February 7, 2012

Executive Risk: Waking Up to the Perils of Fatigue!


In some corporate cultures, herculean hours and fatigue are viewed as badges of honor. The consequences of mind-numbing fatigue, however, can cause bodily injury, property damage and business blunders with a high price tag. C-suite executives must be attuned to operational and cultural factors that heighten the perils.

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Did you get enough sleep last night? Feeling droopy from working on a late-night project? Maybe you caught the red-eye from the West Coast and are starting to feel groggy.

Join the club, but beware.

Some of the most spectacular accidents of the last century have been caused by human fatigue. This includes the oil spill of the Exxon Valdez, the fatal navigational error of KAL Flight 007, the Union Carbide gas leak at Bhopal India and the Three Mile Island nuclear disaster. Less heralded are other accidents that have employee fatigue as a causative factor.

The National Highway Safety Council estimates that thousands of accidents per year are due to trucker and driver fatigue. Medical residents in training pull 36-hour shifts and are prone to fatigue-induced judgment errors. Stockbrokers rise in the middle of the night to juggle huge sums of money on foreign markets. Some lawyers are so burned out by the billable hour treadmill that they are looking at alternative careers. No telling how many bad business decisions flow from sleep-deprived executives burning their candles at both ends.

In isolation, these developments may not seem serious. In some corporate cultures, herculean hours and fatigue are viewed as badges of honor. The consequences of mind-numbing fatigue, however, can cause bodily injury, property damage and business blunders with a high price tag. C-suite executives must be attuned to operational and cultural factors that heighten the perils.

Underlying seemingly disparate losses is a common thread of human fatigue, stretched taut by downsizing, re-engineering, technological advances and the pressure of global competition.

Executives ignoring these factors can find themselves — and their companies — facing grave safety and loss control risks. There is an increasing amount of caselaw holding employers liable when their employee’s fatigue injures or kills others. Personal injury lawyers are bringing the science of sleep into courtrooms. Lawyer publications such as Trial magazine contain articles on suing companies who let workers burn candles at both ends. Courts increasingly say that corporate fatigue management is the business of an organization. Companies ignoring this will receive painful reminders in the form of jury awards and high settlements.

Aside from the loss control consequences, accident and health costs loom as well. Fatigued workers are sicker workers, spawning absenteeism, excessive sick days and inflating the tab for a company’s employee benefits program.

While there is ample evidence that human fatigue is a factor which loss control professionals should address, there is scant practical advice on exactly how risk managers can go about this task. Therefore, let’s examine some hands-on steps that C-suite personnel can take to tackle this growing problem.

Analyze your operations for chronic fatigue potential. Assess work patterns within your own organization for chronic fatigue potential, especially those who:

  • work lots of overtime
  • work back-to-back shifts
  • do shift-work, especially the midnight to 8:00 am “graveyard” shift.

Not surprisingly, studies show a direct correlation between volume of work hours and the odds of chronic fatigue. Further, night-shift workers whose circadian rhythms are disrupted are much more prone to error.

Monitor your organization’s corporate culture to see if it subtly or blatantly incentivizes employees to burn candles at both ends. For example, some law firms offer cash bonuses for billings above a certain yearly threshold. In other businesses, bosses monitor whose cars are still in the company parking lot at 7:00 p.m. and on weekends. Those who fail to log Herculean hours are not promoted, since they are not considered “team players” who are willing to pay the price.

Diagnose objectively your organization’s corporate culture. Are long hours viewed as signs of employee loyalty? Are people who work a nine-to-five shift ostracized or passed over for promotions? Do top executives set the tone by not taking all of their vacation time, or haunting the office on holidays? These questions offer a starting point for the diagnosis phase.

Provide Employee Assistance Programs (EAP’s) to all employees. Studies have shown there EAP’s help workers address shift-work problems effectively. Your company may be too small to have an in-house EAP. Nevertheless, many firms offer counseling assistance to workers with a wide variety of problems. These problems impact safety.

Work with Human Resources to fashion a safety strategy to manage and prevent corporate fatigue. An effective plan to manage corporate fatigue must involve the Human Resources or Personnel Department. This helps avoid friction and turf battles over who should be the architect of the plan.

Assess staffing and workload levels. Not to overlook the obvious, but are staffing levels realistic within the organization? Are there a sufficient number of people to realistically do the work? Conscious decisions to under-staff to trim overhead may create a climate where chronic fatigue takes root, inviting accidents, injuries and property damage.

Undertake a causation analysis of your organization’s past losses to assess the role played by human fatigue. This takes time, but it time well spent. Study the gamut of past losses for your organization, particularly workers compensation, fleet auto, property loss, accident and health. Was fatigue a factor? There may be a root cause of many seemingly unrelated losses.

Sensitize the C-suite upper management team to the perils of chronic fatigue among workers. This may be the most daunting challenge. For example, in some states the marathon hours of medical residents have come under fire. The medical establishment, though, has resisted efforts to curb residents’ hours, partially on the macho ethic that, “We were tough enough to do it so the new doctors should take it as well.”

Until you can demonstrate empirically to top management that fatigue is a causative factor in losses, it will be tough to draw attention to the phenomenon as a top-level issue. If you can make the case, however, and demonstrate that fatigue hurts the organization financially, you speak a language any top executive should understand.

Expect skepticism at first. Like an alcoholic denying that he has a drinking problem, many organizations deny that they have a fatigue risk within their workforce. Inwardly, they may concede that one exists but rationalize it as a cost of doing business. Others might think that addressing the problem is tantamount to coddling employees.

Progressive, forward-thinking companies though, will analyze fatigue’s role, not only as a clue in unraveling past loss trends, but in averting future losses which can cause financial hemorrhage.

Get some rest and tackle the problem!

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