New research suggests that managers of U.S. companies trying to meet earnings expectations may be compromising the health and safety of workers to please investors.
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A study published in The Journal of Accounting and Economics says companies may create incentives for employees to increase productivity or reduce expenses. However, these actions often come at the expense of worker protection. The study was conducted by Professor Naim Bugra Ozel of the University of Texas Dallas and Dr. Judson Caskey of UCLA. They found that companies that met, or just beat analyst expectations have a 12 percent higher injury rate than other businesses.
Using injury data from OSHA and companies’ financial information, the researchers examined company spending and worker output. They found that discretionary expenditures are associated with high injuries in firms that meet or just beat expectations. That, they say is consistent with the conclusion that businesses cut safety spending such as oversight and employee training.
According to Ozel, “Our research suggests that there is also an increase in the workload of the employees so it’s not just cutting expenditures, but asking employees to work a little harder.” He says that might take the form of overtime, or expecting workers to accomplish more in a shorter time period. “If employees are forced to work harder, they might inadvertently ignore the safety procedures themselves,” he added. The study found that the link between injuries and expectations is weaker in highly unionized industries. This speaks to the role of unions in negotiating for and enforcing safety measures.