Competition in HSE Consulting calls for a paradigm shift.

Over the years the H&S industry has fallen victim to countless unscrupulous practitioners operating as consultants and advisors, offering questionable advice to employers. Those who fell victim to these practices learnt the expensive truth that real help does not come cheap.

When the Department of Labour started its intervention in the Construction Industry in 2010 and proposed a regulatory framework, many H&S practitioners thought this would be the solution to the problem and supported the idea that H&S should be regulated. It would get rid of the “fly-by-night” consultants.

Today, 4 years after the SACPMCP was awarded the “deal” to regulate Construction Health & Safety, the fly-by-night operators are all still there. Some even has a registration certificate to prove it.

One particular example is a registered Agent appointed for a Namibian contract, and who insisted that the project operates under SA law. Another is a registered agent who rejected Annexure 3 medical certificates and “suggested” using a specific  OHM clinic to get it approved.

So, how is the SACPCMP registration process going to help?

We have seen from the Estate Agency Affairs Board that regulating the Real Estate Agents have resulted in literally thousands of estate agents operating unlawfully.

We have seen the same trends in the Insurance industry, and the Auditing professions.

The fact is that people cannot find formal employment yet need to survive and feed their families. Opting for a life of crime selling drugs or operating without registration is pretty much the same, but the latter is a lesser evil.

Why do we then support this?

Firstly because we have no choice. Secondly, because we still believe the SACPMCP waves the magic wand that will make all the “incompetent persons” disappear. It is not going to happen.

Those lucky enough to having been granted their “free passes” would not understand the battles of the H&S practitioner to get on the bus. And the SACPCMP’s recent “Open day” to discuss problems was not “Open” to the hundreds of highly qualified people who has been insulted by a mere “Can” status.

As a matter of opinion, even if you CAN do the job, if you are a CAN, you can NOT do it without a babysitter. These babysitters are often rewarded a Mentor status.

If you can afford the services of a babysitter, you are fortunate, but it will still increase your professional rates charged to your clients. This lessens your competitive advantage, because in all honesty, the rate of an H&S practice is the only “advantage” it may have.

Competition in H&S

One of the key components of any business plan is to determine your competitive advantage. What makes you better than the rest? What do you offer that others don’t?

Looking at the website of most H&S consultancies, the services they offer is pretty much the same everywhere you look. None of them really stands out as WOW! So how does an employer or client decide who to use?

The reality is that 90% of employers only want to prevent prosecution. In the Construction Industry, 90% of them only want a Safety file to get approved, in order to start working.

So why shop for the best H&S practice for assistance? Economically there is no reason at all. The best is expensive. The bulk of employers do not want expensive. They don’t want cheap either. They want cost-effective.

The market demand for cost-effective H&S services have forced prices down to an all time low, while everything else is going up in leaps and bounds.

In South Africa, there is a massive oversupply of professional service providers, mainly because there are very few full time appointments available. Everyone who cannot find a job, has two options. Start consulting, or get out of H&S. Most however, picks the former, and increases the supply of H&S service providers.

This oversupply has forced down professional fees to as low as R120 per hour, making it impossible for a legitimate consultancy to remain profitable.

The prohibition on setting professional rates for H&S under current SA Competition law, further compounds the problem to such an extent that the competition among H&S firms have become unhealthy.

Specialise or Diversify

Another challenge the H&S consultancy faces is the deciding whether to specialise or diversify their services offered. Once again we have seen 95% of the firms claiming to specialise, yet on closer look their services are the same as everyone else. It is therefore clear that the term is misunderstood.

Health and safety management is an extremely diverse field of practice, and as the phrase suggests it is separated into two fields; health (referring to human health as a medical field) and safety (referring to plant and machinery as an engineering field) with the “management” portion suggesting a system of policies, plans and procedures.

This opens the door for a variety of specialist fields, and it appears that the current specialists operate within the administrative side only; i.e. the management systems, such as ISO standards.

But the real “H&S specialists” do not exist.

The real specialists are focused on a particular subject within the H&S genre, such as Occupational Health, Occupational Medicine or Occupational Hygiene. These practitioners are highly educated and focuses on a specific function within the H&S field.

In the “safety” part of the field, specialists are not found within the H&S regime, but outside thereof, under the auspices of the Engineering Council, such as Fire Engineers, Lifting Machinery Inspectors, Pressure Vessel inspectors and the Engineering in charge of Safety at a factory; the GMR 2(1),etc.

Other forms of specialists include Safety Engineers, Process Safety Engineers and Commissioning Safety Engineers to name but a few. These specialists do not operate under the H&S Banner.

This leaves the H&S practitioner with only one option left; Diversity.

Diversifying H&S practice can have its own set of problems as many have already experienced.

Diversifying your business can be done in two ways.

Firstly you can offer a separate service or product, like H&S software, PPE etc, and secondly you can add an additional service, which may or may not be H&S related.

The problem comes in the public perception of your business. Are you really focused or are you throwing everything at the wall to see what sticks?

This is not something a single article can answer, as it depends on a variety of factors.

Overcoming competition restrictions

The South African Competition Act prevents price fixing through agreements between competing companies in order to protect the consumer. There are various forms these “agreements” can take on, including Cartels and Collusion. This requirement also applies to statutory professional bodies like the SACPCMP, HPCSA and others.

There is however a mechanism that allows you to set a specific price on a service or product without contravening the Competition Act, and that is through a Franchise Model.

A Franchise is a business that makes its own business model and processes available to other businesses under certain terms and conditions. There are numerous franchises around the world, each offering a unique business model. The prices you pay for products or services at a franchised outlet is the same regardless of where you are. A hamburger at a franchised fast food outlet will be same price in Johannesburg as it is in Durban.

There are a number of H&S Franchises available in SA.

Mergers and Acquisitions

Another process to beat the competition is to merge two or more companies or to acquire shares in a competitor. This has been successfully done since the inception of the Stock markets and one example within the H&S field is the acquisition of a consultancy by a PPE manufacturing group.

There are prescribed requirements for these M&A’s and if you are not familiar with the rules, it could bite you in the back.

 Divide et Impera

Translated as Divide and Concur, it is a strategy deployed in War, by dividing your armed forces and attacking from two sides. It is however also wrongfully applied in business by creating division among rivals and then coming in as a third party to save the day. When two dogs fight over a bone, the third runs with it home.

One example where this was successfully applied was in the formation and split of H&S professional bodies in South Africa. Where it started with one, the profession were divided into 8 different bodies punting for support, and eventually ending up with an outsider taking the lead to victory.

Undoubtedly, as loyalty and commitment toward the practitioners starts to be questioned, history will repeat itself and we are soon to see another split in the ranks of the leading professional body, who has recently denied its own founding members’ role in its success.

Where will it all end?

Competition in H&S practice will always be there, but the writing is on the wall for both the larger consulting firms and the one person enterprise. There is economic pressure on all business to cut costs and the larger firms may find themselves outpriced if the pressure continues. Only those with sufficient capital to survive the aftermath of State Capture will be left in the next 7 years.

For the one person consulting practice, where the owner is everything in the “we”, the challenge to survive is often influenced by the time of entry into the consulting field. It is generally accepted that the one-person SOHO business is less expensive due to lower overheads, but if two SOHO businesses are compared, the difference is often found in personal financial liability of the two practitioners.

Changes in the National Credit Act has made it easier for the sole proprietor to survive the onslaught of creditors, but financial pressure may result in hap-hazard decisions and over-commitment to clients. Time constraints and a lack of resources may also place an additional risk on business continuity and many SOHO practitioners have all their eggs in one basket. A sudden change in client opinion may result in everything going up in smoke. This was the case with a mid-sized consulting practice with 12 clients and 4 practitioners in its employ. Their 12 clients all worked for the same principal, and when the principal forced these 12 companies to stop using the consulting firm, they lost 12 contracts in a matter of 2 weeks. The “one basket” is not necessarily working for one client, but also working for a number of clients within a single supply chain or even industry sector for that matter.

It would thus be prudent to ask yourself the question. Where will it end? And work out a strategic plan to circumvent these sudden changes in market requirements. The injection of the SACPCMP into H&S practice has already taken its toll among consulting firms within the construction sector.

The question is where in H&S lies the next wolf in sheep’s clothing?

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Sheqafrica
Sheqafrica.com is Africa's largest online Magazine for the Risk & Compliance profession. It is co-owned by Net-IX and the Sheqafrica Corporate Services(Pty)Ltd.

Editor-in-Chief:
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Independent Contributors and Media Partners:
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