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Mohamad Ilyas bin Mohd Noh 2010266416

Mohamad Zakuan bin M.Jafri 2010822042

“In today’s dynamic marketplace, many organizations/industries are initiating cost reduction
measures to remain competitive”. Discuss the contradictory demand of cost reduction
programmes of Health, Safety and Environment (HSE) in the industry. Is it possible to be cost-
effective yet meeting the ever-increasing HSE requirement?

Living is often considered as risky business. Taking risks begins since childhood and
continues throughout our lives until old age. Sometimes people are aware of the risks that they
are taken but sometimes they do not. The likelihood of personal harm or even disaster occur in
personal lives is often influenced by several factors such as where they live, their lifestyle and
company, attitude toward the risk, the attitude to risk taken by other person around them,
their hobbies, interest and pursuits, and also their job and the duties associated with it. The
number of incidents that affect health, safety and the environment can be reduced if the cause
is known and understand. This is particularly true for incidents that resulting from human error
or from a failure to take adequate precautions against risks. Hence, creating a safer and less
environmentally harmful workplace is a learning experiences that involves finding out more
about the risks associated with the activities, better understanding on why accidents happen or
environmental incidents occur and also reducing or eliminating the factors that contributes to
In every workplace, there will always associated with risks. In some industries, the
outcome of a typical incident may be relatively slight, for example an office worker shaken and
upset by slipping on a wet floor. In other industries a typical incident can have far more severe
consequences, such as a farmer pinned beneath an overturned tractor, a building worker hurt
in a fall, or a factory worker caught up in machinery. Industrial accidents can create not only
personal grief and distress but also huge financial costs and unwelcome negative publicity for
the organization and industry concerned. They are of great interest and concern to all of the
organization’s stakeholders such as employees, managers, shareholders, local residents and
businesses, and suppliers. In a modern society, people will not allow organizations to ignore the
impact of their activities on surrounding communities. Not all of the stakeholders have the
same interests. In meeting with their health, safety and environmental responsibilities,
businesses have to strike a balance between the conflicting interests. When a firm puts
forward a safety recommendation, its shareholders will want to know the cost of implementing
it, whilst employees are more likely to ask how many illnesses, injuries or deaths it is likely to
prevent each year. Before the introduction of health and safety legislation, there was always
the possibility that irresponsible or unscrupulous employers might view health and safety issues
as a low priority and so set very low standards. When voluntary codes of practices failed to
produce acceptable standard across all industries, it should be supplemented by laws and
regulations set by the government. These will set out every employer duties and
responsibilities. In United Kingdom, The Health and Safety at Work Act, passed by Parliament in
1974, sets out the duty of employers to ensure the safety and welfare at work of all employees,
so far as is reasonably practicable. The Act also imposes obligations on employees to have
regard for the health and safety of themselves and others. There, a number of health and safety
regulations as well as environmental laws and standards have also been brought in to comply
with EU Directives. Today, socially responsible organizations go beyond these standards. They
monitor and evaluate their performance and develop approaches to health and safety that
reflect best practice across each industry in which they operate.
Health, Safety and Environmental (HSE) is defined as ‘human factor refer to
environmental, job factors, humans and individual characteristics which is influence by the
health and safety environment. HSE is view from three important aspects: the job, the
individual and the organization. All three aspects stated give an impact on worker’s health and
safety-related behavior. Firstly, the job, the work or task should be designed according to
ergonomic principles where limitations and strengths of human natural is considered. It must
suit the job with physical of the person in order to gain effective work and not overloaded the
person itself. Workplace and working environment are two components that determine the
best physical match of the job. Besides that, mental match should be emphasized where it
involves of individual’s information and decision making requirements about the tasks and
risks. Mismatches between task requirements and people’s abilities can affect the human error.
Secondly, from individual aspect, individual attitudes, skills, habits and personalities can bring
strength and weakness into the task demanded. The characteristics influence behavior in
complex way as it might be negative or positive and may not always be mitigated by task
design. It surely difference with skills and attitudes where it can enhance. Finally, the
organization factors give more impacts on individual and group behavior. They are often
overlooked investigation of accidents happened during work performed. Positive health and
safety culture must be established to involve all employees at all levels in participating health
and safety standard. For example, fire, explosion or harmful substances released in the work
area must be prevented. Leaders in charged for HSE must take action to reduce environmental
impact and spread of diseases among employee.
Work can affect positive or negative contribution to individual health as physical and
mental of worker be exposed to harm. Use of chemicals, a risk of falling, carrying out repetitive
task or pressure from employer is examples of harm occur in an organization. So, HSE
developed to achieve two general objectives which is prevention of incidents or accidents that
might result from abnormal operating conditions on the one hand and reduction of adverse
effects that result from normal operating conditions on the other hand. It is not surprising if
many employee involve in accidents where 80% of accident could be occur throughout the life
cycle of an organization. Accident happened comes from action of an individual who do not
follow the standard safety requirement. Besides that, effects of adverse can eventually make a
life of cycle disturbed when the main focus in invisible by another matter. Time and energy are
wasted to solve the problem regarding violence, disciplinary, injuries and traumatic event.

In the industries, Health, Safety, and Environment (HSE) also known as ESH or SHE are
usually put under managers and departments that are responsible for environmental
protection and occupational health and safety at work. This is only happen when the company
considered that these factors is as important as providing quality products or services. The
general objectives of the HSE department or management is to prevent any incidents or
accidents that might come from abnormal operating conditions and also reducing any
unwanted result from normal operating conditions. In 1985, the first formal approach was
introduced by the chemical industry as a result of several catastrophic accidents like Sevesco
disaster in Italy and the Bhopal disaster in India. This accidents creates a negative effects on
both location where the land have contaminated resulting in uneatable fruits and vegetables
and also dead animals. It also creates health problems on the residents and also several death
are recorded. This formal approach creates a worldwide voluntarily initiative called
“Responsible Care” including about 50 countries and organizes by the International Council of
Chemical Associations (ICCA). It involves eight fundamental features that ensure plant and
product safety, occupational health and environmental protection but also try to demonstrate
by image-building campaigns that the chemical industry acts in a responsible manner. Still, this
initiative is restricted only to the chemical industry. Since the 1990s, general approaches to HSE
management that may fit into any type of organization can be found in the international
standards like ISO 14001 for environmental management and OHSAS 18001 for occupational
health and safety management or the European Eco-Management and Audit Scheme (EMAS).
In 1998, International Finance Corporation also created HSE guidelines.

There are guidelines for the HSE management. The HSE Guidelines are technical
reference documents with general and industry-specific examples of Good International
Industry Practice (GIIP). These guidelines contain information on something that involving
environmental, health, and safety issues potentially applicable to all industry sector. It should
be used together with the relevant industry sector guidelines. This HSE Guidelines are intended
to be living documents and are occasionally updated. These guidelines are divided into four
specific chapter; the first chapter is about Environmental, the second chapter is about
Occupational Health and Safety, the third chapter is about Community Health and Safety, and
the fourth chapter is about Construction and Decommissioning. In the first chapter it is more
about to prevent any emissions that could pollute the environment such as air pollution, water
pollution, land pollution, noise pollution and also energy use. It provides information about
common technique on how to reduce and prevent the facilities from emitting something that
could endanger the environment. For the second chapter, it is about the safety and health of
the employees inside the building. It show how to manage and prevent and accidents from
occur inside the workplace. It is including a good fire precaution, good lighting inside and
outside the building, good water and air supply, and safe access. The third chapter is more
about the safety and health of the community outside the building. It shows the information
and techniques on how to prevent any unwanted incidents towards the community outside.
This is including traffic safety and disease prevention. The fourth chapter is provides additional,
specific guidance on prevention and control of community health and safety impacts that may
occur during new project development, at the end of the project life-cycle, or due to expansion
or modification of existing project facilities. Cross referencing is made to various other sections
of the General EHS Guidelines.
Every industry therefore should give a very high priority to health, safety and
environmental considerations. Health and safety policies must become part of a business’s
corporate strategy as well as part of its everyday operations. However, each business has
limited resources to apply to health and safety policy. It must therefore use its resources very
efficiently. Hence, it is importance for every company to conduct a risk management. Risk
management is a process that attempts to identify and understand specific risks within the
business, and to identify the cost of reducing or eliminating those risks. A company usually
faces both direct and indirect risks. Direct risks arise from the business main operations and
may come from environmental incidents such as emissions of greenhouse gases and health and
safety incidents affecting a range of groups within outside a plant. Indirect risks usually follow
on from direct risks. They include damage to a firm’s reputation and the adverse media
attention created by a high profile incident. Companies with poor accident records may run the
risk of losing favour with investors and of finding it hard to raise funds. These are also indirect
risks. So, it is important for every companies to take extra attentions on this matter.
In the United States, workplace fatalities, injuries, and illnesses cost the country billions
of dollars every year. In its 2012 Workplace Safety Index, Liberty Mutual estimated that
employers paid almost $1 billion per week for direct workers' compensation costs for the most
disabling workplace injuries and illnesses in 2010. Employers that implement effective safety
and health management systems may expect to significantly reduce injuries and illnesses and
reduce the costs associated with these injuries and illnesses, including workers' compensation
payments, medical expenses, and lost productivity. In addition, employers often find that
process and other changes made to improve workplace safety and health may result in
significant improvements to their organization's productivity and profitability. Companies that
invest consistently in safety realize positive bottom line results, reduced absenteeism, lower
turnover rates, higher productivity, increased employee morals and positive brand image.
Hence it is advisable that investing in workplace safety and health as it can improve the
company financial performance. This is supported by several researches done in this aspect.
A 2012 study concluded that inspections conducted by California's Division of
Occupational Safety and Health (Cal/OSHA) reduce injuries with no job loss. The study showed a
9.4% drop in injury claims and a 26% average savings on workers' compensation costs in the
four years after a Cal/OSHA inspection compared to a similar set of uninspected workplaces. On
average, inspected firms saved an estimated $355,000 in injury claims and compensation paid
for lost work over that period. This study showed that when a company is willing to invest in
the health, safety and environment department, the company will have a better outcome and
reduced the total cost of the company. When the company have a better workplace, the
probability for the workers or employees to get hurt or injured during work will also reduce. As
injuries and illnesses decrease so to do health care and workers' compensation costs. So, this
will reduce the cost of the company including workers compensation payments, medical
expenses, and also lost productivity. This is because when fewer workers is involve in an
accidents, the less impacts it has on the work productivity. Prevention of the accidents might
also reduce the number of unwanted lawsuit from the victims. The lawsuit will not only prove
costly to the company but also give a bad reputation to the company name.
Among their many duties and responsibilities, safety, health and environmental
management should look at injury and illness data, focusing not only on real losses but also
potential losses. Corporate management executives need to focus on the potential losses in
workers' compensation programs, which are often missed and can really add up in financial
costs. An example of this is the possible threat of workplace violence, a potential problem that
safety professionals and management need to assess in developing a crisis management
plan/business interruption/resumption plan. One needs to keep in mind that management,
insurance professionals and safety professionals do not share the same experience base from
which to understand potential losses and the larger picture of how potential losses can affect
the entire corporation.
Furthermore, corporations should establish a proper structure in handling and
preventing workplace injuries and illnesses through an effective safety, health and
environmental program. That is where developing and maintaining a safety culture is key. This
involves bringing the concepts, practices and methodologies of safety and integrating into the
corporate culture of a company, so safety is present at all levels. Establishing a safety culture
and getting safety at the organizational level helps reduce at-risk behavior at all levels of the
corporation, at-risk behavior that could otherwise lead to additional financial losses. Employees
at all levels of the corporation need to hold the proper attitudes and motivation in reducing the
likelihood of injuries or fatalities on-the-job that could have devastating effects on a
corporation financially.

Education is also important in bringing about a safety culture as employees at all levels
from line workers to top management should be involved in the safety process. It is a good idea
to get employees involved with assessing losses and participating in job hazard analysis, since
they are the ones doing the tasks and provide a first-person perspective. What tools or devices
are needed to reduce back or hand injuries? Sometimes there can be a very simple solution to
questions like these (such as providing a longer wrench) which can significantly reduce back
injuries for a group of workers.
From a future standpoint, everyone from safety professionals to insurance professionals
and upper management need to keep value in their safety programs. Investing in safety will
greatly enhance a corporation or public entity, building a better working environment. The
markets and worldview has changed considerably since the 90's. But two factors play a major
role of why failure to invest in safety is a risk in itself where it can't be determined when the
market will change so costs could easily climb high, and also corporations with safety, health
and environmental programs in place will achieve savings for fewer losses, thus establishing a
major cost benefit. And most importantly, investing in effective safety, health and
environmental programs can save lives, prevent injuries and reduce potential financial losses,
including hidden/indirect costs.
Statistic from Health, Safety and Environment (HSE) UK show 148 workers killed at work
place while 78000 other injuries in 2012/2013. Poor health and safety at work causes of many
people die from occupational diseases and around a million worker s suffering illness from
work. When the worker involving with accident, it would affects working days due to recover
from the illness or injury. It causes an organization to spend time and money to replace worker
in immediate time. If the new person fulfilled is not proficient as the original one, surely it will
cost an organization in term of productivity and profit. Furthermore, if the equipment damaged
in the accident, it create many costs to organization to spend either to replace or replace them.
Instead visible costs stated above, some of invisible costs also occur when poor health
and safety environment. Firstly, it can be seen in term of deterioration of industrial relations.
When relation based company know many accident or injury occur inside an organization, the
suspicion from that company will be focus the quality of product supplied. Low qualities of
products promote negative perception from customers to purchase the products. Secondly, it
lowers morale of employee and operative staff which lead to low productivity in an
organization. Accident case involving death person affect the emotional and mental of another
worker. Some of them blame safety and health conducted of the company and makes a strike
into company which gives unbeneficial to employers and employees. Apart of that, some of
former workers make sabotage into industry as a revenge for accident occurs into their friends.
The third of invisible costs that can be view is failed to achieve production targets. It is due to
losses of skills and experience worker because untrustworthy to an organization for failure to
provide safe and good environment in the work place. When the organization failed to satisfied
the demand, it will lead to a breakdown especially in an internal customer. This phenomenon
creates many disasters into organization to gain comfortable state back. Then, fourth cost from
poor HSE is it increase cots of training and meeting in order to prevent another accident for
next time. At same time, many rehabilitation programs are held to gain the confident level of
every employee s. it also affect the cost of measurement and supervision to prevent
Even accident and tragedy affect the reputation of an organization, but nasty effect
struck more into victims. Pain and suffering of victim causing strain on social relationships
where it can reduce the quality of life. Some of permanent physical injury left a deep misery in
a mind of victim. They felt isolated and diminished self-esteem when cannot afford to make
plastic surgery restore back the original physical. Moreover, loss of physical strength means loss
of income as many industrial not welcoming disabled people. Ability to meets debts coerces
them to make mortgage. Allowance from charity group is not enough to support cost of
appliances and educations. It also affect the marriage because of financial problem make the
couples became stress and worry about the future of the sons. Children also affected by
argument between father and mother occur in the house. Children ease to follow negative
behavior form their friends because of lack of intention from parents.
Some an organizations will argue whether it is possible to be cost-effective yet meeting
the HSE requirement. In some circumstances, HSE requirement rigorously can reduce
competitiveness between industries. Capital of the industry need to spend on HSE requirement
especially to make the work place safe and healthy environment. Many financial analyses for
the company suggest following less severe requirement such as China and focusing more on
profitable. But the poor safety and health environment discussed in above paragraph proved
that more negative effect that will cost more. However, in developed of technology around the
World has given some advantages as it may enable HSE requirements to meet at competitive
costs. For example, new machine will designed with high safety and very emphasized on the
health of worker and industrial environment. But to equipped with this technology, it still
required more financial because expensive price. When view on the point above, to achieve
cost-effective and at the same meet HSE requirement will be impossible, it need cost-benefit
analysis form an organization to choose the right method where still in low cost and provided
safe environment.

In Europe, many industry associations and employers focus on cost-benefit analysis as a
crucial tool in making good legislation. They used to prepared additional work on cost-benefit
analysis as an important prerequisite for clear legislation. The technique of cost-benefit analysis
only can be acceptable when minimum regulatory standard can develop and prevent accident
that cause of lost time injury or illness. This technique starts with appointed special competent
individual to meet health and safety duties. It necessary to find someone that has skill,
knowledge and experience in managing health and safety for a couple of years. Important key
to success in this technique is communication between each other. Make sure clearly explain
the situation of the company and try to get response from his opinion about work area inside
there. Instead having difficulties in communication and financial, it recommended to appoint
someone form internal worker which has understanding the current situation and relationship
among the workers. The it move to second method where the competent person must manage
the risk of the business, by analyzing what give more benefit when implement HSE inside the
company. It is best to focus on training rather than equipment of HSE. Compare the result
whether it comes from human error or machine damages that cause the bad environment.
Introduce to the board of the company the final conclusion to spend the financial on human
behavior though training or focus on equipment of HSE only.
Apart to focus cost-benefit analysis, company also can increase the awareness into
employee’s mind by promoting health and safety law can be conducted through poster. Make a
simple and clearly explanation will attract the employees to follow the rule during working.
First-aid in should be placed in nearest and easy to grab it. Immediate treatment can reduce
large harm to the victim. The company also must owned insurance for employees. It will show
that the company very seriously to take responsibility if any accident occur excluding human
error. Finally, the company should up to date with new regulation and policies that suits the
company best
As conclusion, cost of reduction gives positive and negative effect toward an
organization. So, it to be cost-effective yet meeting the ever-increasing HSE requirement need
strong method called cost-benefit analysis that can determined best solution to be focused
rather than trial and error method. Even reduction cost might be popular for some company
because of low capital is required, but the long term effects toward mental and physical of
employee very give terrible outcomes.