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Work and Enterprise Panel 2
Business Survey

Cowling M (IES), Bevan S (Work Foundation)
Research Report RR589, Health and Safety Executive, October 2007

commissioned by the Health and Safety Executive

This report is intended to provide up-to-date information on UK business attitudes, intentions and performance vis á vis health and safety in the workplace. In addition, it aims to provide robust empirical evidence concerning any linkages and impacts of health and safety strategy and expenditure on an array of hard and soft performance measures of intermediate and final business performance. We also consider how health and safety issues interact with key strategic decisions in other core business areas to achieve the greatest impact on observable performance.

Data

Derived from an extensive telephone survey of 3,000 UK businesses, the sample reflects the size and sectoral distribution of the UK business population, albeit with a top-up sample of very large businesses. We also allowed for geographical representation according to Government Office Regions. The telephone interviews were carried out in June and July 2004, and the sample was generated by random digit dialling. Interviews were carried out with Chief Executive Officers, managing Directors, Chief Finance Officers or Human Resource Directors in the UK. The study was conducted using Computer Assisted Telephone Interviewing (CATI) and interviews lasted an average of 23 minutes. The response rate was 23.7 per cent.

Health and safety risk and strategy

We considered how the nature of the industry sector a business operates in affects their strategic positioning vis a vis health and safety. The key survey questions we posed relating to health and safety strategy were:

• Our business views managing health and safety as a strategic activity.
• We see good health and safety performance as being cost positive.
• There is board level commitment and responsibility for the health and safety track record of our business.
• Our business sees health and safety as a critical part of good people management.
• We empower our employees to act if they encounter health and safety risks, even if it means stopping work.

In each case the respondent is required to state the extent to which they agree or disagree with these statements. One further question is relevant and relates to perceived risk:

• Our business manages significant health and safety risk.

As before, respondents state the extent to which they agree or disagree on a five point scale. The basic statistics reveal that:

• Certain sectors, namely construction, retail/hotels/catering, agriculture, other community and utilities all perceive there to be a higher degree of risk.
• Medium sized businesses (50-249 employees) tend to operate in environments where they manage health and safety risks to a greater degree than other size classes of business.
• We identify a strong correlation between a strategic commitment to health and safety and the belief that health and safety performance is boosting the bottom line.
• Micro businesses, in particular, may be failing to address strategic issues surrounding the management of health and safety in the workplace because they are less likely to believe that it will improve their bottom lines.
• It is also true that key decision-makers in micro firms are reluctant to accept responsibility for health and safety.
• The median expenditure on health and safety per annum is £200 per full-time employee.
• Only 29 per cent of businesses have an explicit health and safety budget.
• It appears that businesses make their budgetary decisions first (ie, do we want to spend any money on health and safety?), then decide how strong their strategic commitment is going to be, which in turn determines the size of the budget allocation.

Linking health and safety strategy to other business areas

In line with our a priori hypothesis that integrated and complementary strategy making will yield better performance than isolated decision-making, we then tested for basic associations between our health and safety strategy index and five other strategy indices covering shareholders, stakeholders, innovation, customer and markets and, people. This is important, as health and safety is not commonly seen as having equal status as other business areas.

• Our health and safety index can explain a significant amount of the variation in our five strategic indices (shareholder, stakeholder, innovation, customer and markets, and people).
• It is more strongly associated with the stakeholder and people indices, and less so with the shareholder index.
• In short, better health and safety index scores are associated with higher index scores in our five other strategic domains.

Performance analysis

We tested for the impact of strategy and strategic bundles on a total of 13 alternative measures of intermediate and final business performance. In addition we also tested for any performance enhancements derived from health and safety expenditure, an additional measure of hard commitment to employee welfare. However, as our survey data is essentially cross-sectional in nature, the results should be interpreted as associations rather than indicative of absolute causality. Further research using longitudinal data would provide more robust conclusions. Our key results are as follows:

• In no cases was spending more on health and safety associated with a worsening of performance. The same was true for the health and safety strategy index.
• Higher health and safety strategic index scores were associated with helping businesses to create a workforce whose skills base are above their industry benchmark.
• In three instances we observed that spending more on health and safety was associated with improved outcomes. Firstly, higher spending was associated with businesses having an increased probability of attracting good quality employees from their industry pool, which may suggest that higher health and safety spend sends a positive signal to potential employees.
• Within businesses existing workforces, higher health and safety spend was associated with improved employee commitment.
• Higher health and safety spend was associated with faster sales growth over three years.
• Taken together, our performance results, across a range of measures, strongly suggest that spending on health and safety (or making a strategic commitment) does no harm to a business and most certainly is associated with tangible improvements in employee related aspects of the business, which in turn can feed through into measurably better bottom-line outcomes.

Conclusion

Our start point was that the key to achieving high levels of business performance is to develop complementary strategies across all areas of the business because it is the overlapping and mutually reinforcing effect of multiple, synergistic practices that have, potentially, the largest impact. To test this hypothesis, we surveyed 3,000 UK businesses. Our initial finding was that health and safety as an issue generally ranks as important or very important for UK businesses. However, we also found that smaller businesses are less likely to have a positive attitude towards health and safety issues, or regard it as a key strategic area.

In terms of complementarities with broad business objectives, we found that health and safety strategy was associated with creating a great place to work, innovation, stakeholder value and business growth. This could suggest that a commitment to health and safety is strongly aligned to a desire to deliver high levels of job enrichment, to create an environment supportive of creativity and innovation, and to engage with the wider community, including suppliers.

On business performance, we find that our health and safety strategic index has one positive association (with helping businesses create a highly skilled workforce). But actual health and safety expenditure is associated with observably higher performance in three areas: having a greater capacity to attract quality employees; higher employee commitment; and faster sales growth. Taken overall, our performance models, across a wide range of indicators, suggest that a strategic commitment to good health and safety practice does businesses no harm, and a spending commitment is strongly associated with tangible improvements in employee-related aspects of the business.

Work and Enterprise Panel 2: Business Survey, Cowling M (IES), Bevan S (Work Foundation). Research Report RR589, Health and Safety Executive, 2007.
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