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In a volatile global economy, organisations are under increased pressure to be competitive while at the same time safeguard their employees from new and emerging risks. Understanding the factors that drive and impact performance and wellbeing is an essential element of an organisation’s enterprise risk management.

At Aon’s Insights Series 2019 in Melbourne, Mario Machado, National Practice Leader, WHS, at Aon outlined the four megatrends identified as having the greatest impact on work health and safety (WHS) and workers’ compensation over the next 20 years.

Key megatrends

These megatrends present new opportunities for organisations to safeguard their workforce for the future.

megatrends

New ways of working

In today’s digital age, traditional limitations, such as the physical locations of employees and customers are becoming increasingly less of an obstacle for employers. Technological innovation means that people can connect across platforms with ease from anywhere at any time. In an increasingly fast paced working environment workforces are adopting more flexible ways of working. According to the Australian Bureau of Statistics, almost a third of all employed persons regularly work from home1.

While organisational agility has proven to have a significant impact on employee engagement, retention and an organisation’s bottom line, insights shared during the panel revealed an interesting mismatch between employee perception and business reality. While 25 per cent of employees say working from home has improved their work life balance2, some research suggests 92 per cent of companies permitting home based work say health and safety outcomes are worse off (Quinlan & Bohle, 2008)

Sharing her insights on the panel in Melbourne, Bron Taylor, Manager, Group Workplace Safety at Virgin Australia said, “New ways of working are changing how people interact in teams. It affects team engagement and has a direct impact on employee stress and .”

The unstructured nature of working from home, or remotely, may in fact lead to feelings of isolation and the breakdown of teams. This can have a significant impact on employee stress and mental health. For companies themselves, they also have to navigate the complexity of handling employer liability when workers have accidents when working from home.

Ageing workforce

The second megatrend, an ageing workforce, is well known and accepted as a global, not just a local challenge. The statistics speak for themselves. By 2060 half of men and four out of 10 women aged 64 or older in Australia will still be employed3.

Chanelle McEnallay, the Australian Chief Risk Officer at Ramsay, Australia’s largest private hospital operator said that the ageing workforce should be seen as a great opportunity. She said, “when we look at the recruitment challenges facing the healthcare sector in Australia, the issue is not necessarily that there is a shortage of nurses, but a shortage of skilled nurses. The fact that employees are staying in the workforce longer means organisations and their customers can benefit longer from their talent, experience and knowledge.”

The number of workers in Australia aged over 65 rose by a staggering 235 per cent between 2003 and 20134. This has led to the development of gradual retirement strategies which are intended to have a positive impact on employee wellbeing. However, workers in the 50-54 age group had the highest rate of injuries in 2017/185. The increase in workers compensation liability clearly presents a significant risk for some employers.

Mental health

Mental health and wellbeing, the third megatrend, is projected to be one of the biggest social and business issues facing society.

McEnallay stressed that while mental health awareness has grown exponentially in recent years, it is not a new risk facing organisations. She said, “Mental health is not an emerging issue, it has emerged; we’re in it. The data collected over the last 10 years is incredibly compelling. Mental health has social, financial, personal and business impacts.”

Highlighting the business case for wellbeing, Safe Work Australia estimates that $543 million is paid in compensation of work-related mental health conditions annually, accounting for six per cent of all serious workers compensation6.

Machado noted that aside from the staggering statistics associated with the magnitude of the problem and the financial impacts on organisations, mental health also presents as a social and organisational cultural risk. He then declared that a fa failure to properly address mental wellbeing, inevitably leads to a reduction in engagement and an increase in absenteeism.

Aon research shows that a five point increase in employee engagement is linked to a three point increase in revenue growth in the subsequent year7. The cost to business per year in presenteeism and sick costs is predicted to be as much as $8 billion a year8.

Panellist Andrew Conway, CEO – Institute of Public Accountants (IPA) stressed that organisations have a duty to look beyond the financial motivations of addressing mental health in safeguarding a workforce. He said, “It’s the right thing to do.  We must empower our staff to talk about mental health, to encourage reporting that equips us with the relevant data to build the right strategies.

He added, “Board awareness and a culture of open, transparent reporting and response is essential, not just nice to have. But it doesn’t stop there. There is no end point in the management of this risk. It is an ongoing process of assessment, recovery, learning and adaption.”

Officers duties and liability

The fourth and final megatrend is one that is gathering speed at a rate of knots – the continuing shift towards making officers and senior managers more accountable for WHS related offences. The WHS model laws that were introduced in most states except Victoria and Western Australia in 2011 introduced positive obligations on officers to exercise due diligence. At the time this was seen as a significant shift in ensuring senior managers and board members took a more positive approach to the management of WHS.

The review of the model WHS laws by Safe Work Australia was released a few months ago which made a number of recommendations including increases to penalties, expansion of existing penalties and a recommendation to create a Model Industrial Manslaughter (IM)9 Penalties do vary with maximum penalty of 20 years imprisonment and $10 million for corporations. Victoria and Northern Territory have recently revealed plans to introduce  IM offences. Western Australia have also suggested plans to introduce IM offences. Queensland and Australia Capital Territory both have IM laws in10.

While there are mixed feelings about whether the introduction of a model IM offence will in fact add any value, Mario Machado concluded that it is certainly a topic that organisations should watch very closely.

The interconnection of financial responsibility and people risk – in an age where changing demographics, corporate responsibly and employee expectations – is driving new business models.

The views and opinions expressed in this blog are those of the author(s) and do not necessarily reflect that of Aon.  We make no representations (express or implied) as to accuracy, completeness, correctness or validity of any information in this blog and accept no responsibility or liability for any errors, omissions or misstatements of whatever nature and however caused.

 

[1] https://www.abs.gov.au/ausstats/abs@.nsf/lookup/6333.0Media%20Release1August%202015
[2] https://mccrindle.com.au/insights/blogarchive/working-from-home-the-benefits-and-the-cost/
[3] https://www.worksafe.qld.gov.au/forms-and-resources/newsletter/esafe-newsletters/esafe-editions/esafe/april-2008/working-well-working-wisely-keeping-our-older-workforce-healthy
[4] Safe Work Australia Presentation 2018
[5] https://www.abs.gov.au/ausstats/abs@.nsf/mf/6324.0
[6] https://www.safeworkaustralia.gov.au/topic/mental-health
[7] 2013 Trends in Global Employee Engagement – https://www.aon.com/attachments/human-capital-consulting/2013_Trends_in_Global_Employee_Engagement_Report.pdf
[8] Psychosocial safety Climate and Better Productivity in Australian Workplace – Costs, Productivity, Presenteeism, Absenteeism Report – November 2016
[9] https://www.safeworkaustralia.gov.au/law-and-regulation/model-whs-laws/review-model-whs-laws
[10] https://www.ashurst.com/en/news-and-insights/legal-updates/industrial-manslaughter-laws-in-australia/

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Mario Machado

Mario Machado  

National Practice Leader - WHS
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