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The global business environment changes on a daily basis. Change comes from such diverse directions as:
Not only do SH&E professionals need to be competent in the technical and managerial areas of safety and health, they also need to understand the global context in which their company operates. Beyond regulatory compliance, a successful SH&E professional must understand the strategic and business governance issues facing their organization. Within this context, SH&E professionals can successfully influence and impact, at both a strategic and technical level within their organization, the safety and health of their organization's workforce around the world.
To help SH&E professionals move beyond the technical, this article provides insight on issues and challenges found in global business today. They include (Seabrook, 2005; 2006):
Many Asian and European domestic and multinational companies are engaging in pandemic preparedness planning because of the potential for a highly pathogenic avian influenza (HPAI) pandemic. According to the European Center for Disease Prevention and Control, the potential for individuals to be infected with HPAI, even with direct bird contact, is considered low. However, World Health Organization (WHO) and governments around the world are concerned, and progress of the A/H5N1 HPAI is being monitored.
Globalization has had a significant impact on the connectedness of the world through increased travel, trade electronic communication and information systems. From a global health perspective, this increases the likelihood of a serious avian or human influenza outbreak spreading to a pandemic level. For example, the likelihood of an A/H5N1 infection in China to spread to individuals in Japan, Singapore, Australia, India, the U.S. or Europe is significant if the spread of the disease crosses over from bird-to-human to human-to-human contact.
What does this mean for U.S. multinationals? Whether a U.S. multinational has manufacturing operations, service, and sales or distribution sites, or uses suppliers and vendors in Asia (origin of the current avian flu virus), their business will be impacted. WHO and governments in the U.S., Asia and Europe have issued guidelines for minimizing the risk of contracting HPAI from birds.
The U.S. Centers for Disease Control (2006) and the European Center for Disease Prevention and Control (2005) have published guidelines and checklists for pandemic preparedness, which include risk identification, prevention and control and mobilizing, isolating and educating infected individuals and healthcare workers. Other areas to consider include:
SH&E professionals should be involved not only in the technical planning for such a pandemic but also in the strategic direction and implementation of the pandemic preparedness process.
Another growing trend in globalization is the importance that executive leadership is placing on business risk, identification and assessment of operational and reputational risks, in addition to traditional financial risks within multinational organizations. This is a direct result of Sarbanes-Oxley-type legislation and financial accounting changes implemented by countries around the world, including the U.K., France, Australia, Holland and Belgium (Institute of Chartered Accountants, 1999; Australian Stock Exchange, 2003).
While worker safety and health risk is not specifically identified as a financial risk, management assessment of internal controls is found in Section 404 of the Sarbanes-Oxley Act of 2002. This has led some U.S. multinationals to ask, "What are the worker safety and health risks within their global operations, and how are they controlled?" This includes operational as well as reputational risks associated with workplace health and safety incidents. What are the business risks to the operational functioning of the organization and to its reputation?
The following two scenarios exemplify the relationship between business risk and worker safety and health risks:
From a reputational risk perspective, suppliers can also be a significant liability. In the 1990s, Nike Inc. suffered significant damage to its reputation when allegations were made that the company contracted Asia suppliers that used child labor and provided poor safety and health conditions for their workers. CEO Philip Knight acknowledged that this impacted Nike's perceived reputation at the time (Knight, 2004; Locke, 2005).
Shareholder expectations drive the trend of annual sustainability and corporate responsibility reporting. This also impacts the focus that multinationals place on workplace safety and health. Companies such as GE, BP, Novartis, Microsoft, Cadbury Schweppes, Halliburton, Nike and Pfizer are but a few companies that actively produce an annual sustainability or corporate responsibility report which includes their workplace safety and health performance.
SH&E professionals strategic role within their organization is to identify, assess and communicate these safety-and health-related business risks to executive leadership. By expanding the existing safety and health internal control audit/assessment processes to include all business risk, SH&E professionals have an effective mechanism to communicate business-wide risk implications, thus enabling executive leadership to make informed business decisions and to meet their global Sarbanes-Oxley-type legislation obligations.
Technology Advances
Video conferencing, e-mail, the Internet, faster communication capabilities, cell phones, satellite navigation and the use of PDF files and computer-aided production equipment are transforming products and services as well as how jobs are defined. Communication is faster, circumnavigating the globe in seconds. In The World Is Flat, Friedman (2005) describes the concept of "disaggregation" of jobs as a result of globalization.
This disaggregation trend identifies worker's skills in low-cost locations and matches them to job components in operations around the world. This model allows an organization to use human capital around the world to complete a task, job or project (Friedman, 2005).
Customer service jobs are a good example of this globalization trend. Using call centers in lower-cost locations such as Glasgow, Scotland versus London, England; Minnesota versus New York and Madras, India versus Minnesota are examples of this concept. The customer sees a seamless service. One call to customer service transfers the caller to tech pupport in India, customer returns in Idaho and customer orders in Poland. The world, as Friedman (2005) refers to it, is becoming "flat" in a way never seen before. The concept of global projects and teams allows a multinational organization to efficiently pool the best resources available for the jobs at hand. The company capitalizes on its human capital and creates efficiencies and cost reductions using skilled workers in low-cost areas of the world.
Advanced technologies also provide multinationals with increased capabilities for global supply chain outsourcing. These suppliers of raw materials and component parts use low-cost production sites in developing countries around the world. Reputational risk is a financial risk as described in the Nike scenario. Therefore, supply chain safety and health performance management processes are becoming even more important to multinational organizations.
What does this mean for global SH&E professionals? New technologies bring new safety and health risks, the need for research and a greater understanding of these risks and their control strategies. Nanotechnology (Davies, 2006), muscoskeletal impacts of technology use, increased use of worker home offices, fleet safety, security, global worker travel, global management systems and global regulatory compliance assurance are just a few issues on which global SH&E professionals need to build their skills.
China (Seabrook, 2005) and India are the current markets of choice for basing manufacturing or servicing capabilities. From computer software companies to global accounting firms, these two countries are significant growth areas for U.S. multinational companies.
China. Most of the new safety and health regulations are related to the recent mining disasters in China. Enforcement continues to be sporadic. The perception of many SH&E professionals is that enforcement of safety and health regulations in China is geared toward resource-rich multinational organizations.
This means that good management systems need to be in place for developing corporate safety and health standards, then auditing and measuring performance against those standards. The country of China is constantly changing, so it is essential for SH&E professionals to stay abreast of strategic and compliance issues in this country.
India. India is currently one of the fastest-growing economies aside from China, and multinational organizations see the benefits of a stable business environment with a rule of law, low labor costs and a skilled work force. While there is safety and health legislation in India, enforcement resources are minimal.
Developing and implementing corporate safety and health standards across a global organization, with auditing and performance measurement, is considered good business practice among multinationals. A management systems approach is not a new trend, nor is regulatory compliance a new issue (British Standards Institute, 1999; European Union Council, 1999; Seabrook, 2005). What is important is the correlation of management systems and corporate standards with risk assessment, transparency and internal controls, the basic tenants of Sarbanes-Oxley-type legislation around the world. This approach provides consistency across the organization and tackles the issue of regulatory compliance in most developing countries. It is also considered good business practice among multinational companies (Seabrook, 1999).
In countries where specific government regulations are stricter than existing corporate safety and health standards, these regulations are identified and implemented for sites operating in those countries. Examples include the noise action levels in Europe (European Union Parliament and Council, 2003) and the requirement of safety committees for all workplaces in Singapore (Ministry of Manpower, 2006).
The European Union's relatively new legislation, harmonizing the Registration, Evaluation and Authorization of Chemicals (REACH), may become another EU-driven standard for global implementation. REACH provides for a "one substance, one registration" process for chemicals that are produced for use in the EU. Polymers and intermediates are excluded. The EU Commission expects REACH legislation to come into law in early 2007 with an operational expectation for enforcement in 2008 (European Agency for Safety and Health at Work, 2006).
There continues to be a general trend in government information sharing and cooperation on workplace health and safety research, business collaboration and regulatory approaches. The U.S., EU and U.K., Australian, Japanese, Korean, Finnish and Canadian governments are engaging information technology initiatives to build a platform for sharing occupational safety and health strategies with developed and developing countries around the world. One only has to access the technically rich content of their websites to understand the advantage this collaboration is bringing to business and labor.
Globalization is the driving force behind the change in business. Understanding the global "big picture" will enable SH&E professionals to know what key information their business leaders need, thereby positioning them to have a greater influence on strategic as well as technical workplace safety and health decisions.
Australian Department of Industry, Tourism and Resources, Australian Government. (2006). Being prepared for an influenza pandemic. Retrieved from http://www.industry.gov.au/pandemicbusinesscontinuity/.
Australian Securities and Investments Commission. (2004).The corporate law economic reform program (Audit Reform and Corporate Disclosure) Act 2004.
Australian Stock Exchange, Corporate Governance Council. (2003; 2006). Principles of good corporate governance and best practice recommendations. Retrieved from http://www.csaust.com.
British Standards Institute. (1999). Occupational health and safety assessment series 18001: Occupational health and safety management systems-specification. London: Author.
Davies, J.C. (2006). Managing the effects of nanotechnology. Washington, DC: Woodrow Wilson International Center for Scholars. Retrieved from http://www.chemalliance.org/columns/improving/ooo929Maclean02.asp.
European Center for Disease Prevention and Control. (2006). Assessment tool for national pandemic influenza preparedness. Retrieved from http://www.europa.eu.int.
European Center for Disease Prevention and Control. (2005). ECDC guidelines to minimize the risk of humans acquiring highly pathogenic avian influenza from exposure to infected birds or animals. Sweden: Author. Retrieved from http://www.ecdc.eu.int.
EU Management of Health and Safety at Work Regulations (1999). European Union Council, DGV, Brussels, 1999.
European Parliament and of the Council. European Union Agency on Health and Safety at Work (2006). Directive 2003/10/EC. Physical agents: noise. Retrieved from http://osha.eu.int/legislation/directives.
European Agency for Safety and Health at Work (2006). REACH. Retrieved from http://europe.eu.int/comm/environment/chemicals/news/press.htm.
Friedman, T. (2005). The world is flat: A brief history of the 21st century. New York: Farrar, Straus and Giroux.
Institute of Chartered Accountants. (1999). Internal control-guidance for directors on the combined code for corporate governance. England: Author.
Knight, P. (2004). Chairman's letter to shareholders: We're faster than ever. 2004 annual report. Oregon: Nike Inc.
Locke, R. (2005). The promise and perils of globalization: The case of Nike. Cambridge, MA: Massachusetts Institute of Technology, Sloan School of Education. Retrieved from http://mitsloan.mit.edu/50th/pdf/nikepaper.pdf.
Ministry of Manpower. (2006). Workplace safety and health committees. Part VII. No. 29, Workplace Health and Safety Act 2006. Retrieved from http://www.mom.gov.sg. Sarbanes-Oxley Act of 2002. Public Law 107-204.
Seabrook, K. (2006). Briefing: Global issues and trends in workplace safety and health. Proceedings of 2006 ASSE Professional Development Conference, USA.
Seabrook, K. (2005). Global issues and trends in workplace safety and health. Proceedings of 2005 Professional Development Conference, USA.
Seabrook, K. (1999, June). 10 strategies for global safety management. Occupational Hazards, 61(6), 41-45.
U.S. Department of Health and Human Resources. (2006) Business pandemic influenza planning checklist. Washington, DC: Author. Retrieved from http://www.pandemicflu.gov/plan/pdf/businesschecklist.pdf.
Published in the Proceedings of the 2006 ASSE Professional Development Conference (c)2006 ASSE.