Companies are defined by their reputations. It can take years to build your brand and only minutes for it to come crashing down.
Although hard to put a monetary value on it, reputation is a company’s most precious commodity and reputational damage is not something that can be insured against.
To protect your warehousing and distribution business you need to manage reputation risk. This requires identifying and managing scenarios that could leave your company vulnerable to reputational damage. A workplace accident in which an employee is injured or even killed is the classic example.
The reputational damage arising from an accident can be even greater if your company brand is associated with safety. The classic example being the January 2017 prosecution of Volvo resulting in a £900,000 fine after a worker was seriously injured falling from a stepladder. They had previously quoted that their safety innovations have changed the world and further that they want no-one killed or seriously injured in their cars by 2020!
The iceberg effect
The cost impact of a workplace accident can be highly damaging to your warehouse and distribution business.
Accident and ill-health costs can be likened to an iceberg: costs that are recoverable are visible but those that are unrecoverable are hidden below the waterline and are many times greater. The HSE estimates the hidden cost of accidents can be up to 10 times greater than the insured costs.
Uninsured costs can include:
- Lost time
- Sick pay
- Damage or loss of product and raw materials
- Repairs to plant and equipment
- Extra wages, overtime working and temporary labour
- Production delays
- Investigation time
- FFI or prosecution fines
- Legal costs
- Loss of contracts and, of course...damage to reputation
These hidden costs come out of company profit. Furthermore as accident losses increase, so will a company’s insurance premiums. It is clear that directly and indirectly, accidents reduce profitability and can have a negative impact on your business.
Initial response to a serious accident
In the event of a serious accident, your immediate goal should be to help the injured party, to prevent further injury to themselves or others. First aid support and an ambulance may be required and the area isolated, with access restricted to first aiders and those investigating only. With the use of mobile phones and social media channels embedded in our day to day lives, you would benefit from asking your workforce for cooperation in refraining from posting about the accident on social media channels, as anything posted on the internet is essentially making a public statement with potentially damaging impact on your company reputation.
Identifying immediate, underlying and root causes of Accidents
In the event of an accident at work many employers focus their efforts on looking at the immediate cause and reacting to ensure operations continue to run smoothly. Rarely do businesses look further into root causes of accidents and the true cost impact of an accident.
The immediate cause of an accident may be a machine blade coming into contact with hands and fingers. The underlying cause may be the removal of the machine guard, leaving the machine blade accessible. The root cause may be inadequate staff training or supervision resulting in the guard being removed and not replaced before re-starting the machine. Taking steps to investigate all accidents thoroughly and implementing an action plan for improvements is important to prevent further similar accidents. In event of an accident, enforcers take a very dim view of companies who have ignored previous warnings and will use this against you in court. It is also important to investigate accidents to boost employee morale and attitudes towards health and safety.
It is worth noting that a dangerous occurrence in the workplace such as racking collapse or overturn of a forklift truck may not result in injury but will still require full investigation and will be reportable under RIDDOR. It would subsequently be investigated by the enforcing authority with a similar potentially damaging outcome for your business.
In the event of an accident you will need to be able to get your hands on your risk assessments, health and safety policy and any training or maintenance records relating to the accident. These will also be requested by an inspector and your insurance company. Safety management software, like Safety Cloud, that holds this all in one place and accessible from any location, is invaluable.
Interviews under Caution - Essential Information!
If an HSE or Environmental Health Officer suspects a health and safety offence has been committed (often following a serious accident) they will invite you to attend an interview under caution. This is an interview under The Police and Criminal Evidence Act 1984. Any member of your staff can be invited to interview but typically it is Directors, branch managers or the person responsible for health and safety on site. This is conducted in a formal interview room, audio recorded and starts with a formal caution. It is essential you seek legal advice before attending. Generally, we advise you do not attend an interview under caution because, despite what they say, an inspector is looking to prosecute you or your employee. If you refuse to be interviewed, the inspector will usually send the questions to you in writing (or you can request them in writing) which gives you time to seek advice and think carefully about your answers.
It is worth noting that you can be cautioned on site at any time during an inspectors investigation. Our advice in this scenario is to not to say anything but state you wish to seek legal advice.
Keeping business running
Operations can be effectively shut down by the service of a prohibition notice by the enforcing authority. If the inspector is of the opinion that activities being carried out involve the immediate risk of serious personal injury, a prohibition notice will be served on the business, requiring an activity to cease immediately. If this activity is essential to your day to day operations, then this will have the effect of shutting down your business. Typical examples in the warehousing and distribution sector include prohibiting the use of racking due to poor condition, prohibiting access to stock on an unguarded mezzanine, prohibiting use of a forklift truck due to a failed lifting equipment inspection or prohibiting forklift trucks operating in a loading or unloading area due to uneven ground conditions.
It is critical that you seek our advice to assess the legal accuracy of the prohibition notice and to find a solution to get your business up and running as soon as possible.
Managing Reputation Risk
According to Jonathan Hemus, managing director of crisis management consultancy Insignia, protecting your reputation in the event of a major incident means doing and saying the right thing under enormous pressure and scrutiny.
He says: “Speed of action and communication in response to an incident is a reliable predictor of the impact on an organisation’s reputation. So, it’s important to take time ahead of an incident to plan how you would communicate in response to a major crisis”
He suggests that the following three areas are critical:
- Crisis management planning – your ability to communicate quickly and appropriately will be founded upon crisis management training and planning before the event. Organisations which have taken the time to plan, train and rehearse ahead of time are much more likely to be fleet of foot when the pressure is on.
- Creating the right culture – you can only respond quickly to a crisis if you have the kind of culture which alerts you to warning signs of an impending crisis. Embedding a crisis resistant culture which allows issues to be flagged and addressed quickly gives you a head start in reputation protection.
- Leadership – making decisions, taking action and communicating under extraordinary pressure before you know all of the facts takes great courage. It calls for leaders of the highest calibre, with the personal integrity and bravery to do what is right, when others might take the safe option and sit tight a little longer.
Hemus concludes: “Evidence is piling up that swift and decisive action is the best way of preserving reputation and business value in the event of a serious accident. Only organisations which have taken the time to plan for crisis events, build a crisis resistant culture and possess an individual with the qualities to succeed as a crisis management leader will prevail”.
In summary, it is clear a workplace accident can have significant negative impact on your warehouse and distribution business. A robust health and safety management system with effective risk control measures will help reduce the likelihood of accidents. Prevention is always better than cure. However, being prepared for the aftermath of an accident, knowing your rights in event of enforcement action and planning for crisis management will help put your business one step ahead.
Quick to implement and built around your business, Safety Cloud software automates every aspect of health and safety management. Proactive email reminders keep everything on time and on track, so you’re free to focus on your day job. Book now!
A special thank you to Jonathan Hemus. To find out more about Insignia's crisis management services, please visit www.insigniacomms.com today.