August 13, 2018

Managing Risk for Production, Quality and Incident Prevention (Part 1)

wooden dominoes
In July 2018, I ran a series of Risk Leadership Workshops for the Safety Institute of Australia in capital cities around the country. These sessions facilitated a transformation from ‘safety thinking’ to ‘risk management thinking’. The highly participative workshops result in value adding takeaways which I’d like to share with you in this series of articles call the ‘Listening Tour’.
A key theme during all workshops was language and the importance of communicating the right priorities and intent. Here are the top 5 gaps and deficiencies in current organizational messaging.
1. Coaching vs Enabling
When companies endeavor to build internal capability they rightly identify frontline supervision as a critical group because of their influence on operational outcomes and workforce performance. Unfortunately, the language used can convey the wrong intent. For instance, I asked attendees, ‘Imagine yourself as an experienced, competent supervisor. How would you feel if you were told that the company was going to provide you with coaching or mentoring as part of a new improvement program?’ The response was invariably, ‘What am I doing wrong?’
Rather than recognizing existing capability, we’re inferring that there are gaps. Experienced, competent personnel should be enabled (not coached) and inexperienced personnel coached/mentored as a risk management strategy to address real gaps related to human resource risks. Enabling acknowledges existing competencies and provides further opportunities to contribute value to business performance.
2. Downsizing vs Right Sizing Capacity
During downsizing, companies reduce personnel based on the organizational chart and associated accountabilities. Personnel numbers are theoretically ‘right-sized’ however consideration is not given to ‘right-sizing capacity’.
Businesses in industries that experience economic fluctuations can struggle to adapt to the upturn because they’ve ‘cut too deep’ during the downturn. If we apply risk management principles, downsizing shouldn’t be driven by job description but by human resource asset value that affects the organization’s capacity to adapt to change (resilience), rebuild and manage both strategic and operational risks through economic cycles. For instance, currently in Australia with the increase in expansion projects on the design table, companies are again struggling to source skilled personnel having downsized significantly only two years ago.
3. Safety Hazards vs Risks of the Work
The focus on hazards inhibits businesses from understanding the interfaces between systems where the ‘real risks’ exist. This language results in safety being siloed and an add-on to core business. Hazard terminology needs to be replaced with the risks associated with ‘The Work’.
For instance, the current approach to populating a risk register tends to focus on hazards which is satisfactory only as a ‘generic’ approach. When new projects or scopes of work are planned, the risk register needs to be more strategically focused on the real risks of execution, such as contractor management, communications, interface management, stakeholder analysis and other considerations beyond safety. These risks have an impact on production/productivity/schedule, quality and incident mitigation concurrently. Front-end planning with the relevant stakeholders is the critical piece in project/scope management.
4. Safety Costs vs Value Optimization
During the workshops, many safety professionals communicated a frustration of not having a safety budget. They reported needing to go ‘cap in hand’ to the general, operations or project manager. This is exacerbated by the perceptions that safety is a cost that detracts rather than contributes to the bottom line. Accounting practices can’t provide visibility on the full benefits of risk mitigation nor the full costs of incidents and losses.
Many organizations are immature in the sense that value-adding used by other professions such as engineering is not part of those disciplines seen as services to core business eg safety, environment and human resources. An example includes Value Optimization. This involves researching and proposing the most cost-effective, sustainable approach to deliver compliance requirements. For instance, bringing mandatory training in-house and tailoring programs to the business at a lower cost and higher quality than external training providers. The initial investment can deliver returns year-in-year-out and meet mandated refresher requirements.
5. Residual Risk vs Inherent Danger
The concept of residual risk which is the remaining risk after controls have been implemented was well understood by workshop attendees. It was agreed for hazard management that achieving ‘as low as reasonably practical’ has created a false sense of security amongst the workforce that this means the work is now safe. The Entropy Model presented in the program emphasizes that residual risk is the ‘Inherent Danger’ remaining. ‘Danger’ is missing from organizational language and yet workers are expected to exercise vigilance. There’s an incongruence between behavioral expectations and messaging about real risks.
Key learnings from the workshops included the management of perceptions and the need to speak the language which accurately reflects operational realities of the business.
The top 5 language transformations needed to think in terms of ‘risk’ rather than just ‘safety’ are:
  • Enable competent personnel and provide opportunities for leadership at the operational level
  • Right size capacity of human resources to sustain resilience through economic cycles
  • Expand the focus from safety risks to the real risks of ‘The Work’
  • Include Value Optimization as a focus for those disciplines traditionally considered to be services to core business
  • Introduce Inherent Danger as synonymous with Residual Risk to provide the rationale for and driver of vigilance.

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