Be aware of cartel behaviour and penalties
A cartel case in Australia has resulted in prison time for those involved.
International research indicates boards pay less attention to health matters than safety issues, with even less regard to mental health. In New Zealand, health-related harm is a far greater cause of health and productivity loss than safety.
With talent shortage being identified as one of the top five issues for directors in 2022, the IoD is advocating that organisations adopt an employee-centric approach to retain key staff and attract new talent. As part of their efforts to address the shortage of talent, all organisations should be prioritising the development and implementation of best practice health and safety measures, including mental health.
The mental health of people at work has been front of mind for many in governance roles over the past few years. Directors' concerns have been exacerbated by changes in the design and management of work, for example, because of covid-19, and a growing awareness of the direct and indirect losses attributed to poor mental health of employees.
The Health and Safety at Work Act 2015 (the Act) also imposes duties on company officers to exercise due diligence to ensure the person conducting a business or undertaking (PCBU) is complying with their duties under the Act. The Act explicitly includes ‘mental health’ within the definition of health. This was given further impetus through the government’s Health and Safety at Work Strategy 2018-2028.
With this background and the heightened pressures on staff and management arising from the pandemic, directors need to ensure they address the risk of harm to workers from exposure to hazards in the workplace which may contribute to mental harm (known as 'psychosocial risks').
Also refer to the article by Clearhead CEO Dr Angela Lim Mental Health in Crisis which notes that “…there must be robust inquiries around the board table into how you can better support employee's mental health every day, not just when a crisis occurs. You need to be proactively taking steps to improve the workplace culture and ensure that it is both ‘psychologically safe,’ and more importantly, a place for them to thrive and find purpose in.”
The recent IoD/ASB 2021 Director Sentiment Survey highlighted that a mounting skills shortage was one of the main issues causing concern for directors in Aotearoa New Zealand (along with border restrictions and vaccine efficacy).
Over half of all directors surveyed identified labour quality and capability as one of the biggest impediments to national economic performance, with a third saying labour quality and capability was the single biggest risk facing their organisation (up from 14% in 2020). The report indicated that employee engagement, performance and retention had been discussed by 88% of boards in the preceding year.
With talent shortage identified as one of the top 5 issues for directors in 2022, and with increasing demand for talent escalating, there is a strong incentive for directors to ensure their organisations look after their staff, ensuring not just physical safety but also mental wellness.
There is a significant amount of research showing that the actions or omissions of senior managers and directors are key determinants in a healthy and safe working environment.
The Business Leaders’ Health & Safety Forum’s Protecting mental wellbeing at work - A guide for CEOs and their organisations (July 2021) and other publications support chief executives and organisations to design ‘good work’ that protects employees and contractors from risks to mental wellbeing that arise in the workplace.
What is still required in these uncharted waters, is a better understanding of directors’ roles in creating mentally healthy work. Current doctoral research by Massey University’s School of Management PhD Candidate, Louise Thompson seeks to understand the role of directors/officers in supporting the creation of mentally healthy work and the extent to which this meets the obligations in the Health and Safety at Work Act.
Once the issue is more fully explored, the benefits for directors will be a better understanding of their roles in creating mentally healthy work, as part of the development of the organisational culture with an employee-centric approach.
This improved understanding will assist in the development of best practice guidance, information, and skills training or development opportunities for directors, to ensure compliance with officers' duties under the Act as they apply to mental health at work.
Overall, this should lead to significant benefits to the credibility and reputation of the organisation, with employees, shareholders, stakeholders, lenders and insurers alike.
If followed through effectively this will benefit communities with which the organisation engages. It will help create thriving organisations where people want to work, and enjoy working for. There are also downstream social, financial and economic benefits to the wider community.
The current doctoral research focuses on companies and their directors/boards. However, it is likely that the issues and questions being addressed with companies will be relevant to all organisations and their boards.
Thompson's research is currently centred on how New Zealand company directors respond to the due diligence requirements of the Health and Safety at Work Act (2015) as they apply to mental health at work.
She is currently interviewing company directors around New Zealand to understand their views of compliance, and what challenges or opportunities directors may face in exercising this duty.
The research will also look at due diligence duties as they apply to managing risks to workers’ mental health and directors experiences in dealing with psychosocial risk or mentally healthy workplaces and whether directors are able to confidently discharge their duties with regards to creating mentally healthy work.
We are currently reaching out to members who have previously expressed an interest in health and safety governance and who can offer their perspectives and experiences on governing mentally healthy workplaces.
We would like to extend the offer to contribute to the research to all company directors of New Zealand companies of at least 50 employees. The research criteria does not specify mental health governance expertise – all experiences contribute to improved understanding of mental health in the health and safety governance context.
Please contact Louise Thompson at Massey University directly to participate in the research.
After the research is concluded the IoD will receive the key results, executive summary and recommendations which we will share with members to help guide and support their boards to better govern mentally healthy workplaces.