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CHANGING LONG ACCEPTED WORK PRACTICES TO REDUCE THE NUMBER & COST OF CLAIMS 2007 CHANGING LONG ACCEPTED WORK PRACTICES TO REDUCE THE NUMBER & COST OF CLAIMS 2007 Comcare National Conference 24 th October 2007 Delivered by: Dominic Andreacchio General Manager – Human Resources Australian air Express 1

CHANGING LONG ACCEPTED WORK PRACTICES TO REDUCE THE NUMBER & COST OF CLAIMS ¡ CHANGING LONG ACCEPTED WORK PRACTICES TO REDUCE THE NUMBER & COST OF CLAIMS ¡ Changing long accepted work practices ¡ Overcoming high injury rates and escalating costs ¡ Dealing with productivity and morale Issues ¡ Achieving significant improvements 2

Australian air Express COMPANY BACKGROUND o Joint Venture Qantas Airways Ltd & Australia Post Australian air Express COMPANY BACKGROUND o Joint Venture Qantas Airways Ltd & Australia Post o Formed 1 st August 1992 (integration of Australia Post Express Courier & Australian Airlines Cargo) o Ansett Collapsed September 2001 (Huge growth within short time frame and limited framework) 3

KEY STAKEHOLDERS ¡ Qantas ¡ Australia Post - Largest customer Aa. E’s largest supplier KEY STAKEHOLDERS ¡ Qantas ¡ Australia Post - Largest customer Aa. E’s largest supplier “Belly Space” access to over 300 Qantas flights per day. 4

COMPANY OVERVIEW ¡ ¡ Approximately 1360 FTE employees nationally Union Coverage - TWU & COMPANY OVERVIEW ¡ ¡ Approximately 1360 FTE employees nationally Union Coverage - TWU & ASU Operate own dedicated freighter aircraft network Extensive fleet of over 500 courier vehicles ¡ Expansive regional service network ¡ Operational sites “ON” & “OFF” airport locations 5

SELF INSURED SINCE 1999 UNDER THE COMMONWEALTH SCHEME Aa. E took the decision to SELF INSURED SINCE 1999 UNDER THE COMMONWEALTH SCHEME Aa. E took the decision to self-insure under the Safety, Rehabilitation and Compensation Act 1988 (SRC Act) because it offered our company, our employees and our shareholders substantial long-term advantages, such as: l Quicker response times on decision making l Greater flexibility with injury management and return to work strategies l Greater control of managing corporate risk l Reduced workers’ compensation costs 6

WHERE WE WERE IN 2001/2002 ¡ Claims received 111 ¡ Claims per 100 FTE’s WHERE WE WERE IN 2001/2002 ¡ Claims received 111 ¡ Claims per 100 FTE’s 8. 2 ¡ Frequency of Lost Time Injuries per 1, 000 hours worked 34 7

Aa. E WORKERS COMPENSATION CLAIMS RECEIVED 2001/2002 TO 2006/2007 8 Aa. E WORKERS COMPENSATION CLAIMS RECEIVED 2001/2002 TO 2006/2007 8

WORKERS COMPENSATION CLAIMS PER 100 FTE’S 2001 -2002 to 2006 -07 9 WORKERS COMPENSATION CLAIMS PER 100 FTE’S 2001 -2002 to 2006 -07 9

LOST TIME INJURY FREQUENCY RATE 1998/1999 to 2006/2007 10 LOST TIME INJURY FREQUENCY RATE 1998/1999 to 2006/2007 10

Aa. E PERFORMANCE SUMMARY Over a 6 year Period : ¡ New Claims trended Aa. E PERFORMANCE SUMMARY Over a 6 year Period : ¡ New Claims trended Down by 48% ¡ Claims per 100 FTE’s trended down by 49% ¡ Frequency of Lost Time Injuries trended down by 70% 11

CHANGING LONG ACCEPTED WORK PRACTICES Aa. E OHS Management System was developed and implemented CHANGING LONG ACCEPTED WORK PRACTICES Aa. E OHS Management System was developed and implemented in early 2000/01 without anticipating the impact of the Ansett collapse in September 2001. Key elements of the OHS management system included: l Commitment and leadership by the Aa. E Board, Chief Executive Officer and senior executives; l Integration of prevention, rehabilitation and claims management -linking them to the company’s business plan; and l The development of policy and risk management based procedures. l Integration of HR & OHS strategic workshops. 12

DRIVING CHANGE TO LONG ACCEPTED WORK PRACTICES The most significant ‘building block’ that allowed DRIVING CHANGE TO LONG ACCEPTED WORK PRACTICES The most significant ‘building block’ that allowed us to move forward with changing long accepted work practices and cultural change was the commitment of the Aa. E Board, Chief Executive Officer and Senior Executive to ensure that change occurred across all aspects of the business. 13

DRIVING CHANGE TO LONG ACCEPTED WORK PRACTICES (cont)… Aa. E took the following initiatives: DRIVING CHANGE TO LONG ACCEPTED WORK PRACTICES (cont)… Aa. E took the following initiatives: 1. Engaged external consultants to drive cultural change through the “Extraordinary Leadership” program which included OHS. This program targeted: ¡ ¡ ¡ Senior Management Middle Management Line Management 14

DRIVING CHANGE TO LONG ACCEPTED WORK PRACTICES (cont). . 2. Increased resources were made DRIVING CHANGE TO LONG ACCEPTED WORK PRACTICES (cont). . 2. Increased resources were made available nationally to assist in the prevention and injury management activities, including the appointment of State OHS Advisors and dedicated state Case Managers. 3. An increased commitment to Case Management training. 4. Strong push that early intervention was the key to success in managing injured employees. 5. Increased reporting to the Board and Senior Executive, ie. LTIFR, Costs and Time Off Work etc. 15

WHAT DID Aa. E DO TO MAKE A DIFFERENCE: Some actions taken by Aa. WHAT DID Aa. E DO TO MAKE A DIFFERENCE: Some actions taken by Aa. E which we believe have made a difference are: 1. Demonstrated ‘seriousness’ about addressing major manual handling concerns, such as transportation of tuna fish, including the influencing and education of our customers. 16

WHAT DID Aa. E DO TO MAKE A DIFFERENCE (cont) 2. National Manual Handling WHAT DID Aa. E DO TO MAKE A DIFFERENCE (cont) 2. National Manual Handling Program l Risk analysis of all manual handling activities l Production of a DVD for competency based training l Introduction of on site physiotherapy services 17

WHAT DID Aa. E DO TO MAKE A DIFFERENCE (cont) 3. Injury Management: l WHAT DID Aa. E DO TO MAKE A DIFFERENCE (cont) 3. Injury Management: l Suitable Duties manual to assist injured employees returning to work l The introduction of Case Managers at all key ports in the organisation l The introduction of Company nominated doctors l The introduction of preferred rehabilitation providers l Shared accountability between the employee and Aa. E Management 18

WHAT DID Aa. E DO TO MAKE A DIFFERENCE (cont) Injury Management (cont): l WHAT DID Aa. E DO TO MAKE A DIFFERENCE (cont) Injury Management (cont): l The introduction of an Early Intervention Program to assist injured employees by the provision of suitable duties, payment of some medical expenses and early referral to nominated facility doctors l Communication to all Aa. E employees of what the injury management processes are. l Improved reporting to the Board and Senior Executive ie. LTIFR, costs and time off work. 19

WHAT DID Aa. E DO TO MAKE A DIFFERENCE (cont) 4. The inclusion of WHAT DID Aa. E DO TO MAKE A DIFFERENCE (cont) 4. The inclusion of OHS key performance indicators in the senior executive appraisal process, example: l LTIFR (set by the Board on recommendation of CEO) l Personal Performance Indicators ¡ ¡ ¡ OHS as an agenda item on all executive meeting agendas Workplace inspections Attendance at OHS committee meetings 20

WHAT DID Aa. E DO TO MAKE A DIFFERENCE (cont) 5. Conducted a Staff WHAT DID Aa. E DO TO MAKE A DIFFERENCE (cont) 5. Conducted a Staff Survey which included HR and OHS issues: Results: High satisfaction levels associated with all OHS and prevention activities within Aa. E. 21

WHAT DID Aa. E DO TO MAKE A DIFFERENCE (cont) 6. The importance of WHAT DID Aa. E DO TO MAKE A DIFFERENCE (cont) 6. The importance of actioning HAZARD/INCIDENT REPORTS in a timely manner and feeding outcomes to all parties leads to: ¡ ¡ Increased confidence Increased Trust Belief that the organisation cares Positive safety culture NOTE: you get 600 free lessons before a serious incident occurs 22

To succeed in changing Work Practices and CREATE an improved Safety Culture: You MUST To succeed in changing Work Practices and CREATE an improved Safety Culture: You MUST have: l Commitment from the CEO and the Senior Executives; l Push from the top down and from the bottom up; l Buy in from those employees doing the job; l Integrated performance indicators; l Line Management Training to support the change processes; l Established review processes ie. Staff surveys, and l Patience – it takes time. 23

ACHIEVING SIGNIFICANT IMPROVEMENTS Between 2001/2002 and 2006/2007 Aa. E achieved: l 48% reduction in ACHIEVING SIGNIFICANT IMPROVEMENTS Between 2001/2002 and 2006/2007 Aa. E achieved: l 48% reduction in claims l 49% reduction in claims per 100 FTE’s l 70% reduction in Frequency of Lost Time Injuries What happens now? 24

ACHIEVING SIGNIFICANT IMPROVEMENTS (cont)… Aa. E is in the process of going through a ACHIEVING SIGNIFICANT IMPROVEMENTS (cont)… Aa. E is in the process of going through a number of significant challenges, including: l Optimisation of National Business Processes; l Introduction of Boeing 737 freighter aircraft; l Introduction of new, state-of-the-art freight handling facilities with advanced logistics technology; l Increased competition; l Increased scrutiny from the Aa. E Board, and l Increased scrutiny from Comcare 25

ACHIEVING SIGNIFICANT IMPROVEMENTS (cont)… We now need to take the next step to drive ACHIEVING SIGNIFICANT IMPROVEMENTS (cont)… We now need to take the next step to drive down our injury rates even further. We have identified the following key factors as barriers to be overcome: o Resistance to continued change by Supervisors & Line Managers; o Acceptance that injuries are an expected outcome of our working environment; o Moving freight without acknowledging the risks; and o Ageing workforce 26

WHAT ARE WE DOING TO MOVE TO THE NEXT STAGE In 2006/07: ¡ We WHAT ARE WE DOING TO MOVE TO THE NEXT STAGE In 2006/07: ¡ We introduced “Safety Week” and launched “Safety is no Accident” Program ¡ Safety is no Accident logo appears on all safety documentation ¡ CEO contacts Line Managers in respect of all Lost Time Injuries; 27

WHAT ARE WE DOING TO MOVE TO THE NEXT STAGE (cont)… In 2006/07 (cont): WHAT ARE WE DOING TO MOVE TO THE NEXT STAGE (cont)… In 2006/07 (cont): ¡ We introduced “Line Manager” competency based training aimed at up-skilling line managers in supervision and injury reporting; ¡ OHS, HR and Training & Development Officers have been involved in change management associated with new facility committees during 2007 & will continue into 2008, and ¡ We introduced fortnightly telephone conferences with OHS Coordinators & Return to Work Coordinators. 28

WHAT ARE WE DOING TO MOVE TO THE NEXT STAGE (cont)… In 2007/08: ¡ WHAT ARE WE DOING TO MOVE TO THE NEXT STAGE (cont)… In 2007/08: ¡ We issued Aa. E’s new Safety Card 29

WHAT ARE WE DOING TO MOVE TO THE NEXT STAGE (cont)… In 2007/08 (cont): WHAT ARE WE DOING TO MOVE TO THE NEXT STAGE (cont)… In 2007/08 (cont): ¡ We conducted an OHS Strategic Workshop ¡ We launched a Safety Observation Program involving management and peers; ¡ Introduced focused pre-employment assessments, and ¡ We launched Aa. E’s ‘Environment Policy’ 30

WHY CHANGE THE LONG ACCEPTED WORK PRACTICES ¡ To do nothing condones current performance WHY CHANGE THE LONG ACCEPTED WORK PRACTICES ¡ To do nothing condones current performance we can always do better. ¡ Risks can be managed and incidents should not be seen as inevitable given the nature of our business. 31