When it comes to the management of organizations in Canada there are basically three types of companies.
At the top, are the organizations that believe in and employ leading edge management and leadership methods whether it is in operations, production or health and safety systems. These organizations put these systems in place because this represents best practices, not because of regulations or legislative obligations. Unfortunately these organizations represent the minority of employers.
The majority of organizations in North America are the ones who lead in some aspects of their business, but who are often motivated by legislative and regulatory requirements or financial penalties in areas such as environment, health, safety and disability management.
And the last group of organizations, which again represent a smaller portion of the group, are the employers who are not motivated by legislation, regulations, fines or even potential embarrassment through hearings and trials related to health, safety, environment or returning inured employees back to the workplace.
This article focuses on the second group, the majority of Canadian employers who are motivated by regulatory and economic incentives as a means of improving health and safety outcomes in the workplace. A review of recent research in the areas of health and safety regulations and the use of financial incentives reveals the most effective means for encouraging organizations to improve their rates of injury and illness in the workplace as well as the duration of compensation benefits.
Human resources professionals who specialize in the fields of health and safety or disability management are likely already aware of the increasing amount of regulatory intervention on the part of the compensation boards or ministries of labour at the provincial and federal levels.
In the past two years, HR professionals have read about British Columbia becoming the first jurisdiction in Canada to include ergonomic regulations in its Health & Safety Act, the increase in the number of health and safety rules and regulations across all jurisdictions of Canada and the recently passed Part II of the Canada Labour Code which addresses health, safety and ergonomics in federally regulated environments.
The compensation boards are also increasingly using regulatory mechanisms as an incentive to motivate employers to decrease the rates and severity of injury, accident and illness.
A number of compensation boards across Canada are re-writing and updating their legislation and acts as they relate to minimizing the impact of disability on the workplace. This includes direct language in many of the compensation boards acts and policy manuals in order to regulate the rehabilitation, vocational rehabilitation and return to work of employees following injury and illness.
At a time when the boards and ministries are increasing the number and level of regulatory interventions, the number of workplace inspections and the number of written orders for compliance, employers may be asking: Does government regulation in this field have any impact on workplace safety?
The United States has had the Occupational Health & Safety Act in place since 1970. This is regulated via the Occupational Safety and Health Administration (OSHA). Since 1970, that act which is based on the use of regulations and standards with enforcement by inspectors and fines, has had little or no impact on workplace safety.
In Canada, governments have been attempting to promote workplace safety through:
•variations in workers compensation insurance pricing (rate-group level);
•variations in insurance pricing at the individual firm level (experience ratings); and
•safety regulations and standards that are enforced via inspection and fines.
In Canada, studies have found similar results as the U.S.-based research — Canadian occupational health and safety regulations, with the use of inspections and fines, have had minimal impact on workplace safety.
Boris Kralj, researcher with the Ontario Medical Association, has written extensively on the topic of regulations’ impacts on workplace safety performance. In Workers’ Compensation Foundations for Reform, Edited by Morley Gunderson and D. Hyatt, Kralj concludes that, clearly, there is little evidence in North America for the use of regulations to improve workplace safety performance. And he reviews and reports on the literature related to other more effective means of providing employers with incentives to improve workplace safety and health.
The alternative to government imposed regulations for improving workplace safety and health outcomes, is a financial incentive provided by the workers’ compensation insurance-premium pricing method. Kralj reports that based on U.S. research, “workers’ compensation experience rating provides market-based incentives for safety, the effects of which dwarf those of regulatory alternative of direct controls, fines and inspections carried out under occupational health and safety legislation.”
Experience rating systems, which all of the boards in Canada have instituted within the last 10 years, refer to a system which shifts the responsibility for some compensation costs from the industry group to the particular employer who is incurring the accident costs.
Kralj refers to a number of economists who argue that the “injury tax” approach, or experience rating, is a preferred method for encouraging employers to undertake health and safety initiatives in that it allows the employers themselves to determine the best methods — including the most cost-effective ones — for improving health and safety practices.
A number of economists argue that the experience rating provides enough of a financial and economic impact for employers to allocate enough resources to activities and processes that will lower their workers’ compensation accident costs.
There is other research that proves a positive link between an experience rating system and decreased rates of injury in the workplace, some of which indicated links between experience rating systems and decreased duration of disability benefits although this research is not as conclusive as for rates of injury.
From this review of the research and literature it can be concluded that the use of regulations including standards, fines, inspections and prosecutions has had minimal impact on health and safety outcomes for North American employers. The most effective method for motivating employers in Canada to develop prevention programs such as ergonomics, health, safety and return-to-work programs is the experience rating system. This penalizes employers who do not employ the use of effective health, safety and return-to-work processes while rewarding employers who do employ effective processes and programs.
Provincial government strategies should focus on the continuous improvement of current experience rating systems in order to provide an incentive for the majority of employers to develop and deliver effective and efficient health, safety and return to work processes. These rating systems provide a monetary incentive to employers to reduce accidents and injuries while expediting the return-to-work of employees.
Having said this, provincial compensation boards in Canada need to provide more improved research to both quantify the impact of experience ratings, as well as to enhance and improve existing systems.
Jane Sleeth is managing partner and senior consultant at Optimal Performance Consultants, an ergonomics, training and disability management consulting firm. She can be reached at [email protected].
At the top, are the organizations that believe in and employ leading edge management and leadership methods whether it is in operations, production or health and safety systems. These organizations put these systems in place because this represents best practices, not because of regulations or legislative obligations. Unfortunately these organizations represent the minority of employers.
The majority of organizations in North America are the ones who lead in some aspects of their business, but who are often motivated by legislative and regulatory requirements or financial penalties in areas such as environment, health, safety and disability management.
And the last group of organizations, which again represent a smaller portion of the group, are the employers who are not motivated by legislation, regulations, fines or even potential embarrassment through hearings and trials related to health, safety, environment or returning inured employees back to the workplace.
This article focuses on the second group, the majority of Canadian employers who are motivated by regulatory and economic incentives as a means of improving health and safety outcomes in the workplace. A review of recent research in the areas of health and safety regulations and the use of financial incentives reveals the most effective means for encouraging organizations to improve their rates of injury and illness in the workplace as well as the duration of compensation benefits.
Human resources professionals who specialize in the fields of health and safety or disability management are likely already aware of the increasing amount of regulatory intervention on the part of the compensation boards or ministries of labour at the provincial and federal levels.
In the past two years, HR professionals have read about British Columbia becoming the first jurisdiction in Canada to include ergonomic regulations in its Health & Safety Act, the increase in the number of health and safety rules and regulations across all jurisdictions of Canada and the recently passed Part II of the Canada Labour Code which addresses health, safety and ergonomics in federally regulated environments.
The compensation boards are also increasingly using regulatory mechanisms as an incentive to motivate employers to decrease the rates and severity of injury, accident and illness.
A number of compensation boards across Canada are re-writing and updating their legislation and acts as they relate to minimizing the impact of disability on the workplace. This includes direct language in many of the compensation boards acts and policy manuals in order to regulate the rehabilitation, vocational rehabilitation and return to work of employees following injury and illness.
At a time when the boards and ministries are increasing the number and level of regulatory interventions, the number of workplace inspections and the number of written orders for compliance, employers may be asking: Does government regulation in this field have any impact on workplace safety?
The United States has had the Occupational Health & Safety Act in place since 1970. This is regulated via the Occupational Safety and Health Administration (OSHA). Since 1970, that act which is based on the use of regulations and standards with enforcement by inspectors and fines, has had little or no impact on workplace safety.
In Canada, governments have been attempting to promote workplace safety through:
•variations in workers compensation insurance pricing (rate-group level);
•variations in insurance pricing at the individual firm level (experience ratings); and
•safety regulations and standards that are enforced via inspection and fines.
In Canada, studies have found similar results as the U.S.-based research — Canadian occupational health and safety regulations, with the use of inspections and fines, have had minimal impact on workplace safety.
Boris Kralj, researcher with the Ontario Medical Association, has written extensively on the topic of regulations’ impacts on workplace safety performance. In Workers’ Compensation Foundations for Reform, Edited by Morley Gunderson and D. Hyatt, Kralj concludes that, clearly, there is little evidence in North America for the use of regulations to improve workplace safety performance. And he reviews and reports on the literature related to other more effective means of providing employers with incentives to improve workplace safety and health.
The alternative to government imposed regulations for improving workplace safety and health outcomes, is a financial incentive provided by the workers’ compensation insurance-premium pricing method. Kralj reports that based on U.S. research, “workers’ compensation experience rating provides market-based incentives for safety, the effects of which dwarf those of regulatory alternative of direct controls, fines and inspections carried out under occupational health and safety legislation.”
Experience rating systems, which all of the boards in Canada have instituted within the last 10 years, refer to a system which shifts the responsibility for some compensation costs from the industry group to the particular employer who is incurring the accident costs.
Kralj refers to a number of economists who argue that the “injury tax” approach, or experience rating, is a preferred method for encouraging employers to undertake health and safety initiatives in that it allows the employers themselves to determine the best methods — including the most cost-effective ones — for improving health and safety practices.
A number of economists argue that the experience rating provides enough of a financial and economic impact for employers to allocate enough resources to activities and processes that will lower their workers’ compensation accident costs.
There is other research that proves a positive link between an experience rating system and decreased rates of injury in the workplace, some of which indicated links between experience rating systems and decreased duration of disability benefits although this research is not as conclusive as for rates of injury.
From this review of the research and literature it can be concluded that the use of regulations including standards, fines, inspections and prosecutions has had minimal impact on health and safety outcomes for North American employers. The most effective method for motivating employers in Canada to develop prevention programs such as ergonomics, health, safety and return-to-work programs is the experience rating system. This penalizes employers who do not employ the use of effective health, safety and return-to-work processes while rewarding employers who do employ effective processes and programs.
Provincial government strategies should focus on the continuous improvement of current experience rating systems in order to provide an incentive for the majority of employers to develop and deliver effective and efficient health, safety and return to work processes. These rating systems provide a monetary incentive to employers to reduce accidents and injuries while expediting the return-to-work of employees.
Having said this, provincial compensation boards in Canada need to provide more improved research to both quantify the impact of experience ratings, as well as to enhance and improve existing systems.
Jane Sleeth is managing partner and senior consultant at Optimal Performance Consultants, an ergonomics, training and disability management consulting firm. She can be reached at [email protected].
