Rehiring safety staff after the GFC

Cutbacks are irrational during financially stressful periods as they only amplify skill shortages when conditions return to normal, which in turn hinders recovery. Much of Australia’s business community is now experiencing that costly scenario, as it endeavours to attract quality safety professionals, among other skilled personnel, to their businesses.

During the GFC, redundancies were commonplace, with several roles left vacant. Now that the GFC is over, Australia’s recovery is exacerbated by our longstanding skills-shortage challenge. And, as our recent annual SafeSearch HSE remuneration survey reveals, safety professionals are becoming increasingly sought after and, consequently, more expensive.

The survey collected data from 898 respondents primarily from ASX200 companies in industries such as energy, resources, construction, manufacturing and industrial.

According to the survey, OHS professionals’ remuneration packages increased, on average, 9.6% in 2010, largely to win back lost talent in a competitive post-GFC market. HSE general managers, for example, now earn on average $271,310, up from $221,509 in last year’s survey. As anticipated, those in the mining, construction and resources sectors were paid the highest, well beyond other sectors.

Australian industry began rigorously re-hiring mid 2010 to replace the talent lost through widespread retrenchments in the GFC. Our company, for example, was engaged to place 11 GM positions over the second half of 2010, a demand that is unprecedented since we formed the business six years ago.

This process of retrench and re-hire has hidden costs that extend well beyond increased remuneration costs. HR research indicates the real costs can be 2-10 times annual remuneration packages. Our experience shows it’s at the higher end, factoring broader issues such as recruitment and search costs, induction, training, outplacement, redundancy packages, lower productivity, effects on colleagues and loss of intellectual capital. Some organisations may try to operate without senior HSE people, but the ramifications are often quickly evident, not only in terms of safety performance, reputation and morale, but financial impacts like increased workers’ compensation claims and higher premiums.

Not surprisingly, we saw far fewer cutbacks in safety personnel from the oil, gas and mining sectors - they just ‘get it’.

In OHS, large-scale redundancies not only make bad business sense, they also send a message that safe workplaces are no longer important when times get tough. This negatively affects the ‘employee brand’ and the ability to attract skilled staff, particularly in safety where the talent pool is closely ‘connected’.

Protecting the ‘employee brand’ is crucial. If companies reduced their safety staff numbers during the GFC, then - depending on how that was done - it may have adversely affected their ‘employee brand’ because of the perceived message of a lack of commitment to safety. Or the manner in which people were made redundant could signal that safety was no longer important with that company, taking a ‘back seat’ during the GFC. If so, a company’s reputation may have been damaged, making it difficult to attract and retain the brightest from a now-limited candidate pool. In our company’s experience, the first question candidates for safety positions typically ask is not about remuneration but about the organisation’s level of commitment to safety.

The drive for a different approach to talent management is particularly important as we head towards harmonisation of OHS laws under which there will be further duties imposed on officers. Effective risk management requires a forward-looking strategy and implementation at all levels. One thing’s for sure, the GFC is certainly over for the HSE community. Blanketed remuneration policies are no longer applicable to attract and retain the best. Insightful companies will realise the need to interpret and act on the demands of the local market. Short-term incentives are also back on the radar, with companies eager to retain their performers.

By Julie Honore is Managing Director of specialist recruitment business, SafeSearch. She is also a member of WorkSafe’s Occupational Health and Safety Advisory Committee and chairs the ‘General Manager Safety’ forum for ASX200 leaders. Previously, Honore was a Director with PricewaterhouseCoopers, leading the national HR consulting practice. She holds a Masters in Leadership and Management and is an Honorary Fellow and past executive of the Safety Institute of Australia.