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The real costs of cutbacks to training and HR


HR programs may seem like a clear target for cost reduction during tough times. Training, rewards, incentives, safety, wellness and employee assistance programs are often viewed as optional extras, perfectly acceptable when business is good, and completely expendable when business is tough.

When times are tough, businesses can be forced to make difficult decisions with great reluctance, and with the understanding that they are not without consequence. Cutbacks to HR programs must however be made with caution by thoroughly examining the potential strategic, financial and legal risks involved as the same cutbacks may end up costing much more for the company.

For instance, during a restructure it is tempting to shift resources and spending away from ‘support services’ such as Workplace Health and Safety (WH&S). Changes to WH&S programs often occur incidentally, as part of wider cost saving initiatives. However, research indicates changes and cuts that affect workplace health and safety can have very negative consequences for an organisation during an economic downturn, as WH&S risks increase during these times.

This has the potential to increase workplace injuries and workers compensation claims at a time when the organisation can least afford it. Risk factors include increased work volume and work pressure, reduced personnel, poor morale, reduced focus on a safe work culture and uncertainty about the future.

Issues that have the potential to influence workplace health and safety:

Lack of sensitivity in implementing workplace change 

Research has shown that of those employees who remain after a restructure, there is an increased risk of absence due to mental health disorders and it is the most committed employees who run the highest risk of mental health problems.

Poor morale

In an organisation experiencing a downturn or restructure, poor morale can result in the assumption that safety is no longer a priority, resulting in an increase in workplace injury. It is therefore essential that safety is reinforced from a senior executive level and clearly communicated that it remains a priority during tough times.

Reduction in resources available

Reductions in time, money or personnel as a result of tough economic times can increase work pressure and errors leading to accident and injury. Pressure to complete a task or job in a tight timeframe with limited resources can also lead to cutting corners on important safety aspects of the job.

Travel restrictions can also reduce the availability of senior management or safety personnel on site, contributing to an overall decline in safety culture, and sense of isolation and abandonment of staff. Increased requirement for expenditure approval can lead to a dynamic where managers and staff are afraid to raise WH&S issues that may require financial outlay.

WH&S legislation requires that an employer ensure the health and safety of their workers so far as is reasonably practicable, but in determining this, costs may only be considered after the extent of the risk and the available ways of eliminating or minimising the risk have been assessed. For cost to be a key factor in the risk control process the cost would have to be ‘grossly disproportionate’ to the risk.

Changes to reporting relationships, and loss of highly knowledgeable personnel

Changes to an organisation’s structure during tough times can create an environment where it is difficult to follow or comply with established policies and procedures. An example of this could be an employee failing to report an incident or injury because a key person or part of the process is missing. 

Likewise, the loss of highly knowledgeable procedural or technical personnel can pose challenges in terms of workplace depth of health and safety. Potentially combined with increased time or resourcing pressures, employees may lack depth of knowledge to understand hazards, assess risks, and implement appropriate controls.

Workplace Health and Safety

Workplace Health and Safety creates a legacy that must be managed into the future. 

Ensure that changes are communicated and conducted as sensitively and as fairly as possible with regard to the future health impact on those who are staying or leaving. Keep employees informed so as to prevent gossip, rumour and worry. Maintain investments in employee wellbeing services such as employee assistance programs. 

Actively work to maintain morale. Reinforce senior management commitment to a safe workplace through regular communication. Prioritise risks according to risk rating and ensure progress is tracked using a risk register so that they are documented and not forgotten during tough times. 

Encourage new and innovative ways of reducing and eliminating risk in order to avoid hazard identification, risk assessment and control being abandoned during tough times. During workplace change consider existing process and procedures, and ensure alternative processes are clearly communicated. 

Where employees are performing new roles or responsibilities, ensure that they are provided with training from someone experienced in the role or task; this should also include training in safe work procedures.

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