What Boards Should Learn From Deepwater Horizon
Every time I watch the movie Deepwater Horizon, it brings tears to my eyes. As many will recall, it is based on a real-life tragedy in which 11 people died on an oil rig due to a series of safety failures. It is particularly close to my heart since I was responsible for a sister rig to the Deepwater Horizon at one point in my career. While the film focuses on a pressure test, in reality, the accident was the result of a series of events, as are all serious injuries and fatalities (SIFS). It is never one single thing that leads to the unfortunate loss of life. Based on my experience, if company leaders and the crew had changed one of the many events or actions that led to the incident, it’s likely that 11 lives would not have been lost.
Safety risks are everywhere. This has always been true in physically-intensive businesses, such as energy, construction or manufacturing. Increasingly, it’s also true for online businesses, where logistics and deliveries are a core part of operations. Look hard enough and you’ll find safety risks in just about any company, ranging from the travel obligations of sales and marketing organizations to the mental health and repetitive stress issues of office jobs. The tragic death of Kobe Bryant, his daughter and seven others in a helicopter crash recently highlighted the safety risks associated with the entertainment and professional sports industries.
Yet every day, many high-risk businesses run without any injuries. The question becomes how an organization can create a culture where no injuries are the expectation, rather than the exception. In other words, how can the system produce safe days over and over. This is why, for me, safety is at the heart of a people-centric culture—and why it must be on the agenda of the board. Safety culture and systems must work in harmony to prevent a catastrophe. Boards have a critically important role to play in setting this expectation and ensuring the company culture reinforces it.
What can the board do to ensure health and safety receives adequate attention?
Directors must make a personal commitment to safety: It’s really difficult to advocate a culture of safety when you’re not committed yourself. Commitment requires some discomfort, sacrifice and the willingness to intervene. My simple illustration is a bacon and eggs breakfast: For breakfast, the hog is committed and the chicken is a contributor. In my experience, most people are contributors, i.e. chickens. They talk about safety and say they are all for it—until a difficult production issue comes up or the business results are below expectations.
For those who are committed and believe in a people-centric culture, business results are never satisfactory and production targets are tainted if workers are injured along the way. As a director, if you’re committed, you intervene when you witness unsafe behaviors. For example, if you get on a bus with fellow directors and people don’t put seatbelts on, you remind them to do so. If a company leader doesn’t mention safety on the plant tour, you ask them about it. It’s that level of awareness and behaviors that work. If you don’t have that, it’s hard for you to press others on it. In world-class operational excellence, discipline wins—and the same is true for world-class safety results.
This commitment also means supporting management in difficult choices between productivity and safety. When product demand is high, for example, company leaders should be empowered to resist the inclination to risk employee health and safety to meet it. Instead, they should openly prioritize employee health to ensure that no one is run ragged or subject to repetitive stress injuries, with demand a secondary concern. This should carry through in regular messaging, too. If directors and leaders talk only about productivity when they visit the plant and not about safety, what do you think workers will prioritize?
Strengthen board oversight of the organization’s safety management protocols: In high-risk industries, many boards already have a health and safety committee. If your board does not, it is important to assign that duty to an existing committee, most likely governance and nominating.
This committee needs to be regularly asking management questions about safety, such as: What is our strategy? What are our trends? What are you concerned about? What are you doing about it? How are you holding people accountable? These questions should get at what systems and structures the company is using to mitigate safety risks, and how well it is following stated processes and procedures, including audit requirements. Another key question: What are the repercussions if an audit raises concerns? In some companies, safety management systems are audited and leaders cannot be promoted if they do not demonstrate improvement on those audits. Is the same true at your organization? If the stakes are not high enough, even a good process can fail.
As a whole, the board should be making budget decisions with a view to process and personal safety. That means looking at likely risks and investing ahead of a problem. When I became CEO of Aera Energy LLC, one of California’s largest oil and gas companies, the state regulator shared with me that we had a poor history of spills. In response, my team and I, with the full knowledge and support of the board, established a process safety plan with metrics and budget to significantly improve our spill results. Over time, we reduced the number of spills to nearly zero.
Whether it is infrastructure, equipment, buildings or other capital items, it is the board’s responsibility to ensure management is taking a proactive approach to both personal and process safety risks, budgeting appropriately for them, and tracking the progress with metrics.
Connect safety excellence to operational excellence: Leaders often invest in safety because they care about people. However, I am a firm believer that safety excellence is explicitly linked to operational excellence. The board needs to ensure management understands that the discipline, systems and structures that drive lean principles or operational excellence are the same elements necessary for safety excellence. Both require a culture that is fixated on tracking trends and metrics.
In fact, directors should encourage management to set zero-injury targets, on the grounds of good business sense. A zero-injury target drives accountability and transparency. “Pulling the chain” to halt production because of defects is the same as “stop work authority” for safety. Also, directors can play an important role in reminding leaders that they stand to gain personal capacity, as well as organizational capacity, if their staffs are not consumed with investigating accidents, working through workers’ compensation claims, and handling injury-related lawsuits. What business wouldn’t prefer to put that time and energy into something positive and reap the benefits?
Encourage stick-to-it-tiveness: Virtually every accident has already happened before. This was even true for the Deepwater Horizon. The fact that it was the first well blowout in that water depth doesn’t dismiss the fact that well blowouts had happened before. The question is: What prevents companies and industries from embedding learning from the catastrophic events that have occurred?
Simple answers could be changes in people, processes and technology. However, I believe another key reason is that people often react to the specifics of a distressing safety incident, but don’t probe to understand the systemic problems that led to it. Or even if they identify the deeper issues, they lose focus and don’t sufficiently embed the learnings; moving on to the next “thing” once the lawsuits are handled and the events are in the rear view mirror. For example, the smallest problem on an aircraft can cause a catastrophe. But what is it about the underlying systems, structures and culture that permitted that small problem to occur? This is a question that directors should be asking. And how will leaders know when they have fixed that deeper—usually cultural—problem? Understanding incident and safety audit trends are crucial information for directors to examine on an ongoing basis.
Keep the focus at the right level: I firmly believe safety is a leadership issue. When a CEO fails to prioritize safety and make it part of employees’ daily reality, thousands of lives are at risk. For good or for bad, no other employee in the company can have that kind of impact on safety.
Yet, at the same time, the CEO cannot get distracted by specific issues. If a CEO has a location with a spate of hand injuries, he or she must empower the people on the ground to fix that problem. It is not okay that employees can’t pick up their children because they have an injury from work, but it is not for the CEO to solve. The people doing the work are the best people to know how to get work done safely.
That said, just because minor injuries are not a CEO-level priority is not an excuse for them to happen. Remember, the CEO’s priority is a safe, injury-free workplace. The CEO must set the strategy and ensure that the culture, systems and structures support a safe, injury-free workplace.
While emotions run high when accidents occur, the board can ultimately help prevent more accidents by ensuring management is focusing at the right level. Likewise, the board itself should be talking about systems and structures, not how to prevent specific injuries.
In the long run, boards that commit to safety can both help their companies avoid tragedy and heartache and contribute to cultural changes that create stronger performance for years to come—and they can reinforce the idea that people are the company, not simply a means to an end.