News & Trends
Study: OSHA Inspections
Many business leaders are of the opinion that Occupational Safety and
Health Administration inspections
are costly and undermine
productivity. But a new study
implies that couldn’t be further
from the truth.
In a paper published
on May 17 in Science,
in highly hazardous industries in
California reduced injury claims by
9.2 percent and saved 26 percent on
workers’ compensation costs in the
four years following inspections. On
average, inspected firms saved an
estimated $355,000 in injury claims and
compensation for paid lost work over that
period and had no discernible impact on
The study, co-authored by Harvard
Business School Professor Michael Toffel,
Hass School of Business (at University
of California, Berkeley) Professor David
Levine and Boston University doctoral
student Matthew Johnson, analyzed
workplace-inspection data compiled by
Cal/OSHA. A 1993 California mandate
requiring Cal/OSHA to conduct some of
its inspections randomly let them evaluate
the effectiveness of OSHA inspections not
spurred by complaints or accidents.
“Going into the study,” Toffel says, “we
figured there might be a small decline, but
the effects are actually quite large.” The
findings suggest inspections had a lasting,
across-the-board impact on companies
with both small (less than $2,000) and
large (more than $2,000) workers’
compensation claims. There was also no
evidence that inspections led to declining
sales or affected companies’ survivability.
Jim Johnson, group vice president of
workplace safety initiatives for the National
Safety Council in Itasca, Ill., believes the
study demonstrates how OSHA activities
are making a difference. Despite the
presidential election results, he says, it
makes a strong case for OSHA funding.
An Ethical Double
Standard In the C-Suite?
In light of the recent controversial resignation at Best Buy of both its CEO and chairman, and less-recent
resignations of top leaders amidst
other ethical quagmires, a question
looms: Are members of C-suites
answering to completely different sets
of behavioral rules, or none at all?
According to various news reports,
former Best Buy Chairman and Founder
Richard M. Schulze resigned May 14, two
days after the Best Buy board of directors’
audit committee issued its report finding
that he knew about former Best Buy CEO
Brian Dunn’s affair with a 29-year-old
female subordinate for months, but never
reported it to the board.
Choices to Employees
As healthcare costs continue to rise, companies expect o give employees greater
responsibility for choosing their
benefits and contributing to the
cost, according to a survey of senior
finance executives by Prudential
Financial Inc. and CFO Research
The report, entitled The Future of
Retirement and Employee Benefits: Finance
Executives Share Their Perspectives,
also shows that finance executives are
increasingly looking at pension risk
transfer and liability-driven investment
strategies to reduce or eliminate defined-benefit-plan risks.
So was Schulze guilty by omission or
commission . . . or just improperly trained?
Despite the fact that he sat at the very top
of the company, it was his lack of training
and familiarity with proper protocol that
most likely took him down, says Roy
Snell, CEO of the Society of Corporate
Compliance and Ethics in Minneapolis.
He says “top leaders ... just talk” about
zero tolerance and having ethical cultures
without implementing reporting rules.
Many firms with ethics officers also have
yet to hire compliance officers, says Snell.
Luis Ramos, CEO of The Network,
a Norcross, Ga.-based provider of
compliance solutions, concurs that a
stronger commitment to the role of
compliance officer is needed. Often,
he says, “a compliance officer gets the
title, but not the time or power to deal”
with some of the problems appropriately
when they arise.
—Kristen B. Frasch
CFO Research Services surveyed 186 senior finance xecutives from U.S. companies with defined-benefit plans of $250 million or more to determine how
employers deal with rising costs while still
providing the best benefits possible.
“CFOs can’t handle [the increasing
volatility of healthcare premiums] because
it’s not predictive,” says employee-benefits
consultant (and HREOnline™ columnist)
Carol Harnett. “So they’re ... moving the
onus of coverage to the employees.”
Indeed, 16 percent of respondents
already shift a larger portion of costs for
healthcare coverage to employees, 65
percent say they are likely to do so, and
more than half of those say they are “very
likely” to take this action. Fifteen percent
also already describe their benefits as
“employee choice” models, and 29 percent
say they’ll adopt that model in two years.
—Jeffrey S. Eisenberg