors can influence health and safety, and to provide a framework for how directors can lead, plan, review and improve health and safety within their organisation. A “best practice” approach to health and safety governance is encouraged, particularly for organisations operating workplaces with obvious hazards and safety risks.
For more information, follow the link below to view the complete guideline: