Recommendations for Owners and Senior Management: Ten Practical Ways to Improve the Quality of Risk Information Transmission Within Critical Infrastructure Organizations

Abstract

The previous chapter has presented the insights of 100 practitioners about the causes of existing problems with internal risk transmission (answers to questions I–III are presented in Sect. 2.3). The same 100 practitioners were then asked the following questions about how to improve the quality and speed of risk communication within organizations.

The previous chapter has presented the insights of 100 practitioners about the causes of existing problems with internal risk transmission (answers to questions I–III are presented in Sect. 2.3). The same 100 practitioners were then asked the following questions about how to improve the quality and speed of risk communication within organizations:

• IV. How, in your opinion, should an effective process be built for transmitting information about risks from bottom-line employees to executives? Please outline your perfect picture of how such a process could be established.

• V. How in practice is it possible to ensure implementation of an emergency dialogue between employees and executives, where the hierarchy is temporarily leveled in order to facilitate a discussion about critical risks in an organization? Please suggest mechanisms and tools for such an emergency dialogue. What are the obstacles to introducing temporary hierarchy alignment within an organization? How could these obstacles be overcome? (This question was asked to the first 30 interviewees).

• VI. How can one include middle range managers (directors of production sites) in the process of discussing an organization’s emergency risks, when the hierarchy is temporarily leveled? (This question was asked to the first 30 interviewees).

• VII. Is it possible in practice to prioritize the safety of operations over financial results and production targets during the operation of critical infrastructure? Please outline your perfect picture of how to implement a priority of safety over other corporate goals. Please share your point of view on obstacles to the implementation of such an approach. How would such obstacles be overcome?

• VIII. How can one build the trust of employees in executives?

• IX. How can one motivate senior management to visit key production sites on a regular basis and demonstrate openness in discussing organizational problems with bottom-line employees? What are the obstacles and fears facing executives in initiating active communication with bottom-line employees? How can executives overcome these obstacles and fears?

• X. What kind of tangible and intangible rewards for employees can be offered for disclosure of existing risks?

• XI. Is it possible to automatize completely the process of gathering information about the operation of critical equipment without the participation of engineers (humans)? What pros and cons do you see in such a total automatization of monitoring and control over critical infrastructure? What are the prospects for artificial intelligence in this context?

• XII. What development potential do you see in the idea that companies could provide insurers with full access to internal information about all critical risks, in exchange for lower insurance premiums?

• XIII. Do you see national and cultural differences in the reporting and discussion of risk? (This question was asked only to interviewees with international work experience).

The information received from 100 practitioners in industry, combined with the results of an earlier study of the reasons for concealing risks in major industrial accidents, provide clear practical recommendations for owners and managers of large industrial companies who want to fundamentally improve the transmission of risk information within their organization, in order to prevent serious industrial accidents.

1 Recommendation No. 1: Owners and Senior Management Should Be Willing to Give Up Short-Term Profits in Exchange for the Long-Term Stability of Critical Infrastructure

From the analysis of previous incidents (Sects. 2.1 and 2.2 of the handbook), the prevalence of “short-term thinking” was the reason most frequently cited to explain why managers ignore early warnings reported to them, and why subordinates hesitate to report risk-related information internally. It is clear that company owners, shareholders, the business community and even some state authorities all set short-term goals, thus pushing managers to achieve ambitious production and financial targets. This was apparent within both capitalist and socialist economies. Firstly, the priority was always to ensure better financial results over a short period; secondly, there was relentless pressure to increase production, to fulfill or ideally exceed the agreed or imposed targets. Over-ambitious short-term plans for growth in production and revenue negatively affect the corporate atmosphere because any discussion of the risks being taken to achieve them is discouraged.

Based on interviews with 100 practitioners (Sect. 2.3 of this handbook), 58% of them believe that the main reason managers do not want to hear about problems from subordinates is the high cost of tackling them. At the same time, owners and shareholders have imposed strict production and financial targets, which are too tight to be achieved if unforeseen and expensive technological issues come to light. Most large organizations have an approved annual budget for expenses and projected profits. The budget is usually agreed with the shareholders and allows only for some planned expenses. The company’s annual profit and personal bonuses for senior managers are calculated based on these forecasts. It is not hard to anticipate the impact on senior management when an employee comes to them with information about a critical risk. Solving the problem will require significant costs and exceed the planned budget. This increased expenditure will greatly reduce the profits they have confidently promised their shareholders. Therefore, for senior management, receiving information about a critical risk from employees is deeply unwelcome, because they will have to explain to shareholders the reasons for the decline in anticipated profits, not to mention the impact that decline will have on their own and their colleagues’ bonuses.

©Dmitry Chernov, Ali Ayoub, Giovanni Sansavini, Didier Sornette, All rights reserved

Setting short-term ambitious targets for the growth of profit and production, while demanding constant cost reduction, does not foster an internal corporate atmosphere which welcomes the discussion of any risks that might require significant expenditure to mitigate.

Fundamental improvements in the quality and speed of reporting critical risks within a critical infrastructure company are possible only when the owners are willing to focus on the long-term ownership of the company. This involves accepting that the significant costs required to manage existing serious and critical risks may impact short-term profits, but are essential to protect the long-term reliability, sustainability and value of the company. In other words, the owners will make more money on the long-run and with much less risk in case of investing in reliability of critical infrastructure, which increases the long-term return and decreases the short-term risks and volatility.

Senior management follow the requirements of owners

Everything starts from the top: owners and senior management set the tone and standards of behavior, and these spread down and through the whole organization.

Several of the managers interviewed cite the same interesting example of how senior managers follow the corporate goals and priorities that the state and owners dictate to them. In one country, the state had dominant control over critical infrastructure. After the election of a new liberal government, part of the sector was privatized, and some former state assets went to foreign-based transnational corporations (TNCs). In recent times, some of these have promoted a long-term approach to managing critical infrastructure assets, whereby priority is given to long-term sustainability and asset security instead of short-term profit. This approach has arisen from the negative experience of some TNCs in the past, when compromises on safety led to disasters that hit the company’s development on a global scale, damaging the capitalization of the business and ruining its reputation in the eyes of governments in other countries where it was operating. Through this bitter experience, some TNCs have come to understand the need to work to the same high safety standards in all regions where they have a presence. Thus when one TNC opened operations in the country in question, the world’s leading senior managers and HSE experts came with it to help set up advanced solutions in the field of production and safety management at the newly acquired facilities. The expatriate supervisors who came were strong advocates of a rigorous approach to safety. They actively recruited the agreement of local staff to make safety a priority, and assured them that the company wanted to know about risks to be able to tackle them at an early stage. After 10–15 years of work in the country, the TNC sold its assets to a state-owned company because the national government’s strategy for controlling critical infrastructure had changed again. A significant portion of expat executives had left the country, but some who had worked there from the start decided to stay and continue: they had citizenship, had started families and acquired property. Under the new state control, the previously promoted priorities of long-term sustainability and operational safety were relegated to the background. The government pushed to increase production volumes, keen to raise more short-term revenue from the operation of critical infrastructure in order to increase the tax base. They demanded a greater contribution to the state budget and launched new large-scale production projects. It is interesting to trace the conversion of some of the expat executives who had remained. With the new state-driven priorities, many who had previously actively advocated safe working practices began to promote the growth of production and short-term revenue that the new shareholders demanded from their subordinates. Safety ceased to be a priority for the new owner and senior management, so less attention was paid to these issues within the company. At one production site, the expat manager turned from a passionate advocate of safe working practice into an accountant for whom the sole priority was to drive the production and financial plan forward. He was now open to committing significant safety breaches to make this happen—and this metamorphosis occurred in just one year! This example shows that some senior managers are only too willing to adapt to the corporate priorities and demands imposed by owners and the state.

The CEO of an electricity company agrees that everything depends on the ideology that is adopted by senior managers, which in turn is based on the goals that the owners set. If bosses, in response to the demands of owners and shareholders, claim that they really want to improve the quality of their products and give subordinates the resources and authority to achieve this, then employees will fight for quality. The same applies to safety issues. If managers are pursuing a policy of maximizing profits for shareholders and owners, and cutting costs in the short-term, then they will not welcome any information coming from below about problems that need additional investment, because tackling them will cut profits. There is tremendous reluctance to get involved in solving operational safety problems, receiving information from employees about risks, or investing in an effective risk management system.

The CEO of an electricity company described two approaches to obtaining information about risks—reactive and proactive—which are based respectively on whether an organization is focused on short-term or long-term goal setting.

If senior management are focused on short-term results, then they are not interested in the long-term consequences of their actions or the feedback from subordinates about existing serious and critical risks that may in time lead to disaster. When management ignore information about risks coming from below, then ironically, a company’s costs for dealing with the onset of serious and critical risks in the long run will be higher than the costs it would have faced to take suitable preventative steps to mitigate risks in the first place. By ignoring early signals about the state of the business, managers are only able to take a reactive approach to crises: they never know what is on the horizon, and every new day is likely to bring unwelcome surprises. Often, senior managers only receive feedback on their actions and begin to respond to shortcomings in the organization’s work after the onset of risks (reactive approach). A reactive model is a monologue, a one-way communication down the hierarchy: orders come from managers down to subordinates, but managers refuse to hear anything coming in the opposite direction. Such behavior will inevitably stunt the long-term development of an organization.

If senior managers are focused on long-term results, then they consider the long-term consequences of their actions, and take a positive view towards operational feedback from subordinates about the existing serious and critical risks of an organization. This comes from the fact that they recognize this is likely to minimize the chances of a serious incident occurring in the future. The earlier a risk is identified and steps are taken to mitigate it, the cheaper it will be to manage this risk in the long term (proactive approach). A well-informed senior management, that have created a system for working with information arriving from below, can solve many problems before they reach a critical stage. With a proactive approach, risks are addressed in the early stages when fewer resources are required to tackle them, thus reducing costs. Receiving this risk information earlier, before a critical stage is reached, also means managers are likely to have access to a greater choice of effective solutions.

If we take two identical companies at a point in time where they have equally good business performance, it will be the company that responds proactively to risks that has a better chance of thriving in the long term. Proactive management in the modern world is more forward-thinking, because it sets up systems to get information about risks in advance and tries to resolve issues before they turn into serious problems. These systems develop naturally through feedback to senior management in response to its previous actions. Organizations that increase internal feedback are more adaptive and sustainable. A proactive model is a dialogue between managers and employees, where senior management are actively interested in feedback from employees.

Whether senior management adopt a proactive or reactive approach to gathering risk information depends largely on the goals set by owners in relation to the terms of ownership of a critical infrastructure company, together with its financial and production goals.

Senior management cannot dramatically increase investment without the support of owners and shareholders

The vice president of a gas pipeline construction and repair company outlines the options available to the board members of a critical infrastructure company when they hear from employees that there are serious problems at one or more industrial facilities. The CEO will assemble the board to present the situation and raise the question of what can be done to reduce the existing critical risks that may require significant expenditure to rectify. The financial director will likely explain that the company simply does not have the funds for a comprehensive modernization—in effect rendering the question as rhetorical, the only answer being “little or nothing”. In many countries, most critical infrastructure was built decades ago and after years of failing to modernize, the investment now required to bring it up to date is enormous. Sometimes, instead of upgrading old equipment, it is cheaper to buy new or to build a whole new production facility. This kind of capital investment will make a company unprofitable for many years. Obviously, shareholders will not be happy with a course that will wipe out profit and dividends for the foreseeable future. For a start, there will then be no resources to cover large salaries—let alone bonuses—for senior management. Moreover, shareholders will question the professional competence of a management team that cannot deliver decent returns. Faced with such a sobering picture from the financial director, most executives will give up and send critical risk warnings to the back of the in-tray. Senior management will stop asking employees for updates about problems at the production sites and instead of long-term solutions, the managers will opt for the most conservative possible option that will prevent imminent disaster while minimizing extra expenditure. They will invest only in equipment that threatens to fail in the near future, keeping the budget tight enough to still provide for a small profit. They have resigned themselves to the fact that neither radical nor even moderate modernization will have support from shareholders. Despite the long-term reliability—and eventually profitability—that would come from proper investment in new equipment, a period of zero profits and dividends will just not be accepted by the majority of owners and shareholders.

If the business model is all about maximizing short-term profits, there will be no room for the significant extra cost of dealing with serious problems: when expenses rise, short-term profit falls. If profits go down, so will the reputation of the managers who cannot fulfill their profitability targets. Ongoing investment in safety improvements will only find support in companies that are focused on long-term development, whose owners are willing to sacrifice short-term profit in exchange for the stability of the business and the long-term maintenance of its assets.

Owners determine the priorities of critical infrastructure companies

The head of the HSE department of a gold mining company says candidly that, if he were simultaneously the owner as well as the CEO of a large industrial company, the first thing he would try to do would be to reduce his own appetite for profit. It is the desire for ever-increasing profits that underlies many aggressive decisions by senior managers and tempts them to ignore risks. This profit-driven approach from the top puts pressure on middle managers to set barely achievable production goals and do whatever it takes to cut costs. Ultimately, this puts ordinary employees in a position where they are forced to ignore the risks and run after financial and production targets to keep their jobs and obtain career advancement. In most companies, senior management never ask subordinates about risks—they only want to hear about production volume, cost reduction, revenue and so on. The questions that they are choosing to ask make company priorities perfectly clear. In response, these become the issues that subordinates devote their attention to.

The HSE head of a mining and metallurgy company put this very clearly, saying that in some companies, where profit takes precedence over safety due to the priorities of the owners, employees are treated by executives as little more than disposable assets. Obviously, leaders who view their employees like this will pay little attention to safety problems. The respondent cited cases of managers carrying out a cost–benefit analysis, comparing the cost to a company of employee deaths against the cost of installing additional safety systems that could save those employees’ lives. Sometimes this even led to the cynical decision not to authorize the huge cost of modernizing equipment, but to accept the far more modest cost of covering employee funerals in the event of an accident. As the respondent put it: “Everything was cynical, practical, and calculated on a cost–benefit basis”.

The HSE manager of a production company which uses hazardous chemical processes believes that safety ceases to be a priority when it is more important for a company to make short-term profit and deliver an ambitious industrial plan. If however the prime task is to preserve the asset over time and increase the capitalization of a company in the long run, then safety will always be a key corporate priority. Owners will be willing to sacrifice short-term profits, and finance whatever measures are needed to ensure the stability of the company and the safe operation of its assets in the long term. The respondent gives an example from his experience. At the time of the interview, he had been working in the industry for over 25 years. For 22 years he had worked in a company where the owner had a reactive approach to risk management. A few decades ago, this owner gained sole control over what had been a state asset and established a very authoritarian management style. The owner had only one goal: to make as much money as he could, as quickly as possible. Safety issues were only funded on the basis of crisis management—money was allocated only to resolve the most pressing issues. This attitude to risk management only changed after there had been several accidents. By contrast, for the past three years the respondent has been working for a multinational company that has been managing assets for over a century. Over decades, the owners and management of the company have come to understand that the most economical approach to safety is a proactive one. Assets are considered as long-term investments, and the resources are found to maintain their safe operation, even to the detriment of short-term profit. This ensures stability and keeps facilities running safely; it also attracts investors who are willing to fund reasonable expenditure on the development of industrial facilities to yield stable profits in the long term.

The head of a large power plant states that many electric power companies in his country are owned by private investors. Participating in a rush towards widescale privatization, they have little experience of running such utilities. If critical infrastructure is controlled by such private shareholders, they are often tempted to put financial profitability first, to be sure they receive a decent return in the shorter term. The respondent believes that controlling stakes in critical infrastructure facilities should be state-owned. This will allow development goals to be set in a balanced way, to guarantee the stability and reliability of the infrastructure over decades along with a moderately profitable rate of return for the state. Everything related to critical national infrastructure should have a development plan at the state level over a horizon of at least 50 years, because of the very long payback periods for the equipment. Based on his work experience, this respondent believes that owners need to encourage senior managers to “take the long view” in the operation of critical infrastructure, and be accountable for their decisions even beyond their tenure as managers. The respondent advocates the idea of making top and middle managers jointly responsible for the state of critical infrastructure facilities over a 10–20 year horizon. To do this, their contracts would have to be set up so that even after the contract has expired, they would still be accountable for the decisions they made during their term with a company. This is especially important in the event of a major emergency on critical infrastructure, when the former leaders of the affected facility clearly share moral responsibility with its current managers, but may not be brought to justice. Changing the legal framework to ensure longer-term accountability would motivate managers to think strategically; it would discourage them from trying to maximize short-term profits by pushing equipment to its limits without making the necessary investment in maintenance and repairs.

The head of risk management of a renewable energy producer believes that, if a critical infrastructure company belongs to a state, safety is often of greater interest to the owners than it would be for private investors. There are some private owners of critical infrastructure who will not authorize significant extra expenditure to improve safety, and expect large dividends and constant growth of stock market capitalization. Moreover, lack of available capital can have a negative impact on senior management decisions regarding safety investments. According to the respondent, a company must be rich to ensure a high level of safety.

The executive of an electric power company believes that many owners and senior managers are making a crucial logical error. In their minds, the concepts of “safety” and “reliability” are opposed to the concepts of “profit” and even “production plan”. This is because for them, the term “profitability” refers only to short-term profitability. Any expenditure towards long-term goals is considered as a cost that does not produce positive financial results in the current financial reporting period. If the calculation period is long enough to correspond to the duration of the life cycle of a material asset, then those longer-term expenses can and should be evaluated as a profitable investment. To make such a calculation requires an accurate assessment of the level of risks over a much longer period. Trying to balance the books only over the normal financial accounting period will not give a fair assessment of costs and revenues over the (much longer) duration of an investment project. In other words, safety will only become a corporate priority when the owner focuses on the ownership of the critical infrastructure in the long term. Then, expenditure on proper maintenance will not be seen as a cost to minimize, but as a wise investment: it will guarantee a profit for many decades, and leave the owner with equipment that is still running reliably and safely, and can be sold for a good price. In the energy sector, the shortest-lived facilities have a design life of 30 years. For hydropower plants the minimum life is 100 years. The respondent was asked what prevents this longer-term priority being implemented in practice. He replied that the obstacles are that: (I) that owners see short-term “market” priorities as the only criteria for evaluating effectiveness; (II) that the regulatory framework tends to evaluate the viability of investments and activities on the basis of short-term results; (III) that there are psychological barriers to tolerating short-term losses. To overcome these obstacles you need to: (A) recognize the existence of a multilevel system for evaluating effectiveness; (B) introduce this multilevel system into the regulatory environment; (C) educate executives not only in finance but also in economics; (D) assess the performance of managers against both short and longer-term indicators.

According to the HSE head of a global oilfield services company, there will only be a fundamental breakthrough with safety and the reporting of risk information when owners choose to ensure the long-term sustainability of critical infrastructure to the detriment of short-term financial and industrial results. In order for information on critical risks to be freely transmitted up to the senior leadership of an industrial company, it is necessary to change the way owners see their production assets: priority must be given not to financial and production indicators, but to the long-term functioning of critical infrastructure. If business owners understand that production and financial plans are secondary to the preservation of critical infrastructure assets in the long term, then senior management can create KPIs for the entire company, thus ensuring the long-term safety of production processes and protecting the well-being—and ultimately the lives—of employees. Only then will senior management want to hear about serious problems in the workplace, and feel free to discuss these problems with owners and work together to find acceptable solutions.

In order to radically change attitudes towards the safety of critical infrastructure facilities, owners should tell senior management that: (I) they view the asset as a long-term investment, (II) they are interested in the sustainable development of the enterprise, and (III) they are ready for the additional modernization costs that this development entails.

Owners will then need to work with senior management using these fundamental values to set new KPIs around industrial safety. If owners are willing to allocate resources to prevent critical problems, then their managers will follow suit and begin to pay attention to these safety issues. This changed view regarding safety in the minds of senior management will lead over time to a change in attitudes and working practices throughout a company.

Risk disclosure in public and private companies

Some of the interviewees maintain that it is easier for senior management to discuss critical risks with shareholders in private companies where there are only a few owners than it is in public companies. Large strategic shareholders usually want to know about serious problems or risks in their business that might lead to large losses. Their logic is very simple. “No one needs a dead cow”: if you own a cow, you want to know when it gets sores on its udders, and treat them so that the cow keeps giving milk in the long run. For an effective ongoing discussion of critical risks, the most convenient situation is when a company has one majority shareholder. Then senior management can stay in touch with the shareholder online, and raise any developing situation to authorize the resources in good time to deal with it. Any critical risks should be confirmed, preferably by an independent examination. The level of risk, possible consequences, and a risk reduction plan—all should be explained in accessible language, especially if the owner is not a specialist in the industry.

For example, one of the interviewees, the HSE head of a large state oil company, previously had experience working in a medium-sized private oil company, with a single multi-billionaire owner. The owner was very interested in preserving and improving his asset. His company had the largest business margins of any oil business in the country. Any major accident involving the company’s infrastructure could well lead to the loss of a lot of business, because the state authorities and some competitors had a rather biased and negative attitude towards the owner. The respondent was aware of this situation, and when he was appointed as the HSE director, he made the case for the investment of approximately US $1 billion over several years in the modernization of critical equipment, industrial safety and labor protection. After a detailed study of the proposed safety improvement program, the owner eventually decided to finance it. This shows clearly that, if owners understand that there is a serious chance of losing their assets through industrial accidents, they will be willing to invest significant money in safety.

Several interviewees note that in terms of setting targets, family-owned companies have a longer-term overview in relation to their business, and are not prepared to risk long-term stability just to generate short-term income. Family companies tend not to have annual contracts, there are no short-term bonuses, the turnover of managers is slower, and so on.

It is much more difficult for senior management to disclose the critical risks of public companies where there are a huge number of minority shareholders. These will often be speculative investors who expect senior management to issue a positive annual report, with constant growth in stock capitalization and regular payment of large dividends. If they need to respond to critical risks in this situation, senior management will have to publicly disclose the situation in the workplace to get significant resources from the board of directors to deal with the risk. Highlighting critical risks in this way will likely damage a company’s capitalization, attract the attention of regulators, and raise questions about the competence of senior management. However, according to one respondent, if the CEO of a public company is a professional with a strategic vision, he/she will nevertheless publicly disclose risks, look for resources to alleviate problems and take preventive measures to minimize risks. Such a CEO understands that it is better to spend one dollar on risk management today than a thousand dollars on clearing up an accident tomorrow.

Discussion of the objectives and long-term development plans of a critical infrastructure company

The head of a large power plant (middle management) expressed the opinion that for senior management to work effectively, they need to understand the criteria by which their performance will be evaluated by owners over a given period. The first step in creating a long-term plan for the development of a critical infrastructure company is to ask the state and the owners what their goals are for a company. Then they need to ask, “Where do you want to be in, say, five or ten years’ time?”. The objectives will probably include: (I) infrastructure reliability; (II) a certain level of energy output (production); (III) a certain level of profitability; and (IV) some other parameters at certain points in time. Then, within this framework of goals and targets set by the state and the owners, strategic strengths and weaknesses of the existing critical infrastructure can be evaluated. The CEO and senior managers need to explain the consequences of the implementation of certain decisions, showing all the pros and cons and the resources required for each decision. In this way, they will have carte blanche from state and owners to implement specific strategies at given time intervals. Having from the outset established the criteria by which their performance will be assessed, and the targets they need to meet, they can pass appropriate instructions down the corporate hierarchy to their subordinates to set things in motion.

The HSE vice president of an oilfield services company believes that it is enough to change corporate goals and objectives to encourage people to act differently; nevertheless, these new goals must be agreed with the owners. As soon as the goals—and the results expected from implementing them—are clearly defined, many safety priorities will also become clear. It will be understood that the owners have chosen to prioritize the reliable long-term operation of the sites over short-term profits, and that they do not want to make “dirty money”, or “a fortune on the corpses of workers”. There is no single list of universally applicable KPIs to achieve this. They need to be developed individually for each enterprise based on the national and cultural characteristics of workers, the level of risk, and the corporate objectives in relation to each production facility. Senior managers should discuss with their mid-level subordinates the new values and goals they have agreed with the owners and shareholders. By discussing the new priorities with managers at various levels and even with ordinary employees, leaders can ensure that all employees understand how these priorities can inform and be integrated into the work of an entire industrial company.

Finding a balance between financial profit, production targets and safety

According to the HSE director of a petrochemical company, the first step towards changing corporate priorities is to introduce management models based on the concept of sustainable development, where the financial, social, and environmental priorities of an organization are balanced.

In response to the question of how, in practice, to put safety above other corporate goals—profit, production plan, and so on—the HSE director of an electricity company maintains that there should always be a balance between safety, finance and production. If one of these three elements takes precedence over the others, there is trouble on the way. For example, if profit takes priority, this can threaten the safety of the production process: equipment may not be as regularly maintained, but aggressively pushed to its tolerance limits. On the other hand, if preventing the over-exploitation and potential failure of production equipment becomes the most important corporate priority, then profit could be lost because production capacity is underused. If industrial safety is the main priority, then some production operations may be halted due to a relatively minor danger to employees.

The task for senior management is to support managers at different levels in conducting daily risk and opportunity analyses to find an acceptable balance of risks. The senior management team can set the example in finding such a balance, by regularly gathering the function managers who oversee these issues and using their knowledge to help reach a consensus between financial targets, production plans and safety. A situation should never arise where the respective managers cannot come to an agreement. Leaders at this level are paid not only to perform their own function in isolation, but also to work together with others towards a unified group objective. Gradually, this practice of reaching consensus will cascade down the hierarchy so that lower-level managers work together in the same way. Ideally, people lower down the ladder will continue to work with their colleagues on the shop floor to find a consensus, without always requiring more input from senior management. To do this, they must be given both appropriate authority and resources. For instance, managers at various levels should have the authority to stop unsafe operations without jeopardizing their career and be able to suggest adjusting financial and production plans if, in their opinion, these cannot be achieved without serious violations of process and occupational safety.

A senior HSE advisor and human factors specialist in the oil and gas industry offers an interesting example from his own practice. He heard an employee say, “We are not an oil and gas company, we are a safety company”. Colleagues immediately perceived this statement in a negative light and responded, “Rubbish! We are an oil and gas company, let’s be honest about it. The reason we exist is to make money for the shareholders, for the organization and then ideally that filters back to us in the workforce”. According to the interviewee, the idea of operational excellence, whereby all aspects of a company’s operations are brought together under one roof, is far more accurate than claims that safety is a top priority for an industrial company. The respondent considers it disingenuous to pretend that operational safety can completely take priority over financial results. The concept of operational excellence recognizes that a company must be profitable or it will fail, and all employees and managers will be out of work. At the same time, a company can manage its operations in such a way as to reduce safety risks to an acceptable level. The respondent believes that companies should be honest in what they promote within the workforce. Therefore, it is better for senior managers to openly admit: “We are focused on creating an effective organization. This means that we are constantly looking to improve production operations and balancing them against costs. At the same time, we are focused on maintaining excellent standards of labor protection, industrial safety, and environmental care. We are also focused on minimizing lost production time”. Most employees of a critical infrastructure company will accept an honest message like this more favorably than statements claiming they only care about safety and employee wellbeing, when this is clearly not the case in practice.

The Board Director and manufacturing manager of a chemical company gives an example of a balanced model in terms of his company’s operating philosophy, which can be summarized as follows: “our vision is to be one of the safety leaders in the industry and be the preferred supplier for our customers at the lowest possible cost”. The operating philosophy of this company covers three main areas: safety, customers, and cost. Everyone in the organization understands the order of priorities in choosing solutions: first operational safety, then customer service, and finally achieving the lowest possible cost—but without compromising safety and customer care.

The former head of a mining regulator believes that an unprofitable company will not last long. Therefore, there must be a balance between the profitability of a business and the safety of operations. However, there is no justification for focusing solely on a company’s profitability. The respondent cites the following example. The annual report of a coal mining company was analyzed to see how much content was devoted respectively to production, environment, and safety. It turned out that 99% of the report was devoted to production and finance! Such an imbalance immediately identifies the business priorities established by that company’s board of directors and senior management. This is not to say that an industrial company’s financial profitability and production efficiency should be ignored. However, it is necessary to balance these factors against safety issues. A practical example of implementing such an integrated approach is the way some coal mines operate: the day and evening shifts work on mining the coal itself (i.e., production) whereas the night shift deals exclusively with mine safety issues such as ventilation, dust and explosion protection, repair of equipment, and so on.

A risk management consultant specializing in oil and gas also believes that, if a critical infrastructure company reduces its profitability, it will eventually cease to exist, and employees will lose their jobs. Thus in order to sustain an organization, senior management must balance the operational safety against the overall profitability of production. The respondent noted that in a critical infrastructure company, it is essential to make risk management a calculated process, where risk is balanced against profits. If a company does this more successfully than its competitors, it will outperform them, raise company profits and have more capacity to expand.

The HSE manager at a utility services company notes that there are examples of companies with class-leading performance in industrial safety and labor protection that also have better financial performance than their competitors. There are also examples where wealthy companies with smart (and costly) safety policies have the lowest frequency of risk incidents. In the company where the respondent works, risk managers try to explain to all managers that safety improvements lead to improved processes and a reduction in production faults, which positively affects revenues. According to the respondent, this approach is beneficial for everyone, and several key company targets in the field of safety, finance and production are simultaneously achieved. The message that investing in safety improvements can increase the profitability of an organization and reduce losses from accidents should be constantly conveyed to all members of an organization.

The HSE manager of an oil company believes that investment in improved safety standards has a positive impact on a company’s share price and reputation, as accidents and incidents are damaging to both finances and reputation. Senior managers are very sensitive to these issues. Therefore, risk managers can use this argument to convince senior managers to make adequate and timely investments in production renewal, industrial safety, and labor protection.

The HSE manager of a company that uses hazardous chemical processes in its production believes that a problem can arise when separate departments in a large industrial company have different perceptions of the safety of the enterprise. For financiers, financial efficiency and stability are the most important for the security of an organization. For production units, safety equates to the adequate operation of equipment. For manufacturers, investing in preventive maintenance and carrying out routine repairs is the basis for safe operation. In the perception of financiers, such costs are not always justified because they impact the financial results and therefore the stability of a company. But in their focus on financial stability, financiers often lack full appreciation of the critical production risks of an enterprise. Senior management tend to listen more to the opinions of financiers. Thus, manufacturers must work hard to explain to financiers the value of timely investment in the repair and modernization of equipment. Financiers should be encouraged to become familiar with the production process and employ risk models to assess the financial damage a company could sustain if equipment fails and fixed assets are lost. This should give them a broader and longer-term perspective and temper their ambition to achieve financial results at any cost. Senior managers should take responsibility for coordinating this interaction between financiers and manufacturers. By organizing regular meetings between the two departments, and demonstrating the decision-making principles they wish to encourage, leaders can bring these potentially antagonistic groups together to listen to each other, negotiate, and find mutually acceptable solutions that will benefit the organization.

The chief risk officer of a national power grid company believes that, if the chief financial officer is too influential in a critical infrastructure company, this can have a negative impact on safety and risk management. If senior managers always focus on costs, this can stop them taking appropriate and timely decisions around safety.

The HSE manager of a metallurgy company believes that it is important for the leaders of a company not only to be in communication with production units, but also to keep track of decisions being made by the departments handling planning, economic and financial strategy, and accounting. Sometimes, their mistakes in setting production and economic indicators put production units under pressure to achieve impossible business targets. Senior executives should harmonize the production plans and financial goals of the enterprise through regular peer-to-peer discussions involving all departments of a company. They should explain to employees how mistakes that seem to be unrelated to the production process could lead to serious problems at a company level. And just as they are promoting the value of greater openness about production risks, problems, and errors, they should urge the directors of the planning, economics, and finance departments to share any uncertainty or error in their area of responsibility. In all sections of the business, workers need to understand that they will be appreciated, not punished, for sharing problems or mistakes. Only by working collaboratively in this way can the issues be fully resolved to the benefit of the whole company.

The HSE head of an oil company explained how they have developed an integrated “safe production” program in their company to remove the conflict between financial and safety priorities. Senior managers are encouraged to assess the existing risks of a company and to forecast in detail the likelihood of their occurrence and the possible consequences. If these are not calculated to be significant, then priority is given to production indicators. If, however, the likelihood of a given risk causing significant damage is high, then safety issues are prioritized. It is crucial for the leadership to have such risk assessments operate at all levels of the corporate hierarchy—right down to the shop floor—so that managers at every level have the authority and resources to set priorities and act appropriately to the risk levels involved.

According to the HSE manager of a metallurgy company, metallurgy is a highly competitive industry. Any accidents and incidents occurring within these facilities are carefully analyzed by major customers, who are often worried about the possible disruption of metal or ore supplies if any incidents were to occur at a production site. It can take ten days even to assess the scale of the damage after an accident, and a full resumption of production can take from six months to several years. Therefore, when calculating the costs of potential incidents, it is important to keep in mind lost revenue from downtime and under-production. In other words, organizations that do not invest in safety are not investing sensibly in the business. Long-term safety and profitability are interdependent. When there is no investment in safety, this is a big threat to continued profits in the long term. However, the only way to guarantee 100% safety is to stop production completely and close the site. On a day-to-day basis, there has to be a reasonable balance between safety and income generation. If you are dealing with an insignificant risk, income can take priority. With a potentially critical problem, it is important to focus on safety rather than immediate income.

The managing director of a gas distribution company believes that, if a temporary safety deficit does not lead to big financial and production problems, then financial priorities may prevail over safety. To inform the decision-making process, it is essential to constantly evaluate the likelihood of serious incidents. Critical risk accidents do generally have a low probability of occurrence, and when an operation has been running for decades without any problems, it can “blur the vision” of managers and create the illusion that everything is perfect and nothing serious could ever happen. The challenge is to keep risk assessments as objective as possible, basing them on professional analysis by specialists, managers, and external experts of the likelihood of occurrence and the severity of the possible consequences. If the likelihood of an accident is high, then of course it is essential to prioritize safety over financial and production results.

The head of the HSE department at an oil company believes that safety should not be considered as one among a number of company priorities, as priorities need to often change. It must instead be treated as a core company value, as these are generally fixed. If a company recognizes that safety has inherent value and senior management work to have that value in mind in every aspect of a company’s activities, then safety will always remain a focus of executive attention. The respondent also noted that the safest way for a critical infrastructure company to operate is to do nothing at all and stop all production. Obviously, this is absurd, as a company also exists to provide a service or product and ideally to make money too. It is important to keep in sight “how” a company operates and not just “why”.

The vice president of an international oil company expressed a similar view. If safety is a priority rather than a value for a company, then senior managers are likely at some point to shift priorities, at least temporarily, and put financial or operational results first, with safety relegated to an afterthought. However, if a company holds safety as a value, then this will remain as a fixed, fundamental principle even if corporate priorities shift.

A lead safety manager working mainly in oil and gas also believes that using the word “priority” in relation to the role of safety in managerial decision-making is inappropriate, and that managers should not talk in terms of “safety first”. Instead, safety should be part of a company’s integral business values. Thus, safety functions are a key operating factor that must be considered every single time any management decision is made. Managers should not have the option of relegating safety issues down a list of priorities. Rather, safety considerations should be built into the process of all managerial decision-making. According to the respondent, there are many examples of the successful integration of safety issues into the decision-making process of critical infrastructure companies.

It is worth noting that most respondents believe that the optimal approach to establishing priorities within a critical infrastructure company involves finding a balance between safety, operations (production) and finances. However, respondents from the nuclear power industry firmly believed that safety should be an absolute top priority for a critical infrastructure company. This is perhaps not surprising, especially given the stringency of regulatory requirements for nuclear safety. Moreover, the potential costs of maintaining a nuclear power plant (NPP) in a safe operating condition are likely to be thousands of times lower than the damage resulting from a major accident, and the subsequent clean-up. For instance, the total damage caused by the Chernobyl accident amounted to US $1 trillion (in 2022 prices).¹ It is estimated that the clean-up after the Fukushima Daiichi nuclear accident will run to more than $200 billion over several decades, and this does not take into account the costs of the immediate forced shut-down of all of Japan’s other nuclear reactors (many of which remain closed to date) and the import of fossil fuels into the country for many years after the accident.² No wonder then that nuclear industry leaders view operational safety as the top corporate priority of their organizations.

The president and CEO of a nuclear power company believes that in his business, safety should be more important than financial results. However, at the same time, one must be realistic and understand that the corporation has to earn enough revenue to finance its activities.

A consultant in nuclear safety with extensive experience in NPP operations offers another perspective. If safety is considered as an element of sustainability rather than a cost attribute, it radically shifts the viewpoint. The concerns are both the safe operation of the nuclear power plants and the issues of personnel, corporate and financial safety. In the organization where the respondent worked, he went out of his way to associate optimizing safety with maximizing resilience and long-term security. He maintains that associating safety directly with sustainability, rather than with financial costs, is the key to overcoming the previously described obstacles.

A safety consultant with managerial experience in oil and gas, chemicals and mining notes that continuous improvements in the safety of the nuclear power industry could potentially make some NPPs unprofitable to operate. Nevertheless, the respondent considers that nuclear power has very important benefits for the public at large. Thus the issue of nuclear safety becomes not just an economic, but also a wider national political and security issue. This would seem to justify the state subsidizing these companies to ensure the safe operation of NPPs for the long-term public good.

Focus on making long-term contacts with senior managers managing critical infrastructure

Senior managers have employment contracts that can affect their willingness to receive bad news from subordinates.

According to some respondents, the ideal tenure for senior management managing critical infrastructure should be at least five years. This allows enough time for a manager to deliver effective solutions for the problems that generally exist within an average company, as well as to develop strategic plans for improvements. The head of a power plant recommends five to seven years as the optimal term for a labor contract for senior management, as this allows them enough time to solve serious problems in a critical infrastructure company. The HSE manager of a metallurgy company believes a period of five to ten years is optimal for senior management to solve the serious infrastructure problems of a large industrial company. The head of the HSE department at an oil company recommends signing an unlimited contract with a manager who operates critical infrastructure, so that the manager does not limit his work plans to a short period, but thinks strategically, linking his fate with this company for years, or even decades. Some respondents agree that in principle an open-ended contract is beneficial for a manager. However, a manager’s term of office is rarely indefinite because there is legislation in place in many countries to allow a company to dismiss a senior manager very swiftly if any serious mistakes are made.

Some respondents feel that the annual bonus system easily leads senior managers to set dangerous goals, where profitability and income are prioritized over safety. A better method for encouraging managers to boost the long-term sustainability of critical infrastructure enterprises is to provide their bonuses in the form of company shares that can only be sold after five to ten years. This ensures that the current decisions of senior management are more likely to take account of the long-term success of a company. Some respondents went further, suggesting that the system of paying regular annual bonuses to senior management should be abandoned altogether. Instead, the bonus payments could be spread over time. For example, 30–40% of the bonus can be paid for the current year and 60–70% for the next four years, encouraging senior management to work towards the sustainable development of a company over the long term.

The HSE director of an oil company believes that equal priority should be given to safety as to achieving production and financial targets. He observes that people focus on both what is measured and what is rewarded. If 90% of a senior manager’s annual bonus is based on achieving production and financial KPIs, and only 10% is based on meeting safety targets, then this is bound to influence their work priorities. Similarly, if managers believe that a career promotion is likely to follow success with production and financial targets rather than safety achievements, their priorities are likely to follow suit and safety will be pushed down the list.

While this is not directly linked with the question of senior management contracts, the HSE director of a metallurgy company also highlights the problem of short-term contracts for contractors which carry out critical infrastructure maintenance and repair work. If they are retained only on an annual contract, they will be less likely to invest in equipment or personal professional development, because they may not even be working with the company next year. Therefore, this respondent advocates that the optimal contract period for contractors who operate critical infrastructure is between three to five years.

2 Recommendation No. 2: Senior Management Should Be Approachable About Problems, and Have the Desire and Resources to Control and Mitigate Identified Risks

Management need to have a genuine desire to hear about problems in production and then solve them

Several leaders observe in their interviews that subordinates work according to how senior management manages them. In other words, the management system in a company determines the actions of employees. Everything comes from leadership. Employees will report problems if managers want to hear them. Managers should want as much information as possible about potential risks. If the management support is not there, all other interventions are doomed to fail. The only way to improve the situation regarding feedback in an organization is if leaders have a genuine desire to hear about risks from their subordinates—and communicate this to them—and then take decisions and allocate resources to stop risk escalation. It has already been established that senior managers should have the necessary support—moral and practical—from owners and shareholders to implement risk reduction measures. Having secured this, they should then take the initiative to implement cultural change, dismantling any system of penalties for reporting risks or incidents, and making it clear that they actively want to hear about problems. Only then will employees, inspired by the evident commitment of their leaders to a safer workplace, be willing to report the risks they have encountered.

Several respondents stress the importance of leaders being honest and authentic. When they claim that safety is one of a company’s most important values, they must carry conviction if they are to persuade employees to openly disclose risks and problems. Senior staff should sincerely believe in what they are doing, follow through with their decisions and act with enthusiasm and sincerity, to become a role model for their subordinates. As a rule, managers should behave in the way they want their employees to behave.

The HSE head of a mining and metallurgy company believes that the creation of risk information transmission systems is possible only if senior management actually want to receive the information. If they do not want to hear any bad news from their subordinates, there is little point in investing time and money in setting up a new system.

The HSE manager of a metallurgy company believes that, to start an effective process of reporting risk information from the bottom up, the owner and senior management must want to genuinely hear about problems and have the capabilities and resources to solve any important issues that employees bring up. If a manager simply puts out an order that all employees must reveal risks, few people will be convinced that there is any sincere desire from the top to hear about them. In this regard, the leadership of senior management is obviously very important. The interviewee explains that, if he were the CEO of a company, he would start with himself. He would pursue a policy of open discussion with his subordinates, and assure them that he and his team were not afraid to receive information about problems, and were ready to solve any that were identified as quickly as possible. In addition, he would convey to all employees the possible consequences of concealing risks: a major accident could ensue, leading to the deaths of many people, the bankruptcy of the enterprise and the consequent loss of thousands of people’s jobs. He would begin by making regular visits to production sites and creating frequent opportunities to talk with ordinary workers about operational matters. People must see the genuine desire of top officials to understand the problems and solve the issues. He would constantly be asking: “Why are we operating the equipment like this? What can we do differently to work more efficiently?”. Such questions are necessary to encourage employees to discuss the finer points of the industrial process and indicate the advantages and disadvantages of the current approach to production. No single senior manager can expect to understand all production issues—to fully grasp a problem they need to discuss the details with the expert employees who are running the equipment on a daily basis, and can give a detailed explanation of existing problems and how they could be solved.

©Dmitry Chernov, Ali Ayoub, Giovanni Sansavini, Didier Sornette, All rights reserved

A consultant in nuclear safety with long experience in nuclear power plants operations has a similar opinion. He believes that the first step is for the leaders of an organization to show a clear willingness to receive feedback from subordinates about existing risks and problems, which should be seen as a vital source of information to an organization. For this to happen, leaders must be trained to lead: where necessary, they can be offered training on how to change their language and behavior in order to be more effective in their role. Once the behavior of senior managers begins to change, then it is time to move on to do the same for middle and lower managers, and then finally educate the workers. The respondent has experience of implementing new risk management systems at more than 250 industrial sites, in 40 countries and 10 different languages. They worked with senior managers, who then demonstrated to their subordinates the value of this new way of acting and communicating. According to the respondent, when implementing a project to improve the quality and speed of risk information transmission, changes should always begin at the highest level of an organization’s management and then gradually work down the corporate hierarchy.

The HSE director of a mining company believes that when managing change, it is crucial that the change is clearly shared and supported by senior managers. Only when managers are actively involved in implementing change will employees be convinced that this is an inevitable and welcomed process. It is essential that managers truly believe in what they are doing and that they are genuinely interested in progress with problem solving. Employees feel it instinctively when leaders are being insincere. For the ideas of change that the leader is preaching to really “catch fire”, they must carry conviction. However, this is only the first requirement. Many leaders declare that they want to know about the key problems of an organization and believe it is important for them to know. In reality, as soon as solutions to these problems turn out to require a critical reassessment of their own past decisions, or the allocation of huge resources, even leaders who previously seemed committed to change can react negatively: they make it only too clear to employees that they are unhappy about the news, and it is the fault of employees who should have handled the situation independently. Being an adherent is not enough: senior managers need to demonstrate in practice that, even when they hear about the most difficult problems, they will still allocate the necessary resources and be part of the solution. Another instance of the need to “walk the walk, not just talk the talk” is that employees cannot be expected to strictly comply with safety rules if managers themselves do not. For example, there was a case when the vice president of one of the world’s leading oil services companies refused to buckle up when driving in a corporate car. In the end, he was fired. The board made sure his dismissal was reported to the entire company, to demonstrate that everyone is subject to the same safety rules, and that managers should set the right example for other employees. If the top brass of a company are acting according to newly established principles, their example will communicate the commitment to change better than any statement. Imitation is common among employees as in all human groups—if the leader starts to do something, subordinates will follow suit.

The head of an oil production facility gives another example. Some companies are introducing incentive systems for the detection and reporting of near misses, hazardous actions or conditions, usually reported on so-called “STOP [Safety Training Observation Program] cards”. These systems are aimed at gradually changing the mindset of workers by having them constantly analyze their actions and those of their colleagues to identify and respond to potentially dangerous actions and working conditions. Unfortunately, in many cases, these systems do not work or are not very efficient. This is mainly because there seems to be little real management support for implementing them. Sure, the leadership verbally support the system—but in reality reported cases are not followed up, and there are no real changes to a company’s working practice. Often the implementation of the system is not a high priority for senior management. The system is spread down the hierarchy, slogans for employees are published, but none of the senior managers is ever truly interested in how the system works in practice. For the new system to become ingrained, it is imperative that they respond to the problems flagged up by employees, but senior managers often show little interest. As a result, even though the STOP card system is formally running in a company, it does not actually have much effect in reducing accident rates. If a CEO is not making time to examine the most significant STOP cards from the production sites on a weekly basis, and making decisions based on them, the system will simply never work. If there is no interest from the top, then for the middle and lower management employees there is little motivation to actively participate. They will copy what senior management do and do no more than pay lip service to the scheme.

The HSE manager of a production company which uses hazardous chemical processes believes that a company’s management should be willing to immerse themselves in production problems. They must have the resources to make the necessary changes, and make sure all subordinates understand that they want to receive accurate, unvarnished information from the field. Senior management can offer subordinates real motivation—if they receive disclosures of objective information, they will make better and more appropriate decisions. For example, subordinates will be provided with the resources they need to deal with the risks they have reported in their area of responsibility. Senior management can then declare: “If you let us know the real situation at the site, we will give you the resources you need to solve the problems you have identified”. Subordinates will then have a real interest in disclosing the most critical risks, because management have promised that these risks will be addressed. The respondent has had the opportunity to work under the leadership of three CEOs over the past ten years. The first appeared to welcome all feedback, but in fact made decisions only based on his own experience and opinion. The second delegated all decisions to subordinates and tried not to make any himself. The third tried, whenever he had been informed of a problem, to carefully listen, investigate and then decide about solving it within an agreed timeframe. Unsurprisingly, time shows that the third leader is the most successful and productive in the longer term.

A single team of senior managers

It is important that all senior managers feel part of a single team that shares responsibility for managing a company.

It often happens that the senior management team is very fragmented. Each of them wants to be responsible only for their own functional block. Some do not want to share responsibility for the overall result or for solving problems that affect the whole company. It is important, however, that the whole team understands and is committed to the value of feedback about existing risks, so that they can inspire their immediate subordinate leaders. They, in turn, can then motivate lower management and ordinary employees to give feedback in the same way. There should be complete consensus across the senior management team about the need for change in the way they handle the problems revealed by subordinates.

The HSE manager of a metallurgy company believes that it is important for the CEO to be surrounded by like-minded people: people who will pursue the new policy of openness every day at their management levels, and be ready to shoulder their share of the responsibility for solving the problems that come to light. Subordinates will copy the actions of the management so that after a while, lower and middle managers will also be willing to pursue such a policy of openness, at their own level and in communication with their subordinates.

According to the HSE vice president of an oilfield services company, any alteration of corporate behavior must begin with senior management, and then move to successively lower levels. If senior management do not really want to move on, and instead leave it to external consultants to change the minds of ordinary employees, it is nonsense to talk about meaningful change in a company because people will not believe it. First, senior management need to change—only then will subordinates follow.

In the transition from a reactive to a proactive relationship as regards risks, the communication of risk information improves because all members of every team at every level of an organization are consciously identifying, transmitting, and controlling risks.

Positive examples of owners wanting to hear information about risks, and being ready to allocate the necessary resources to prevent critical situations from developing

The present authors would like to cite two practical examples where owners have been willing to hear about risks in critical infrastructure enterprises, and to make systemic decisions to tackle them.

The first example is from a company whose production involves many hazardous chemical processes. The example was shared by the head of HSE. During an emergency, the senior management were faced with the fact that news of the incident had taken much too long to reach them, and that by the time it did it had been distorted. A fire had broken out at one of a company’s key industrial sites in a region remote from headquarters. News of the fire spread very quickly through regional and national press, and was also quickly published in the professional media. This prompt media response was caused not by the company letting the press know but by the actions of the state emergency services. State firefighters dealt with the incident, and reported on their quick response to people living near the production site, the regional authorities and journalists from various media. However, no news of the incident made its way from the site to headquarters. The owners of the company and some of the board of directors found out about it through the professional media, and naturally they had some questions for senior management about exactly what had happened and why. Senior managers were mortified and furious: how could owners and board members have found out about the incident before they themselves—supposedly in charge and certainly accountable for the company—had heard a word?

Unsurprisingly, the whole episode damaged the reputation of the senior management in the eyes of the owners. However, there was a benefit in that it triggered a sea change in the company’s approach to communication about incidents and critical risks. Managers came under pressure from the owners to demonstrate that they had full awareness of what was happening in the organization on their watch and, in order to show this, they needed rapid and clear information from their production sites. The owners and the board made it clear to senior management that, from now on, they expected to be informed about any deaths in the workplace—whether the casualty worked for the company or one of its contractors—within an hour of the incident, in any region anywhere in the world. The company called in a specialist who had managed the informational response of state authorities during and after emergency situations, who shared his experience of how information about incidents travels vertically in government bodies. This specialist proposed a keystone for the organization’s informational response to emergencies: “The main thing for dispatchers at the site in the first minutes after an incident is to share information about what has happened with all levels of company management”. In his experience, managers and supervisors who were involved in the lead-up to an emergency tend to distort information about the causes and details of the incident. Therefore, senior management must establish internal communications so that they can rapidly get information about emergency situations from various sources, including recordings from surveillance cameras installed near the scene. All this information should be promptly communicated to managers immediately after an emergency. The consultant also defined new criteria for site managers as to what constitutes a crisis. In the event of such a crisis, dispatchers would simply press a specific button on their control panels that would immediately transmit information about the incident to all recipients included in the contact list, using SMS, email or auto redial—a voicemail that cannot be stopped until the full message is heard. Immediately after an emergency, the information available at the bottom of the corporate hierarchy—workers and dispatchers at the emergency site—began to be transmitted, not only to local specialists involved in the emergency response, but also to company leaders thousands of kilometers from the scene. This helped to reduce or eliminate the distortion of information about emergencies as it passed through the various levels of management, and meant that the company could start dealing with the emergency promptly using the knowledge and resources available at all levels of the hierarchy. The only problem the company now faced was that, for the dispatchers on site, it was difficult to immediately judge the scale of what was already happening or predict how serious the emergency might become. The fact is that at the very beginning of a crisis, dispatchers do not have enough detailed information, and their assessment of the scale of the emergency can very quickly change for the worse because incidents in the chemical industry are unpredictable and difficult to respond to. Therefore, any immediate information that company executives receive about a crisis in the workplace will be incomplete and unstructured. Only when the details are clarified can the true scale of the crisis be determined. Nevertheless, this was a breakthrough for the company. From then on, information about a crisis occurring thousands of kilometers from headquarters has been able to reach senior management within a few minutes of its onset. As soon as managers at all levels know about an emergency, each is tasked to immediately collect information from their subordinates about the developing situation and any measures taken and be ready to report to the senior management of the company within an hour. With executives at various levels reporting upwards in this way, senior managers can gain a more detailed and accurate assessment about the situation, as they are also utilizing a range of alternative channels. These new communication protocols have led the whole company to recognize that distorting information when reporting to superiors is now pointless, because superiors have many other ways of cross-checking the facts. In addition, the company is now committed to releasing a first report about the incident to the media within an hour and it is obviously critical that this public statement is based on the best objective information that can be collated across all the various departments of the company. Before making any statement to the media, senior management should also be advised of how government representatives and media are already interpreting the incident, in order to understand the context in which they are delivering the company’s up-to-date account of the emergency.

After the deaths of several contractors’ employees at company sites, it was the owners who asked senior management for details of the contractors that the company was hiring. Their logic was simple: if a chemical plant is destroyed, it is equally relevant to the business whether it was a company’s own personnel or those of the contractors who were killed, or were responsible. The owners began to insist that senior management should not necessarily select the cheapest contractors, but only those who also have a good safety record. Following this requirement, the selection of contractors in the company was completely transformed. The owners had demonstrated to senior management that, for them, pursuit of short-term profit is not as important as ensuring workforce safety and the long-term security of their assets. The open discussion of the critical risks of the enterprise and ways to reduce them was only possible because the owners and shareholders of the company made this choice. They showed that they were not just paying lip service to the idea of safe and sustainable development—they are ready to allocate significant resources to tackle the critical risks of the enterprise. The whole company very much appreciated this new approach from the owners. Moreover, as soon as they recognized that the owners were genuinely interested in discussing critical risks, many top and mid-level managers began to submit long-standing and extremely important problems to the risk management committee that they had previously held back; the owners now attend this committee on a regular basis. Some long-standing problems submitted to the committee had not previously been resolved because senior management had been in too tight a financial position: they were committed to delivering a certain profit and did not have the authority or resources to go beyond the approved cost estimate. Obviously, most of the projects submitted to the risk committee have a negative impact on short-term profits—but unless risk problems are solved, a company may face huge losses in the event of an emergency at a production site. Now that the owners have agreed on the allocation of additional resources outside the approved annual plan if there is a clear case for them, the company can openly discuss many issues that previously could not even be raised. It is worth noting that only critical risks are brought to the owners for consideration, so as not to create an overload of information noise in the form of proposals to address issues that are not essential for improving safety. When projects are proposed to the risk committee, complex technological issues are explained to the owners in the context of increasing the long-term sustainability of the entire business. Summarizing, this company’s experience clearly demonstrates that feedback from employees to senior management on the critical risks of the organization will only be effective if the owners and senior management want to hear it, and are willing to allocate resources to solve the problems reported.

The second positive example was given by the HSE manager of a metallurgy company. This company is an industry leader and the most profitable metallurgy company in its country. The respondent shared his experiences in the company gained over more than two decades. Throughout this time, he has never seen the senior management ignore information from their employees about a serious safety or production issue. The fact is that the owner of the company is focused on the long-term sustainable development of the business. It is more important to him to increase the value of the asset in the long run than to make an immediate profit. Any serious problem at a production site is seen as a threat to the sustainability of the company. Thus, problems need to be quickly identified and comprehensively addressed. The owner has stated many times that, if a serious incident occurs, then it must be the result of systemic shortcomings in the company. He also believes that, if a worker is under pressure to violate safety procedures, then there is something wrong with the organization of the production process itself. Therefore, the causes of any incident should be investigated and established. The company must systematically resolve whatever shortcomings come to light, so that workers are not motivated to take similar risks in the future and incidents do not happen again. The owner insists that, if a safety problem occurs at any of the sites, senior management should raise it at headquarters level in order to systematically resolve the issue throughout the company. He maintains that, if senior managers are not actively looking for safety problems at the production site—and then solving them—they are not meeting their responsibilities. As a result, the management team he has appointed is not afraid to hear about problems and get involved in solving them, because they know the owner is ready to finance whatever measures are necessary to control critical risks. Senior managers at headquarters regularly review the reports of every incident at the production sites. They discuss the causes of incidents not only with the HSE department, but also with middle and lower managers at the site where the incident occurred. In recent years, billions of dollars have been invested in the modernization of equipment and the construction of new production facilities.

Over his two decades of work at this metallurgical enterprise, this respondent has never encountered a site manager (middle management) who did not want to hear about problems, or hid a critical issue from senior management. It is not advantageous for mid-level managers to hide risks: if there is an emergency at the facilities entrusted to them, it could stop production for many months, bring enormous damage to the enterprise and put an end to their career. It is far better for them to identify critical risks and bring them up with senior management and the owner, because the resources needed to solve complex problems are usually many times greater than those at the disposal of middle managers in the field. In this company, at the level of middle and senior management, problems are never hushed up—on the contrary, the main owner and senior managers take pride that problems are identified and resolved quickly. According to the respondent, all this is a result of the values of the principal owner, who has emphasized many times over that he wants to achieve constant improvement of his asset. Accordingly, the management team are set up to proactively resolve issues. It is noteworthy that, when holding meetings at the production site, senior managers start by discussing safety issues, only then moving on to issues of productivity and finances. By addressing the agenda in this order, they are showing middle and lower managers the true priorities of the company.

According to the respondent, at the site where he works, the only organizational level that can possibly conceal problems is the lower tier of managers and some ordinary employees. However, not all employees are the same. Some trust and welcome the constructive attitude of middle and senior managers, and willingly reveal risks; others, perhaps for their own personal reasons, are not always willing to talk about the problems they have encountered.

The respondent summarized the owner’s motives regarding his company.

• (I) The owner is a professional metallurgist with deep knowledge of the field, who understands production processes very well and is deeply immersed in the details. You could even say that he loves his company and wants to see it develop to the highest world standards. This is akin to the attitude of a fulfilled professional towards their work—when money beyond a certain level is no longer as important as achieving something outstanding in their chosen field, and their reputation as an individual.

• (II) The owner is focused on the long-term development of the company and is not concerned with achieving short-term financial gains. Therefore, most of the processes in the company are planned and delivered over years, rather than being a race to hit short-term targets. Billions of dollars are constantly being invested in three areas: (a) equipment modernization, leading to breakthroughs in the mechanization of processes and a sharp reduction in dangerous manual labor; (b) the construction of new production facilities, recently including one of the most modern blast furnaces in the world; (c) and the environmental sustainability of production, for which the company is a leader in its country.

• (III) The owner considers employees as an asset. He actively invests in them through training, career development, high salaries, comprehensive social guarantees, and job preservation during times of economic downturn, to which metallurgy is very prone. In return, employees are very loyal towards the owner: people value their workplace and are happy to remain working at the company for decades. As a result, when an employee sees a serious safety violation, technological failure or critical risk, they do not ignore it, because they understand that the safety of the equipment they operate directly affects their own personal and professional well-being, as well as the company.

• (IV) The owner visits each key production site at least three or four times a year and is very familiar with the operational challenges of the enterprise. Representatives of senior management visit key production sites at least once a week. This attention from the owner and senior management allows middle managers to quickly convey critical issues to them, get decisions made and get approval for additional resources to mitigate identified risks.

The respondent also has some reflections about how his company works with contractors. He believes that irresponsible contractor working practices can adversely affect the safe operation of critical infrastructure enterprises. In his company, contractors are treated as partners. They examine all safety indicators alongside their contractors and make no distinction between contractors and permanent employees. Instead, as with staff, the company is willing to invest in contractors and establish long-term contracts with them. Realizing that they are working long-term with the company, contractors are much more willing to invest in the development of their own staff and in the best equipment. They can see that the company values them. In turn, contractors value their relationship with the company and are focused on protecting it in the long term by providing safe, high-quality services.

3 Recommendation No. 3: Risks Must Be Prioritized, as It Is Impossible to Manage Every Risk Within an Organization Simultaneously

During discussions with the respondents, the question came up of whether senior management should respond to every risk that employees inform about. When asked why managers are sometimes reluctant to pay attention to the problems that employees report to them, 23% of respondents say that managers tend to assume the issues their employees will be bringing to them will only be minor. As a rule, few managers make employees aware of the risk situation across a whole company.

For the most part, ordinary employees will see risks from their own personal perspective. They are more likely to inform their superiors about problems that impact their own job security and their personal safety, rather than risks involving critical equipment failure. Employees provide feedback to superiors not about what they think might be important for senior management, but about what concerns them and their colleagues. Senior management recognize that most of the information they obtain from employees relates to minor issues, which overload them with trivial information. Senior managers have neither the time nor the detailed on-the-ground knowledge to pay close attention to these minor issues. From their perspective, such issues are the responsibility of subordinates—this is the responsibility and role of lower and middle managers.

The head of HSSE-Q (Health, Safety, Security, Environment & Quality) at an electricity company has an example of this kind of information overload. Several years ago, a number of incidents took place in the respondent’s enterprise. The head of the unit where these occurred made it clear to his subordinates that he wanted to know everything that was worrying them. He launched a major initiative to collect detailed information about his employees’ concerns—and, as a result, received an avalanche of data. However, he could not do anything with it all, because he was overwhelmed and had no idea of where to start tackling such a huge catalogue of issues and problems. The learning from this is that it is essential to determine in advance exactly what information is being gathered and why. Collect only as much information as senior management can adequately process and provide meaningful solutions to, otherwise the management system will become overloaded, and no useful progress can be made with any of the problems raised by employees.

©Dmitry Chernov, Ali Ayoub, Giovanni Sansavini, Didier Sornette, All rights reserved

Having discussed this issue with several respondents, there is a clear consensus that it is necessary to highlight the most critical problems in an organization and direct the efforts of the senior management team to solve those. For effective decision-making, you need to have a system in place to deliver an integrated risk assessment of production processes, where all the key risks of an industrial facility are assessed and then ranked by severity. This will enable an organization to prioritize the allocation of risk management resources.

It is rarely possible to satisfactorily manage all the risks faced by an organization. Resources are always limited and are never sufficient to mitigate every possible risk. Without establishing clear priorities, managers have so much information to handle that they cannot distinguish what is important from what is not. A gradation of risks immediately makes the situation clearer—what further information is required, which risks need monitoring, and which demand urgent action so that “major negative events” can be prevented—those that could lead to death or serious injury, major production losses, or environmental disaster, all potentially terminal for an organization. It is vital that critical risks and problems that may threaten the work of an entire enterprise come swiftly to the attention of senior managers so that they can communicate this information immediately to the highest level of the hierarchy, while less serious risks can be delegated to appropriate lower levels of management for further action.

The critical risk structure of a company depends on their corporate strategy

One of the interviewees, the head of a power plant, considers that a production site manager needs to be able to assess the existing technological risks through the lens of a company’s strategic plans. For example, if a company’s leadership are focused on short-term profit, and the longer-term life of the whole asset is not of interest to them, they will want a realistic assessment of the risks of equipment outage over the short term. If the entire plant will be closed in five years and a new facility built nearby, then the chief engineer of the station will naturally assess the risks of equipment failure over that five-year lifespan. On the other hand, if the facility managers are tasked with delivering stable trouble-free operation for the next 20 years, then the risk assessment carried out on the ground will be completely different. Knowing a company’s wider development strategy allows employees to understand the corporate environment they are working in, enabling them to adopt appropriate criteria when assessing the state of equipment. If employees understand how senior leadership view a company’s development in the near and longer term, they will be able to better assess which risks may threaten those objectives.

A mining company HSE director, who considers that it is important to know the parameters within which the risks of a company are being assessed, suggests the same approach. If the leadership are interested in identifying which critical equipment may fail during the next year, this generates a specific timeframe for assessing critical risks; if they are focused on a timeframe of 10 years, then the risk assessment picture will be completely different.

It is impossible to effectively manage all risks—prioritization is essential

The head of HSE department of a fertilizer mining company, employing more than 25,000 people and operating millions of units of diverse equipment, gives the following example. Every minute, somewhere at one of the company’s sites, there is equipment failure. The most common is a bulb burning out in the production room of a mine or an industrial workshop. Even a blown light bulb is a risk, but does it make sense to inform a senior manager every time this happens? Obviously not: senior management should only be informed about significant risks and incidents that could have a major impact on a company’s operations.

The respondent has analyzed the significant risks specific to this mining company. The business is engaged in the extraction of mineral salts from underground, which are then enriched to produce mineral fertilizer. For a salt mine, the worst risk is the threat of flooding due to the breakthrough of groundwater. Mineral salts quickly absorb moisture, and thus most of the mines in the world do not cease operations because everything has been extracted. Instead, they get flooded by groundwater and are abandoned with plenty of mineral reserves still in the ground. Loss of an entire mine is obviously the most critical risk for a fertilizer company. Despite the fact that mineral salt production is highly profitable, the investment required to combat mine flooding can exceed the profit from the mineral sales.

A critical risk like mine flooding can be broken down further. First, it will either be a case of (I) improper exploration or (II) improper extraction. Both areas can be further divided. For example, if the fault lies with extraction, then: (II.a) mining operations may have disrupted the integrity of the mineral reservoir by breaching the saline reservoir. In this case, it will be impossible to prevent water ingress and the mine will gradually begin to flood. By identifying each possible scenario like this, sub-elements of both I and II can be analyzed, and expert estimates made of the impact of each factor on the probability of a critical risk developing. The resulting analysis can be drawn up as a branching schematic of critical risk factors. Comparative assessment allows managers to rank each factor according to its likely influence on creating risk, and thus identify priorities for working to reduce the overall risk. When analyzing the impact of various risks on the work of a large industrial company, the respondent’s recommendation is to assess and then rank all the existing risks in terms of the threats they each represent to its sustainable development over a given period.

Identification of owners for each critical enterprise risk

A schematic of identified risk factors should be overlaid on an organization’s structure and a set of suitable measures to control specific risk factors should be conveyed to each management level. Then information about each critical risk must be communicated to specific employees, with a request that they inform management about any observed deviations in the operation of equipment or production processes under their control that could lead to these risks developing. For example, if we take the lowest level of an organizational structure—the mining engineer and the driver of a mining harvester—it is critical for them to prevent the harvester from entering the salt medium within the mine. On average, up to 40 mining harvesters work in a large mine. With this critical risk at the forefront of their minds, the harvester operators can monitor the condition of the equipment and the mine, using their practical expertise and experience to continuously assess the situation and be ready to inform senior management promptly about any problems that may lead to flooding—vital information about a critical risk which is obviously of great interest to management. This is the kind of bad news that executives want to hear, since it can prevent huge losses. Senior management must take the initiative to inform employees exactly what type of risk information it wants them to immediately pass on.

Risk prioritization makes it easier to understand that only a small percentage of the company’s personnel—possibly only 5% of the workforce—actually impact the management of critical risks within the enterprise. It follows that senior management do not always need to communicate with every employee working for a big industrial company. In the first instance, management only need to build operational communication channels with those employees who can have a direct impact on avoiding critical risk. For example, the “owners” of most critical risks for a fertilizer mining company are the harvester teams that work in salt mines. This is only a small percentage of the company’s 25,000 employees. By communicating directly with the critical risk owners, senior management can simulate the most threatening scenario of a mine flooding in order to develop an understanding of what needs to be done to prevent this from happening. No one can give a more accurate assessment of the situation than the mining harvester teams themselves, who go down into the mine daily and see any weaknesses in the flood prevention systems. It is these workers who should be the main source of this critical risk information, if senior management are to receive the most up-to-date reports of potential problems. Realizing their responsibility in preventing this critical risk from threatening the whole enterprise, the mining harvester teams can constantly monitor, and report to the authorities about, any serious deviations in the control measures. If employees understand the coordinated system within which a company manages risks, they can prioritize their actions to reduce risks in their area of responsibility and learn to value their role in helping an organization meet this challenge.

Moreover, if employees know that management will thank them for this information and that they will be rewarded rather than penalized for transmitting it, then everyone in the hierarchy will be encouraged to begin to communicate more proactively. All levels of management will be keen to show senior managers how they are trying to solve critical problems. If it is impossible to solve a given problem at their level, the managers involved will inform their seniors about the need for additional resources. If senior managers demonstrate that they will give critical risks their close attention, the entire management hierarchy will very quickly begin passing this information on to them. Employees raising serious problems and critical risk information will be less likely to say, “I’m bringing my boss a headache”, but more likely “I’m saving the company”. Thus the management will receive relevant information on the critical risks of the enterprise, without loads of irrelevant noise about minor problems on non-critical equipment. At the same time, some employees will recognize that they act as a key link in preventing certain critical risks damaging their enterprise. This will positively affect the work of ordinary employees and lower and middle managers, by raising their levels of loyalty, motivation, and professionalism.

Below are the results of responses to anonymous surveys of more than 300 respondents as part of a pilot project to improve the quality and speed of internal transmission of risk information. This pilot project is being implemented in an industrial company that is a world leader in its field (Chap. 4 of this handbook).

Results of responses to anonymous surveys within the framework of the pilot project: Have you been made aware of the main critical risks of your enterprise?

	High awareness	Medium awareness	Low awareness	No awareness	Cannot answer	Number of respondents
All survey participants	48.5%	32.2%	10.1%	3.1%	6.1%	326
Senior management, heads of departments and directors of sites (middle managers)	58.5%	39.0%	2.4%	0.0%	0.0%	41
Lower managers: deputy directors of sites, chief engineers of sites, heads of workshops, heads and representatives of HSE services at sites	56.5%	27.8%	8.3%	4.6%	2.8%	108
Engineers, foremen, and ordinary employees who operate critical infrastructure at sites	41.2%	33.3%	13.0%	2.8%	9.6%	177

1. Interpretation of responses: the lower respondents sit in the hierarchy of the company, the less they know about the critical risks of the enterprise. Respondents’ answers indicate that senior management, middle and lower managers are generally more aware of the critical risks of production facilities than engineering and rank-and-file employees. The latter operate production facilities daily and are in an ideal position to personally observe many deviations. However, they may not always understand the consequences of these deviations due to their fragmented understanding of the critical risks of the enterprise. Therefore, the management of industrial facilities need to disclose the critical risks they are facing to their subordinates, so that they operate more effectively within the critical infrastructure and can report promptly to the authorities about problems with equipment function, and so improve the company’s overall preventive control of critical risks.

Empowering critical risk owners to manage risks

The head of HSE department of a fertilizer mining company recommends introducing a “stop-the-job” system first for the “owners” of critical risks, and then gradually expanding it to other employees. It is only where critical risks are being actively managed that employees should be given the power to stop production without prior coordination with line and senior management. There should be a clear rule that employees will never be punished for halting production because of perceived risk, even if the subsequent investigation demonstrates that it was not necessary. In this case, the appropriate action might well be to reassess the way the criticality of the situation is measured. Employees must feel morally justified in stopping critical production. For example, it is better to give all mining harvester teams in a salt mine the absolute right to stop operations because of a significant risk, without the fear of a reprimand for “crying wolf”. Otherwise, the danger is that employees are too fearful of repercussions from management to halt production, and choose instead to passively stay on the sidelines as an emergency rapidly escalates towards disaster.

In industrial companies with many hierarchical levels, information going up the chain of command has to surmount numerous barriers, and a lot of time can be spent on securing scanty resources. Here it is better to delegate some of the authority and resources to managers and employees lower down the hierarchy. They can then respond more quickly to risks that arise in their area of responsibility, rather than waiting until the bureaucratic apparatus above them processes their request and allocates—or chooses not to allocate—resources to them. People at the production sites are often better placed than those at headquarters to see what priorities should be set in their day-to-day work in order to reduce accidents, and empowering them will increase the reliability of critical infrastructure in the long term.

What to do with non-critical risk information

At the initial stage, senior management need to focus on the reasons for stopping critical production and take measures based on the analysis of each case. Clearly, the first priority is always to find solutions that reduce the likelihood of critical risks. Nevertheless, management should not forget about other less critical risks. Information about these should be directed to delegated managers at different levels of the corporate hierarchy, who should be given the authority and resources to manage them. The critical risks of an industrial company should be managed by top and mid-level management, and the less significant risks delegated to ordinary employees and lower-level managers. Having established a “stop-the-job” system with the “owners” of critical risks on the ground, the scope of the system can be gradually extended to include less critical, but still significant, risks. It is neither necessary nor appropriate to immediately give the entire workforce the right to “stop-the-job”. Some people who manage non-critical infrastructure will always be able to find inconsistencies in how they are working when measured against official procedures, and may misuse the system. Quite apart from significantly disrupting production, this would lead to a surge in information traffic because senior management would have to be informed of the reasons for every single pause in production, even on non-critical equipment.

Prioritizing and systematizing risks as the basis for targeted messages to specific risk owners

When employees receive too much information but no guidance on how to use it in the context of their own work, they will simply ignore it. It is more effective for management to inform employees in the field only of matters that have relevance to their own work.

A negative example: in a huge oil company, information about every injury or incident is collected. All of this information is sent throughout the company with no classification into specific context. Understandably, no one reads this unsorted data array or makes any attempt to use the experience of other probably unrelated departments in their work. Thus for example, drillers at remote sites receive information about an accountant’s injury during a corporate football match at an oil refinery; or staff at a gas station receive information about injuries on an oil rig.

In other words, the company sends out a mass of unnecessary and unfiltered data that is irrelevant to the recipients, and which encourages employees to ignore it all entirely. This approach likely obscures what may well in fact be useful information for a given employee. Drillers could benefit from information about incidents at other rigs, and a detailed analysis of exactly what happened and what was done. Accidents at refineries will be of interest mainly to employees at other refineries, accidents at gas stations only to employees of other gas stations, and so on. Prioritization, risk selection, grouping of risks by type—all this would allow an organization to convey the relevant specific information to risk owners without overloading them with unnecessary material. Employees are interested in what is relevant to their area of responsibility. This is the case higher in the business hierarchy too, where senior managers are only interested in hearing about the critical risks of an organization and cannot afford to be distracted by minor information.

Risk ranking by function rather than geography

The HSE head of a mining and metallurgy company recommends categorizing risks into critical and less critical, and then grouping them functionally rather than geographically. Often, critical risks in any given functional area of operations also occur across different sites located in different regions, and even across countries.

Engage independent risk assessment experts

The HSE director of a steel company recommends engaging independent external appraisers to assess risks. Their impartial judgment will avoid the manipulation and bias that can distort assessments carried out exclusively within a company. Risk assessment implies a collegiality of experts. In organizations where the reactive approach to risk management is dominant, there is a greater likelihood of distortion and concealment of the real situation.

The HSE manager of an industrial company working with hazardous chemical processes said that regular external independent audits carried out by their insurers help them to establish a list of any equipment that is critically at risk. These experts make their own assessments, and rank the existing production risks across all company operations. The company can then decide on the best preventive action to reduce the most significant risks, and the audits allow them to delegate what detailed response they require at each level of management.

Create a list of critical equipment

One interviewee manages the HSE division at a metallurgy company, in this case called the “Production Safety Directorate”. At the core of the directorate’s work are the classic functions of an HSE department, essentially aiming to change behavior in the workplace to reduce risk and injury. However, an additional element is the assessment of the safety and condition of equipment, in order to reduce the industrial accident rate. The directorate thus deals with both the reduction of injuries (people) and the reduction of technological accidents (equipment). The first task after the “Production Safety Directorate” was introduced was the identification of critical equipment at various production sites, the failure of which could result in large losses and harm employees, the environment, or local residents. For example, at the company’s leading manufacturing facility, 1,500 units of critical equipment were identified.

Another example comes from the aerospace industry: the safety team working on the Space Shuttle program formulated a “Critical 1” list, which included 750 critical elements of the shuttle and the launch vehicle, the failure of which could destroy the spacecraft.

The HSE manager of an oil company gives the following example of identifying critical risks in the industry, through the experience of assessing damage after accidents. An accident at a traditional oil rig will not cause much damage: it is possible to duplicate many industrial operations so that the process of oil production and transportation from an oil field is not disrupted by any single accident. However, if an accident occurs at a major refinery, then a cascade effect is possible, and the loss can amount to billions of dollars. This is because it is impossible to quickly replace such huge industrial facilities and it will likely take many years and billions of dollars before the pre-emergency production level is restored. An accident at an offshore oil field could cause tens of billions of dollars of damage due to the enormous clean-up cost after an oil spill and the regulatory penalty fines it will incur. First and foremost, the senior management of a diversified oil company need to be in close control of the most critical risks: offshore oil production and the operation of large oil refineries.

What should be done about critical risks? Ask the staff!

The vice president of a gas pipeline construction and repair company suggests asking the employees themselves how to control critical risks more effectively. If managers are interested in hearing about problems, they can tell employees: “Imagine that this company has an unlimited amount of money and resources. Write a program of modernization for the most important and critically worn-out equipment, with a clear justification of priorities, and the senior management will then select the most relevant issues and finance the modernization”. Alternatively, they could stress the need to prioritize: “There is no extra money or resources, but one of the key goals of the production system is to work without serious accidents. Please provide us with a list of critical equipment and recommendations for its repair, so that this organization can avoid major accidents with minimal additional expenditure”. Despite the difference in emphasis, both approaches are aimed at using the knowledge of employees who are working with monitoring these risks daily, to create a ranked priority list of the most important problems for an organization to tackle.

Explain investment priorities to employees when managing critical risks

The head of a power plant believes that, if shareholders are ready to allocate resources to solve problems, then senior management should identify investment priorities, indicating the most important problems that a company needs to solve. These priorities should be communicated to all technical staff. With a better understanding of the logic of senior management concerning the investment strategy being implemented, each unit should be able to relate their immediate problems to the critical problem list for the entire organization. For example, senior management may receive information about the current risks at all 20 of a company’s production sites, but only five facilities would be selected to receive the main investment resources over the next three years, due to the criticality and urgency of the problems identified at those specific sites.

It is also recommended to categorize risks by groups, and then designate those who are to take responsibility for monitoring each group. Risks need to be prioritized so that the most critical problems can be tackled first.

Use simplified terminology when communicating with subordinates

The head of risk management at a nuclear power plant recommends that managers ask employees not about perceived risks, but about observed problems. Employees are not always aware of which issues constitute a risk to an organization, and how critical each of these risks is. Their knowledge is limited to their professional practice. That is why the respondent recommends that managers, when communicating with employees who operate critical infrastructure, replace the word “risk” with “problem” and ask subordinates the following questions: “What is the problem? What is it connected with? What factors caused this problem (e.g. problems with administration, with procedures, with equipment)?”. With this information a manager, together with technical specialists, can assess the current criticality of a given risk and decide what action is necessary to manage it.

In addition, managers can advise their subordinates to examine existing problems through the lens of criticality, and then inform senior management immediately about critical and very serious problems they have identified in their area of responsibility.

4 Recommendation No. 4: Senior Managers Must Be Leaders in Safety

If senior managers require employees to achieve a production plan, then the production targets will be stipulated in the plan; if they require a reduction in costs, they will get a reduction in costs; if they require employees to meet safe working practices, they will get safe working practices. It is imperative that any initiative to prioritize safe operation of critical infrastructure comes from senior management. In highly hierarchical companies, the example set by the leader is paramount. It is worth noting that most critical infrastructure companies have several management levels and are quite bureaucratic. If subordinates see that safety is extremely important to the CEO, and the entire corporate system makes it a top priority, then most employees will imitate senior management and follow the principles they are espousing. Production site workers will have no grounds for relegating safety down the list of their own priorities, and will be willing to place it first, above production and profitability indicators.

Senior management are responsible for safety too, not just the HSE department

Many companies still have a problem with understanding who is really responsible for process and occupational safety. Some senior managers still believe that only those who have “industrial safety” or “Health, Safety and the Environment” in their job titles hold this responsibility. In fact, everyone who operates critical infrastructure, or carries responsibility for it, should be prioritizing safety. This applies to managers at all levels, and above all to the senior leadership.

©Dmitry Chernov, Ali Ayoub, Giovanni Sansavini, Didier Sornette, All rights reserved

The CEO of a consulting company in human performance with extensive experience in power generation notes that, if an incident occurs in an average critical infrastructure company, the first thing senior management do is to call the HSE director and ask them: “What happened? Why did this happen? What is the director of occupational health and industrial safety going to do to ensure that such an incident does not happen again?”. When the costs of a project exceed the allotted budget, then senior managers do not call the financial director and ask him: “What happened? Why did this happen? What are you going to do to ensure that overspending does not happen again?”. They take an active role in resolving the issue. Clearly, senior managers consider financial risk management as part of their managerial role, but often they do not see themselves as being equally accountable for health and safety. Until this corporate situation is rectified, fundamental improvements in health and safety within any critical infrastructure company are unlikely to take place. Instead, this essential function will remain outside the focus of senior management and likely be perceived by them as a bother and a drain on their budget.

The head of the sustainability and systems department of an international electricity company, looking back over the past 20 years of his career, notes that the safety situation in many critical infrastructure sectors has definitely improved. How was this achieved? It is all about encouraging leaders to take an active role in the safety of their companies! In the past, leaders often paid little notice to safety issues and were not adequately trained to make decisions in this field. Managers did not fully recognize the consequences of disregarding safety rules, or put safety on an equal footing with production and financial matters. Therefore, the first step to improve the situation is to properly train all senior managers in safety. The second step is to make safety an essential component of every manager’s skill set so that safety is no longer seen as the sole responsibility of HSE, but as an essential concern for every leader throughout the organizational hierarchy. The third step is to successfully balance safety issues with other production and financial goals that managers may have.

The CEO and chief nuclear officer of a nuclear operating company believes that the place to begin the process of involving senior managers in safety matters is to educate them on the best practice and behavior in the field of safety. After 25 years working on this, the respondent came to the conclusion that the key is to ensure managers are fully trained in correct safety culture, so that they have sufficient knowledge and expertise to ensure operational safety across all areas of their leadership responsibilities and hold it as a central value when making managerial decisions.

The HSE director of an oil company cites an example of how educating senior managers can increase their awareness and involvement in safety issues. The respondent developed a training program that involved the CEO and all other senior managers of the company spending two days on location at a special training ground where explosions, fires and other serious accidents that can occur at production sites could be simulated. In addition, actors were employed to take the roles of workers and thus create a range of realistic emergencies, all of which graphically illustrated how a facility can fail and employees can suffer if safety regulations are violated. Participation in such training events allowed senior managers to safely experience what real explosions and fires feel like and the injuries that workers can suffer. This created opportunities to challenge senior management with questions like: “What would you do to ensure emergencies do not occur on your watch? What would be your role in preventing emergencies? How will you respond if an emergency does occur at your site?”. According to the interviewee, several thousand managers at various corporate levels have now completed this training and have become very different managers as a result, recognizing the huge importance of safety issues in every aspect of their work. This also gave the HSE heads of the company new opportunities to introduce leaders of diverse departments to the challenge of managing site and worker safety.

An HSE consultant working mainly for oil and gas as well as in air traffic control gives another example. In his practice, the respondent presents to senior managers the consequences of accidents at other industrial facilities. For example, he acquaints them in detail with the accidents that occurred at the nuclear power plants at Chernobyl, Fukushima-1 and Three Mile Island. He also examines major railway accidents and serious plane crashes. In discussing these disasters in detail, he encourages the participants to examine the current practices of their own companies and to recognize that similar problems could potentially happen at one of their production sites. It only needs a few safety regulations to be overlooked, a bit of bad luck with several things unexpectedly going wrong at the same time, followed by a couple of delayed or bad decisions by either workers or management (or both)… and before you know it, you have a full-scale emergency on your hands. To help prevent such sequences of events from happening, senior managers must be constantly immersed in the safety of a company’s operations, as well as attentive and responsive to any developing problem.

An HSE manager and consultant with experience in the nuclear and construction industries regularly updates senior managers with reports on significant incidents at other critical infrastructure facilities. For example, in an informal conversation with senior executives in the cafeteria, he might mention that one oil-refining giant has just been fined millions of dollars after a blast wave and a fire led to the death of workers. This respondent then asks them: “Are we in a situation where something similar might happen in our organization?”. He believes that to convince senior management to treat safety issues seriously, it is necessary to use data, well thought-out arguments and external examples.

An HSE manager who has been working for several oil companies also believes that the best way to increase the engagement of senior managers in safety is to frame it in monetary terms: to obtain funding to implement safety solutions for example, the argument needs to be presented to senior managers in the form of a business case—this is the language that senior managers understand the best.

The HSE manager of an oil company considers that every CEO should begin their working day with a discussion with their senior management team about progress on industrial safety issues. This should include an analysis of the causes of any recent incidents, the actions that are being taken to tackle any current problems, and the steps being taken to minimize any chance of a recurrence. Essentially, safety is like a bicycle. If you stop pedaling and moving forward even briefly, then the bike falls over. This need for “constant pedaling” is first and foremost the responsibility of senior managers. They should regularly be asking their team for an analysis of where risks exist in their operations, what are the vulnerable spots, where are the points of possible failure. These discussions should also cover actions being taken to eliminate any identified risks. They should include progress reports on the implementation of decisions already made. It is only when these questions are constantly asked at headquarters that middle and lower management will start following suit and begin to pay proper attention to industrial safety issues. Senior management must constantly be sending the right signals down the hierarchy.

Unfortunately, in some industrial companies, safety is not a priority for senior managers. As a result, the entire corporate management system treats safety issues as a low priority, and the monitoring and control of risks then becomes reactive, with safety policies only receiving attention after major accidents.

In the respondent’s experience, most industrial companies define their corporate strategies by first focusing on production targets and finance—and only then, if at all, move on to HSE considerations. A more proactive approach to safety would be to first establish the risk limits that a company cannot exceed, and then develop the industrial solutions that will keep the operation within those limits. The goals set for progress on industrial safety have to be feasible. Trying to achieve a sudden overnight transformation—demanding that employees immediately adhere to ambitious new safety standards—will probably alienate the workforce and leave them feeling under pressure and criticized. This is likely to result in employees falsifying reports, not this time to show they have hit production and financial targets, but to exaggerate their achievements in HSE. Safety must not become another box-ticking exercise. A meaningful transformation in employee behavior around safety, the kind that will save lives and prevent serious accidents, requires persistent application and monitoring, all initiated and maintained by a committed leadership.

One interviewee made a radical proposal. Any lower or middle manager whom senior management consider as a potential future director of production should be required to work for several years in the HSE department, either in a production unit or at headquarters. His responsibility should include direct work with ordinary employees and regular visits to multiple sites to look at risk. According to this proposal, lower or middle managers should only move up the corporate ladder after demonstrating that they are effective leaders in HSE.

Legal responsibility of senior management for safety

A former head of mine regulation believes that, in order to ensure that senior managers treat safety issues seriously, they should hold legal responsibility for preventing accidents and injury to employees. This should be achieved by passing laws that impose this specific responsibility on them. The respondent explains that this proposal was motivated by the situation in his own country. There, the responsibility for safety has traditionally sat not with a company president, but with foremen and superintendents working at production sites, who receive reports of any safety issues or accidents. A coal company president was not even required to have a degree in mining engineering, and could be an accountant or a politician with no understanding of either mining or industrial safety. The respondent believes that the more a country’s legal framework absolves senior figures within critical infrastructure companies of the responsibility for safety, the less likely they are to give the issue the attention and resources it merits. Instead, they will try to shift all the responsibility on to foremen, and convince them that, if something goes wrong and an accident occurs, it is foremen who will carry the main responsibility. To change this, it is essential that legislators create a robust legal framework that will hold senior figures accountable for non-compliance with health and safety rules and regulations across a company. Only in this way will senior management be motivated to take an active and ongoing role in safety issues.

In some countries, senior managers can be charged with criminal offences in the event of a serious accident. According to several respondents, this provides a very effective leverage. It encourages executives to pay close attention to safety issues and risks within a company, and to take prompt action when problems arise.

Project manager in oil and gas exploration sees legal accountability as an opportunity to frighten senior management, especially company presidents and heads of finance: it can motivate them to keep a close eye on any risk information being raised by their employees, and to identify and deal with significant risks before they become critical and lead to incidents.

According to the HSE manager of an oil company, industrial safety should not be a matter of voluntary compliance: the responsibility for ensuring safety should be compulsory and be included in the labor contracts of senior managers, with a stipulation that in the event of a major accident, they will be held legally and criminally liable, and that ignorance of the technological risks that led to an accident will not be a valid defense. In other words, it is necessary to ensure that senior managers understand that they cannot afford to be unaware of risks. On the contrary, it is their job to have full knowledge of potentially critical risks and act in time to prevent major accidents. Rather than waiting for the “lower classes” to request an audience with the boss, senior managers must take the initiative in establishing effective communication with their subordinates.

An HSE manager of a manufacturing company believes it is important to have candid conversations with senior managers. To persuade them to take a proactive approach to safety, he might say: “Look, under the law, you, as a manager, can personally be fined up to $5 million if a worker dies in the production process you’re in charge of, and you can be shown to have been negligent. I’m telling you this because I’m trying to protect you and protect the business at the same time. To take care of your own interests, you need to take safety seriously and take action”. The respondent is also very clear that he believes industry regulators should be much stricter with the senior management of critical infrastructure companies.

The CEO of a consulting company in human performance with extensive experience in power generation gives an example of how it is possible to explain to senior managers about their legal responsibility should an accident occur, and through this vulnerability encourage them to take active steps to reduce the chances of such accidents happening. Every year in the respondent’s country, regulators and the legislature put more and more pressure on senior leaders of organizations that operate critical infrastructure. By law, they can be held criminally liable for accidents at production sites they are responsible for and lawsuits can be filed against them personally if an incident results in the death of an employee. To train senior managers, the respondent takes the opportunity to bring in a law firm that runs mock trials where they stand as the accused. The whole trial process is re-created, with a realistic courtroom, aggressive interrogation by the prosecution and so on. In most cases, the senior managers fare very badly and quickly fail in their defense. They quickly realize that being taken to court is unpleasant and tough, that they have very little control of the process once litigation begins, and that a defense of ignorance around the safety violations that led to an accident is very unlikely to succeed. The respondent also uses real-life case studies of accidents that occurred in various industrial sectors to show the very serious personal consequences for senior managers caught up in the process. Some of these cases resulted in bankruptcy of the companies and senior managers sentenced to prison. Through emphasizing their vulnerability and the serious personal consequences of criminal proceedings, senior managers are highly motivated to pay close attention to what their subordinate managers and line workers are doing—or not doing—in relation to safety protocols and reporting problems and concerns.

Managers must have a unified position on safety issues and be consistent

The HSEQ director of an international oil company believes that leaders should be consistent in upholding safety principles and objectives and be clear about exactly what they expect from their subordinates. When visiting company production sites, this respondent always emphasizes the mantra “safety above all” to the workforce, and that operative safety is the number one priority for the senior management of the company. This repetitive messaging from a senior manager makes it very difficult for lower and middle managers to tell their subordinates to ignore safety regulations when performing their duties, and focus solely on increasing production. If one senior manager tells junior employees one thing about safety, and then another says something else entirely, misunderstanding within the workforce is inevitable and subordinates are much less likely to take future messages coming from senior management seriously—with the risk that important messages are ignored. To avoid sending such conflicting messages about corporate priorities to lower-level managers, the leadership must reinforce a company’s safety priorities clearly, frequently and consistently throughout the hierarchy.

Consistency is also important when making important corporate decisions. Senior managers must ensure that they allocate sufficient authority and resources to lower and middle managers, so that they can implement these decisions at their level of responsibility. This includes giving employees the right and responsibility to stop unsafe work in their operating area without any subsequent penalty. It is fundamentally important that all company leaders conscientiously apply the safety principles they are promoting to their own day-to-day work, and whenever making management decisions that have safety implications. It takes time to change the culture of a company, and trust can only be built up within an organization through consistent messaging and application of principles. Managers must persevere and be consistent for their messages about the safety priorities of a company to penetrate every level of the hierarchy and to ensure that every employee, from top to bottom, knows what is expected of them.

The senior HSE director of an oilfield service company and the director of operations at an oil company both believe that everyone within an organization must speak the same language to achieve consistency in the implementation of corporate priorities. Over time, a common line of thinking is formed across an organization and making decisions in favor of safety at all levels of management can become routine. According to the respondents, consistency is achieved when decision making and action plans, at every level of management, are always accompanied by the questions: “Are we always identifying what the hazard is? Are we always controlling that hazard and verifying what safeguards we have? Are we following our own processes and procedures?”.

An HSE manager and consultant with experience in both the nuclear and construction industries gives the following example. The respondent knows one company, which had a very good operational system (the so-called “heart” model). The model consists of (I) leadership and (II) systems and processes. These two corporate functions must be in harmony. If a company has good senior management leadership on safety, but the systems and processes are terrible, then a company has no chance of succeeding. If company’s safety systems and processes are great, but there is no leadership from senior managers, then the project is doomed. It is essential that leadership and processes operate in tandem if significant improvements in safety are to be achieved. The role of the HSE team is to work both on the leadership skills of senior managers—their behavior, communication, and attitudes—and equally importantly, to help build effective and safe systems, processes, and policies.

Managers have personal responsibility for safety—an example from the oil and gas industry

As part of the studies reported in this handbook, several interviews were conducted with managers at various corporate levels of an oil company. This company has faced many challenges concerning occupational safety and labor protection—their injury and accident rates were higher than other similar energy companies across the world. As a result, they recognized the need for fundamental changes to improve their safety record. Over time, the company developed and implemented a rather unique project to redistribute the responsibility for safer production and working conditions across all levels of management. The interviewees emphasized that it could not be right—or efficient—for the safety of production and the welfare of ordinary workers to be the responsibility of only one managerial level. Better outcomes would come if this was shared between managers at all levels of the company.

First, the concept of zero injuries (“goal 0”) was adopted at senior management level. As many senior managers had previously worked in other leading energy companies, most of them did not require any explanation of why safety should take priority over production and financial targets. Next, the CEO gathered together key executives from both headquarters and production sites and announced that he was now taking full personal responsibility for safety issues across the whole company. His subordinate leaders were then instructed to follow his example and take responsibility for safety in their areas of control. The subordinates of these leaders should follow the example of their superiors, and so on down the hierarchy. The core objective of the project was to make safety issues a priority for managers at all levels of the corporate hierarchy. For the first time in the history of this company, each leader was set his or her own personal safety targets, a key step in the overall task of reducing injuries and industrial accidents. By stating that he was personally responsible for safety across the company, the CEO was sending a message to the entire workforce that this was the number one corporate priority.

To make sure that the goals of this program were shared through the entire workforce, special strategic sessions were held for each managerial stratum of the company: senior managers, key managers at headquarters (heads of departments and directorates), and middle managers from oil production sites and refineries. The sessions began by acknowledging that in real life work environments, it is impossible to maintain zero accidents and injuries forever. Instead, the aim should be to strive to deliver accident-free indicators over shorter periods of time—for example, during a shift or the implementation of a discrete project. From these short pushes over a particular time-period or project, a significantly lower long-term accident rate would gradually develop across the whole facility.

It is insightful to look in more detail at what this oil company did. First, the CEO brought together ten key senior managers. Based on the discussions held in this meeting—which lasted for eight hours—the project’s goals, priorities and main areas of work were identified. The functions of each senior manager within the framework of the project were determined. It was important that the project did not rely solely on the HSE department: each of the ten key senior managers were to lead project delivery within their respective areas of responsibility.

Then a further hundred less senior but still key managers were recruited: the immediate subordinates to the ten executives from headquarters, plus middle managers from production sites. Each of the ten senior managers stood up before this larger group and made a commitment to deliver such and such a safety target within a specified timeframe. This was made while acknowledging the personal commitments of the CEO to transform the management of occupational safety and labor protection, with the following measures: (I) to create a new HSE committee under the leadership of senior management; (II) to create a new CEO’s Award in the field of safety; (III) in the case that a fatal accident occurs in the workplace, to personally call the head of the industrial site where the accident happened. The ten key senior managers all stated that they too had committed themselves to creating a safer company. They requested that from now on, the top hundred managers should analyze safety problems in their areas of responsibility and make a commitment to their own top one thousand subordinates to solve them.

An essential foundation of the project was that all managers in the hierarchy made firm public commitments to their subordinates about what they would deliver on safety. This had the effect of cascading the responsibility for safety all the way down the management hierarchy and enshrining safety as a critical focus for improvement. This approach broke many stereotypes that middle managers held about their superiors. For the first time in the company’s history, the leadership had articulated that safety was an absolute priority.

Here are some organizational details of the project. The HSE department developed a presentation on cascading risk responsibility down each level of the management. At each production site that the project team visited, the presentation was adapted to the specific risks there. Each production team determined its own list of critical risks, in order to focus on monitoring and controlling the most pressing safety challenges of a given enterprise. The HSE director of the whole company, and one of the 10 senior managers, came to each site to conduct sessions on cascading communication.³ Representatives from company headquarters helped the heads of the production sites (middle management) articulate the commitments they wished to make to their subordinates. The presentation included a special video message from the company CEO, while the HSE director presented the results of the original safety audit that had first revealed the company’s alarming safety figures. The head of the given production site (middle manager) informed their subordinates about the priorities set by headquarters. Then the site manager moved on to the risks at their site, and made safety commitments to his subordinates across five main areas. Subsequently, a team of eight specially trained moderators helped the site management team understand the main risks within their ​responsibility in the five areas identified, and helped them articulate safety commitments to their subordinates. To allow proper delivery of these cascading communications sessions across the whole company, the HSE director set aside more than eight months.

The central moderation team trained moderators at each site to help lower-level managers conduct similar sessions with their subordinates. As a result, the project reached every level of the management from the top brass down, and even included contractors working with the company. The presentations always included the CEO’s appeal, a description of the company’s plan to work towards zero injuries and an explanation of the key safety rules to be introduced, along with a warning that non-compliance with these rules would be punished.

All this information—areas of responsibility, commitments, plans and regulations—were combined into a single corporate order control system, which the HSE department then regularly monitored to ensure fulfillment of obligations at all levels of management. The project initiators understood that the key thing was to motivate managers to change their habits and develop their skills in the field, rather than focusing on formal indicators of injury reduction. When implementing the system, desired injury reduction targets were not presented as precise percentages. There is good reason for this: if a safety policy states that “this year we want to reduce the accident rate by 5% or 10%”, there is a good chance that managers will be tempted to falsify incident reporting simply in order to meet the target. It is more important that managers at all levels want to genuinely prioritize safety in their decision making, and perform all work safely, so that injury and accident statistics are reduced over the longer term. All the leaders of the company took part in this project, and it involved well over one thousand employees.

Within the framework of the project, the company developed new strategic goals that include, inter alia, changes in organizational behavior. For example:

• managers need to communicate openly with their subordinates;

• managers should spend time at the bottom of the hierarchy in order to understand the real situation on the ground;

• meetings need to be focused and effective;

• two-way feedback channels need to be developed;

• the leadership need to be actively involved in the process.

These goals are a de facto manifesto for good dialogue and communication. They are aimed at teams that have always worked in a rigid corporate hierarchy where the approach to risks and safety issues has been reactive rather than proactive. It is very difficult to alter employees’ behavior quickly to embrace this new approach, especially when for decades leaders have been used to shouting at their employees rather than seeing them as potential partners, or in an organization that has previously imposed a rigid system of blind obedience and subservience.

The main achievement of this project was to involve the entire workforce of the company in the discussion of safety issues, beginning with the CEO and spreading out to include ordinary workers at drilling sites thousands of kilometers away from headquarters. It has also helped managers understand that monitoring safety matters is their direct responsibility, not the responsibility of HSE alone. As a result, company managers began asking the heads of production units for progress reports on production safety improvements. Previously, these issues were only handled by the HSE department; production units had only concentrated on the implementation of the oil production plan, regardless of potential risks. A final confirmation of the project’s immediate impact: the year after it was launched, the level of injuries in the company fell by 15%.

5 Recommendation No. 5: Senior Management Should Build an Atmosphere of Trust and Security, so that Employees Feel Safe to Disclose Risk-Related Information

Many respondents expressed the opinion that, unless senior management build an atmosphere of trust with employees, there is no chance of them passing on high quality risk information and objective feedback. If there is no confidence that senior management will receive it in good faith, workers will not feel safe to disclose it. Employees need to have security guarantees, both for their careers and for their colleagues. Managers must guarantee the security of their sources and take responsibility for solving any significant problem they are informed about.

©Dmitry Chernov, Ali Ayoub, Giovanni Sansavini, Didier Sornette, All rights reserved

Having studied many publications on the issues of trust and the transmission of information about risks,⁴ the authors of the handbook have found it difficult to settle on a simple and understandable definition of the word “trust” in the context of the relationship between a manager and a subordinate. Among 100 interviews with practitioners, one head of an oil production site gave a short, yet comprehensive, definition of what he thought trust was—the predictability of the behavior of another person based on positive experience of previous interactions with that same person. According to this manager, trust in a leader develops when employees can predict the leader’s behavior based on previous positive experience of interaction with them. If there is a clear logic and predictability to the actions of a leader, there is trust; if this is absent, there will be no trust.

Without trust in the leadership, there can be no high-quality feedback from employees on the problems of an organization. Often, employees evaluate the possible consequences of disclosing risk information based on rumors about how senior management behaved in a previous situation with colleagues. Employees project both the positive and negative experiences of their colleagues onto themselves.

Results of responses to anonymous surveys within the framework of the pilot project: A trusting relationship between a manager and their subordinates is necessary to create an environment where if feels safe to share information about existing problems.

	Strongly agree	Rather agree	Rather disagree	Strongly disagree	Difficult to answer	Number of respondents
All survey participants	75.4%	22.9%	1.4%	0.0%	0.0%	280
Senior management, heads of departments and directors of sites (middle managers)	86.1%	13.9%	0.0%	0.0%	0.0%	36
Lower managers: deputy directors of sites, chief engineers of sites, heads of workshops, heads and representatives of HSE services at sites	76.0%	22.1%	1.0%	0.0%	1.0%	104
Engineers, foremen, and ordinary employees who operate critical infrastructure at sites	72.1%	25.7%	2.1%	0.0%	0.0%	140

If a leader took an authoritarian stance and punished their colleagues in the past, they will naturally try to avoid a similar fate by not bringing bad news. A few negative examples—where employees were punished for providing objective feedback, and this became common knowledge across an organization—are enough to stop other employees sending information to their seniors.

©Dmitry Chernov, Ali Ayoub, Giovanni Sansavini, Didier Sornette, All rights reserved

If a leader is perceived as a person who listens, responds positively and then solves the problem, then employees will be willing to tell a leader about any important issues. Just as negative experiences can influence the whole workforce, a few positive examples of feedback that the whole company hears about can dramatically improve the process of transmitting risk information. Employees will understand that senior management want to work constructively with their employees and will expect the same approach if they have an issue to report.

©Dmitry Chernov, Ali Ayoub, Giovanni Sansavini, Didier Sornette, All rights reserved

Therefore, if senior managers state that they want to receive objective feedback, they must show appreciation to employees who act on it. Initially, employees who manage critical risks will be afraid to go to executives with bad news. But gradually, seeing the positive experience of their colleagues, confidence in their superiors will grow. Even the most cautious employees will be encouraged to share their assessments of the shortcomings in the work of a company with their managers, and perhaps propose their own solutions to these problems.

A psychologist and consultant in the field of organizational behavior believes that, if there is an atmosphere of trust between employees and management in an organization, employees will feel safe to be honest with management. If an environment can be established where employees do not feel under threat, they will begin to give candid feedback. To increase employee confidence, it is essential to reduce their uncertainty about the actions of managers. Managers need to demonstrate exactly how employees are treated when they give honest feedback. Only through repeated positive responses from managers will it be possible to dispel the common perception that an organization can be dangerous to employees who speak out. The first step is for senior management to make a declaration that feedback is encouraged at all levels of a company. But this is not enough in itself: employees must see the truth of the statement applied in practice, with employees receiving praise and not punishment for offering honest feedback. The message that senior management actively want to hear about problems, and that it is safe for employees to tell them, should come right from the top of the hierarchy. It is important that the CEO and senior executives provide employees with specific examples of their colleagues’ positive experiences of communicating problems to their seniors. Rank-and-file employees tend to see senior management through the negative filter of both their natural distrust for people who have hierarchical power over them, and the previous poor experiences of their colleagues’ interactions with management. These perceptions will only be improved if employees receive repeated reassurance that managers are not seeking to criticize them or their performance, but genuinely wish to cooperate in order to achieve the shared goal of improving work processes and safety across all areas. It is also vital that managers demonstrate respect for their subordinates, including a sincere interest in their well-being, safety, and progress. If these principles are applied reliably across the board, then even the most cautious employees will gradually come round to the idea that a company is a safe environment, where they can confidently reveal their concerns about the situation on the ground without any negative consequences.

Results of responses to anonymous surveys within the framework of the pilot project: A high level of employee trust in managers leads to improved transmission of information about risks throughout a company; and conversely, low trust leads to a lack of willingness to transmit risk information to superiors.

	Strongly agree	Rather agree	Rather disagree	Strongly disagree	Difficult to answer	Number of respondents
All survey participants	62.1%	32.9%	2.5%	0.7%	1.8%	280
Senior management, heads of departments and directors of sites (middle managers)	88.9%	11.1%	0.0%	0.0%	0.0%	36
Lower managers: deputy directors of sites, chief engineers of sites, heads of workshops, heads and representatives of HSE services at sites	57.7%	37.5%	1.9%	1.0%	1.9%	104
Engineers, foremen, and ordinary employees who operate critical infrastructure at sites	58.6%	35.0%	3.6%	0.7%	2.1%	140

It is also necessary to raise awareness among managers and employees of the value of objective feedback in critical infrastructure companies. This issue should be talked about throughout a company, with regular dialogue encouraged between managers and employees, so that each party understands the fears and interests of the other when disclosing information about risks, including those arising from their own mistakes. With a determination to build better communication and feedback channels with managers, employees will gain confidence and security in their position and the process, and gradually begin to speak more openly to their superiors what they think.

Managers should show respect for their subordinates

The executive of an electric power company maintains that for employees to trust senior management, the leader must respect employees at every level and be willing to listen to subordinates. This will reduce fear among subordinates and encourage them to discuss any problems on an equal footing, one professional to another. Managers building a long-term career in a company must be humble and recognize that they cannot know everything. If communication within an entire company at every level is built on a shared belief in honesty, openness, mutual respect, and high professional standards, then a leader can feel confident that they can approach all subordinates working at any particular site or performing any specific role and receive a competent assessment report and useful advice.

Results of responses to anonymous surveys within the framework of the pilot project: Managers should not offend or humiliate employees, as this can have a negative impact on productivity and damage communications.

	Strongly agree	Rather agree	Rather disagree	Strongly disagree	Difficult to answer	Number of respondents
All survey participants	51.1%	37.5%	6.1%	1.1%	4.3%	280
Senior management, heads of departments and directors of sites (middle managers)	80.6%	19.4%	0.0%	0.0%	0.0%	36
Lower managers: deputy directors of sites, chief engineers of sites, heads of workshops, heads and representatives of HSE services at sites	51.9%	39.4%	5.8%	1.9%	1.0%	104
Engineers, foremen, and ordinary employees who operate critical infrastructure at sites	42.9%	40.7%	7.9%	0.7%	7.9%	140

Conversely, if a leader looks down on their subordinates, showing contempt and threatening reprisals for perceived misdemeanors, they will become isolated: (I) skilled confident professionals will cease working under such a leader; (II) a company will retain only less skilled employees who cannot find work elsewhere; (III) subordinates who remain will simply execute the orders of the leader without question or comment; (IV) subordinates will falsify results rather than admit they have failed or been unable to execute their orders; (V) nobody will risk reporting the true situation on the ground for fear of provoking anger and punishment; (VI) nobody will raise wider issues about whether a company is heading in the right direction, or the wisdom of their market activities; (VII) a leader like this will be feared and hated—and after their resignation or the failure of a company, despised.

To gain the trust of their employees, a leader must be competent, respectful, willing to listen and constantly looking to learn and improve.

Openness and accessibility of the leader

One of the interviewees is a manager responsible for the operation and maintenance of turbomachinery in an electric power company operating across several countries. He believes that most of the problems between employees and managers stem from the fact that employees do not have easy access to their managers and feel that their opinions do not matter. The level of trust in a leader is dependent on how well they are perceived by their employees. No one can force employees to trust a leader: trust can only be earned if the leader makes himself or herself accessible, welcomes feedback and is happy to hear both good and bad news. Successful managers give their employees ample opportunity to talk freely about the problems they face. Rather than imposing their own solutions, they encourage others to offer up their own ideas and then work cooperatively as a team to find effective solutions. They are always willing to listen to their subordinates, which encourages them to work harder because everyone feels involved and invested in the decision-making processes within a company.

The HSE director of an oilfield services company believes that a company’s safety culture is partly a function of whether employees feel part of a team. Effective teams are built on trust. Trust is not easy to build: it must be earned. Leaders should initiate the team building process. Confident leaders should be open when they are in a situation where they feel vulnerable or uncertain. Their subordinates can then see that they are honest enough to show they do not have all the answers and can make mistakes, and when they do, they will openly admit it.

The HSE manager of a fertilizer company believes that, in order for subordinates to feel safe to talk to their superiors about problems and risks, an organization should look to create a sense of family. Leaders should therefore look to act in such a way that their subordinates see them foremost as a friend and fellow worker, rather than as a strict and unapproachable boss.

Security guarantees for employees who reveal risks

The HSE manager of an oil company believes that there is only a small proportion of employees who truly care about their work. It is these people who are willing to step up, fearlessly take the initiative, and disclose risks to superiors or regulators. However, the fate of these “active citizens” is often unenviable. Line managers are often afraid of the independent nature of such employees, seeing them as a threat. They are more concerned about making things safe and efficient than about receiving approval, and are willing to report issues and even point out mistakes to senior management. Colleagues can feel threatened by such morally upright workers who are not afraid to speak out even when the rest of the team would rather remain silent. When a rank-and-file employee independently tries to inform senior management about critical issues, they will usually suffer from a negative reaction from their co-workers and immediate supervisors: being seen as an “informer”, a traitor, a troublemaker, “a black sheep”, someone who thinks they are special. Often reasons are found (or invented) to dismiss them, but even if they remain in their job, they are often ostracized and find their promotion chances disappear. According to the respondent, some senior managers have sacrificed their moral principles at some point in order to keep moving up the corporate hierarchy. People with a strong sense of civic duty simply cannot ignore their conscience. Therefore, their career prospects will be limited within most reactive organizations. As a consequence, for employees who are willing to disclose information about risks, it can be easier for them if they have some financial security and can afford to be without a job, at least for a limited period. The converse however is also true: when employees are in debt or otherwise struggling with money, they will do whatever it takes to hold on to their jobs and will thus be reluctant to take any initiative with risk disclosure. The respondent believes it is difficult for any company to create a good enough system of protections and guarantees to make most employees feel safe enough to willingly disclose risks, problems, and mistakes to their seniors.

The chief risk officer of a national power grid company notes that subordinates usually pay close attention to what happens to people who disclose problems in their area of responsibility to superiors. The actions of managers towards whistleblowers tell employees the truth of the situation, far more than any fine words about how staff should not be afraid to disclose information about risks. To encourage honest discussions of complex issues like this, leaders need to create a climate of psychological safety across an organization. This will need to include some cast-iron guarantees: no penalties for subordinates who disclose information about their own mistakes, and no castigation of the supervisors of the workers exposing serious risks. In addition, leaders should commit to expressing public gratitude to these employees who have acted as responsible workers and active citizens, and to highlighting how their actions have prevented a serious accident, improved productivity, saved a company’s reputation and employees’ jobs and so on.

The HSE vice president of an oilfield services company believes that, if someone willingly risks their career by disclosing risk information, then senior management should do everything possible to protect them from any potential retribution from their managers or colleagues. If an employee is punished by their immediate supervisor for negative feedback, senior management should immediately intervene in the situation in order to protect the whistleblower. The mid-level manager involved should be warned that punishing or harassing employees who have given critical feedback in any way is totally unacceptable. Management must continue to keep a close eye on the situation. In many ways, it is like the kind of witness protection program sometimes required in criminal cases where there is significant threat to the witnesses before or after a trial. Senior managers must also warn middle managers that they are closely monitoring the career of the employee who spoke out and emphasize that it is in their own interest to maintain good working relations with them, rather than threatening sanctions. To get an objective assessment of critical risks from all levels of an organization, it is vital to encourage whistleblowers by doing everything possible to protect them from any possible negative repercussions.

The HSE director of an oil company insists that senior management should give employees legal and financial security guarantees. Employees with critical risk information must be sure they will be safe. The respondent worked in one oil company where there were notices up at all the production sites with a photo of the CEO, stating his own personal guarantees that employees disclosing important safety information would be fully protected. Included were extracts from safety regulations and policies, contact numbers for emergency confidential communication, all covered by the signature of the CEO. There should also be provisions for conscientious employees having problems with their line managers in order that they can receive prompt support and assistance. For instance, senior managers should be ready to give their mobile number to any employee who feels threatened enough to request an immediate transfer to another unit, or any other urgent protective measure.

According to the HSE manager of an oilfield services company, it is never enough just to give security guarantees. The very fact that such guarantees are being issued suggests that the whole company is not willing to discuss risks openly. There is a degree of mistrust present, and most likely a punishment system is in place, whether official or unspoken. Unfortunately, this is common practice in more than 90% of industrial companies in the world. In the respondent’s opinion, there is no point in trying to improve the system of guarantees for employees who disclose risks. What is needed instead is a wholesale change to the culture of a company so that people can freely discuss risks without fear of the consequences. The same logic would apply in civic life: it is the difference between arming every household in a city as protection against attack, as opposed to setting up more advanced security systems and tackling the causes of crime in order to reduce the threat in the first place. Clearly, it is better to make the whole city safer rather than telling citizens to defend themselves with guns!

A psychologist and consultant in the field of organizational behavior agrees that, rather than giving guarantees that employees will not be punished or victimized for disclosing information, it is better to tackle the underlying attitudes that make them feel unsafe about speaking out.

The head of HSE of a fertilizer mining company also warns that managers should understand that guarantees usually do not work. Senior managers may assure the workforce that they will not be fired for disclosing information. But if doing so makes the employee an enemy of their direct supervisor, it will be very difficult for them to feel safe and welcome at work, regardless of senior management assurances that they will keep their job. In the respondent’s opinion, the only remedy is a gradual change in an organization’s values, so that the disclosure of risks becomes a collectively approved action for all employees and managers. In an ideal world, middle managers should feel grateful to employees on the shop floor who catch a critical risk in time to send a warning up the hierarchy, so that the situation comes swiftly to the attention of their superiors with the resources to deal with it. To achieve this, senior management must create a relationship of safety and trust with the middle managers by not punishing them for the existence of a critical risk, but instead giving them the resources to swiftly address it. The focus must be on shifting the values of an organization and building trust between top and middle managers. Without such a change of culture, no guarantees will convince employees that it is safe for them to reveal dangerous practices in a team they have to work with every day.

The HSE director of a metallurgy company agrees that, in reality, no real guarantees can be given on paper. No document can guarantee that the career of an employee who reveals a risk will not be affected. Everything rests on how much trust the employees hold in their boss and managers. Employees will not just open up to senior management overnight. Positive experiences over extended periods of time are the only thing that will have employees believe that risk disclosure will result in the problem being solved rather than their careers being torpedoed. Trust is hard and time-consuming to build, and quick and easy to lose! The assurances of a CEO may lack any credibility if their subordinates are less open-minded and punish or humiliate employees who speak out about risks. All it takes is for news of one such incident to reach the ears of the workforce, and all the guarantees from the top brass will count for nothing. Therefore, senior managers must take great care when choosing their team of middle managers and make sure they will be their allies in risk identification and control. To do this, middle managers—just like their subordinates—need to know that their careers will not be on the line if a risk comes to light on their production site. Then they will have no reason to be vindictive towards the site workers who first raised the alarm.

The HSE manager of a metallurgy company has similar reservations about giving guarantees alone. Senior management should not simply promise the safety of employees, but rather deal with the factors that pose a threat to them. Leaders need to convince middle managers that risks are never solved by removing “difficult” employees, but by making systemic changes in a company, so that these employees no longer have a reason to make complaints above their heads to headquarters. Senior management should reassure middle managers that they will continue to progress in their careers even if problems crop up at the production sites where they hold responsibility. It is obvious really: how can the risks and problems of an industrial enterprise possibly be solved by sacking the employees who pointed them out? These conscientious workers were just sounding the alarm bell. If, instead, middle managers work cooperatively with their subordinates to identify and solve problems, then there will be no more unwanted alarm bells. If mid-level managers do not fear for the security of their own jobs every time their subordinates give difficult feedback to the senior management, then they will not see such employees as a threat.

The vice president of an electricity company believes that disclosing and solving risks should be an obligation for the entire workforce of an organization. Leaders need to make sure that this is a continuous and regular practice, for managers and employees alike. It is essential that every time a problem is highlighted, it is resolved as a result. If this is achieved, then it soon becomes apparent to everyone that it is counterproductive to hide risks, because the simplest solution is to deal with the risk with the support of senior management and with access to the resources of the entire company. It no longer makes sense to ignore the risk or try to solve the problem on the quiet with the limited resources available to a local unit. As well as being likely to fail, this approach can look like a cover-up, bringing accusations of fraud and dishonesty with the likely sacking (and/or criminal prosecution) of all involved. Companies should implement a practice of rewarding workers for disclosing information about risks and imposing consistent penalties for concealing them. Incidences of anyone in an organization trying to prevent a significant risk from coming to light will become a thing of the past. In essence, security guarantees are only given to ordinary employees if the corporate value system is at fault. Guarantees are not required when the right priorities have been set at all levels of management, motivating them to identify risks and eliminate them, both for their own and for the organization’s good.

Building trust is not a quick process

According to several HSE managers at one oil company, building trust in senior management is a gradual process: you cannot expect to turn the tide in an instant. People hide information about risks for decades. Managers and employees alike have had a mutual agreement (albeit unwritten) about feedback from employees: managers did not want to receive any bad news from subordinates and were best pleased with a positive report and no questions asked. To change this situation will take constant communication between management and employees—a sustained and genuine personal partnership, so that employees understand the motivations of managers and recognize that they are genuinely committed to solving production safety problems. Everyone needs to see successful examples of risks being identified by employees that are then tackled by the whole company working together. In general, a transformative culture shift like this will take years of dedicated effort to achieve and constant reinforcement to maintain.

The head of HSE of a metallurgy company also believes that one should not expect employees to change overnight, and turn up for work one morning suddenly willing to conduct open honest conversations with senior managers about the problems in their area of responsibility. Most employees will need to witness examples of positive outcomes involving other colleagues before they believe that they can risk disclosing critical information and keep their job. Employees need to see that reported problems are actually addressed. This may well take several years.

Thermodynamic model of risk information transmission

As part of the pilot project in the critical infrastructure company, the level of trust of subordinates in their managers, and the level of trust of managers in their subordinates were both measured.

Results of responses to anonymous surveys within the framework of the pilot project: How do you rate the level of trust of employees towards their managers in your enterprise?

	Very high	Medium high	Medium	Low	None	Cannot answer	Number of respondents
All survey participants	3.4%	28.2%	48.8%	12.0%	2.8%	4.9%	326
Senior management, heads of departments and directors of sites (middle managers)	0.0%	34.1%	51.2%	9.8%	0.0%	4.9%	41
Lower managers: deputy directors of sites, chief engineers of sites, heads of workshops, heads and representatives of HSE services at sites	3.7%	36.1%	47.2%	7.4%	1.9%	3.7%	108
Engineers, foremen, and ordinary employees who operate critical infrastructure at sites	4.0%	22.0%	49.2%	15.3%	4.0%	5.6%	177

Results of responses to anonymous surveys within the framework of the pilot project: How do you rate the level of trust of managers towards their employees in your enterprise?

	Very high	Medium high	Medium	Low	None	Cannot answer	Number of respondents
All survey participants	2.5%	27.6%	50.6%	12.9%	1.2%	5.2%	326
Senior management, heads of departments and directors of sites (middle managers)	0.0%	39.0%	43.9%	17.1%	0.0%	0.0%	41
Lower managers: deputy directors of sites, chief engineers of sites, heads of workshops, heads and representatives of HSE services at sites	3.7%	33.3%	53.7%	8.3%	0.0%	0.9%	108
Engineers, foremen, and ordinary employees who operate critical infrastructure at sites	2.3%	21.5%	50.3%	14.7%	2.3%	9.0%	177

1. Interpretation of responses: the responses show that in this organization there is a middling level of trust between managers and their employees and between employees and their managers. Note also that the percentage of answers with “low trust” is not negligible. This diagnoses a deficit of sufficiently strong trust that would ensure the active transmission of risk information within the company. There is significant potential for improvement and this pilot study confirmed the value of the recommendations presented here.

It is logical that, if senior managers want to improve the quality and speed of risk reporting within an organization, they should focus on increasing the level of confidence that employees have in them as managers. Efforts of senior managers to achieve this can be assessed dynamically: measuring the transition from a perceived low level of employee trust in managers at the beginning of a project, to a high level after concerted long-term efforts to build open, trusting relationships with their subordinates when discussing risks and problems. With low levels of trust, this vital feedback is not effectively conveyed up the corporate hierarchy. Raise levels of employee trust in their leaders, and the speed and quality of information will reliably improve.

To illustrate this, a thermodynamic model of risk information transmission was created. Information about the risks and problems of an organization is like the water enclosed inside a vessel, representing the hierarchy of the company. The ambient temperature affects the state in which water is held—at temperatures below 0 °C, water becomes a solid—ice; at temperatures between 0–100 °C, water is in a liquid state; at temperatures of 100 °C and above water changes to a gaseous state—steam. The proposed analogy is that temperature corresponds to trust. The diagrams below illustrate this analogy between the dynamic transition of different states of water in a vessel under changing temperature, and the speed and quality of the transmission of information about risks within the hierarchy of an organization with changing levels of employee trust in managers: low level of trust = cold relations; medium level of trust = transitional state of relationships; and high level of trust = warm relationship.

©Dmitry Chernov, Ali Ayoub, Giovanni Sansavini, Didier Sornette, All rights reserved

“ICE”—LOW LEVEL OF TRUST—COLD RELATIONSHIPS BETWEEN MANAGERS AND SUBORDINATES

In the absence of trust of subordinates in their managers, information about risks will be frozen like “ice”, and unmoving at all levels of the corporate hierarchy. Information is not transmitted to higher managers because of the cold relations between managers and subordinates. Subordinates fear that they, their colleagues, and their immediate supervisors will be punished for disclosing this information to senior management, and the problems they raise may well be left unresolved. At some hierarchical levels, sites or specific sections within an organization, there may well be much better relations between leaders and subordinates (“a drop of water inside an icy vessel”—see corresponding image). If these proactive employees and their leaders begin to escalate bad news about the risks of their unit up an organization’s “frozen” hierarchy, then they are likely to face “icy” attitudes from their superiors. That information will not pass beyond this level of management but remain “frozen” and inaccessible to senior management. As a result, a company’s top brass will remain in the dark about the development of possibly serious events and will not be able to take adequate measures to prevent a catastrophic scenario unfolding. As a rule, the low level of trust of subordinates towards their managers is only one of the dynamics that indicates trouble within an organization. There are several other indicators that characterize relationships in a “frozen” organization.

Organizational model	Multi-level rigid hierarchy
Power distance between managers and subordinates	Long
Model of communication between managers and subordinates	Monologue (one-way from the top to the bottom)
Relationship between managers and subordinates	Lack of mutual respect and trust
Managers’ trust in subordinates	Low
Opportunities for subordinates to challenge management orders	Limited
Involvement of employees in solving strategic tasks of an organization	Low
Level of trust of subordinates towards managers	Low
Relationship between subordinates	Collectivism at shop floor level, but at the same time competition for the attention of superiors
Risk management approach	Reactive model (risks only addressed after serious accidents occur)
Willingness of managers and employees to investigate and analyze the systemic weaknesses of an organization that led to previous accidents	Low—tendency to blame individuals
Penalties	Frequent/rigid/punitive/no objective investigation
Willingness of managers and employees to analyze organizational shortcomings and discuss existing problems and risks	Low
Level of concealment of information about employee errors, work-related injuries, risks and problems, etc	High
Quality of risk-related information transmitting across corporate hierarchy	Low

“WATER”—INTERMEDIATE LEVEL OF TRUST—TRANSITIONAL STATE IN RELATIONSHIPS BETWEEN EMPLOYEES AND THEIR MANAGERS

Senior management can take several steps to increase employee confidence in management, with the goal of improving the quality and speed of communication about risks: publicly stating that they actively wish to receive information about risks, that no one will be disciplined for disclosing this information, and that the highlighted problems will be solved. Some employees may respond positively to this call and pass on risk information, but senior management should not be under any illusion that, even if some of the most confident employees respond positively, this does not mean every worker will from then on communicate openly and honestly with their superiors. It is likely to take several months or even years to “unfreeze” the corporate hierarchy, especially at the lower levels of an organization. For most employees to feel confident to speak out, they need to witness first-hand that management’s promises to anybody highlighting a problem are genuine: those bringing the news were not penalized, and the issues they raised were indeed resolved in a way that benefited everyone.

Organizational model	Multi-level flexible hierarchy
Power distance between managers and subordinates	Medium
Model of communication between managers and subordinates	Monologue prevails, but some examples of dialogue between managers and employees
Relationship between managers and subordinates	Respectful
Managers’ trust in subordinates	Average
Opportunities for subordinates to challenge management orders	Some examples of active listening to subordinates
Involvement of employees in solving strategic tasks of an organization	Medium
Level of trust of subordinates towards managers	Average
Relationship between subordinates	Cooperative
Risk management approach	Variable—examples of both reactive and proactive approaches
Willingness of managers and employees to investigate and analyze the systemic weaknesses of an organization that led to previous accidents	Medium—more serious incidents usually investigated in detail
Penalties	Occasional, reasonable and fair/objective investigation of incidents
Willingness of managers and employees to analyze organizational shortcomings and discuss existing problems and risks	Average
Level of concealment of information about employee errors, work-related injuries, risks and problems, etc.	Average
Quality of risk-related information transmitting across corporate hierarchy	Average

“STEAM”—HIGH LEVEL OF TRUST IN RELATIONSHIPS BETWEEN EMPLOYEES AND THEIR MANAGERS (WARM, OPEN AND HONEST)

Friendly, open, and trusting relationships between managers and employees lead to information about risks being quickly and efficiently transmitted up the hierarchy of an organization (“evaporated out of the vessel”). Employees can use a variety of communication channels, including informal ones based on personal relationships between subordinates and managers, to quickly convey critical issues up to senior management level. Workers are confident that risk information will be positively perceived at all levels within the hierarchy. Senior management recognize the value of this information, as it enables them to proactively initiate risk management at appropriate corporate levels so that the issues are promptly resolved. The valuable role of the employees who raised the problem in the first place will be recognized by public praise and suitable rewards.

Organizational model	Flattened hierarchy—fewer management levels
Power distance between managers and subordinates	Short
Model of communication between managers and subordinates within an organization	Two-way dialogue
Relationship between managers and subordinates	Trusting
Managers’ trust in subordinates	High
Opportunities for subordinates to challenge management orders	High—feedback welcomed
Involvement of employees in solving strategic tasks of an organization	High
Level of trust of subordinates towards managers	High
Relationship between subordinates	Mutual support and assistance
Risk management approach	Proactive (preventive measures taken to address risks before they become a problem)
Willingness of managers and employees to investigate and analyze systemic weaknesses of an organization that led to past accidents	High (detailed investigations undertaken for even minor and near miss accidents)
Penalties	Rare: look to find systemic causes—poor management decisions and flawed corporate process—rather than blame individuals
Willingness of managers and employees to analyze organizational shortcomings and discuss existing problems and risks	High
Level of concealment of information about employee errors, work-related injuries, risks and problems, etc.	Low
Quality of risk-related information transmitting across corporate hierarchy	High

This model was presented to the participants of the pilot project. Below is the feedback received from employees from every corporate level of this critical infrastructure company.

Results of responses to anonymous surveys within the framework of the pilot project: Do you understand the thermodynamic model of risk information transmission that has been presented to you?

	Fully understand	Mostly understand	Don’t understand very well	Don’t understand at all	Difficult to answer	Number of respondents
All survey participants	54.9%	40.2%	4.2%	0.0%	0.8%	264
Senior management, heads of departments and directors of sites (middle managers)	77.8%	22.2%	0.0%	0.0%	0.0%	36
Lower managers: deputy directors of sites, chief engineers of sites, heads of workshops, heads and representatives of HSE services at sites	47.1%	47.1%	4.8%	0.0%	1.0%	104
Engineers, foremen, and ordinary employees who operate critical infrastructure at sites	54.8%	39.5%	4.8%	0.0%	0.8%	124

Results of responses to anonymous surveys within the framework of the pilot project: Do you agree with the principles of this model?

	Strongly agree	Rather agree	Rather disagree	Strongly disagree	Difficult to answer	Number of respondents
All survey participants	45.8%	45.5%	3.4%	0.8%	4.5%	264
Senior management, heads of departments and directors of sites (middle managers)	50.0%	47.2%	0.0%	2.8%	0.0%	36
Lower managers: deputy directors of sites, chief engineers of sites, heads of workshops, heads and representatives of HSE services at sites	47.1%	42.3%	3.8%	1.0%	5.8%	104
Engineers, foremen, and ordinary employees who operate critical infrastructure at sites	43.5%	47.6%	4.0%	0.0%	4.8%	124

Results of responses to anonymous surveys within the framework of the pilot project: What stage do you feel your organization is at in the framework of the ”Thermodynamic Model of Risk Information Transmission”?

	Steam (warm relationship)	Water (transition state)	Ice (cold relationship)	Difficult to answer	Number of respondents
All survey participants	8.7%	61.7%	20.5%	9.1%	264
Senior management, heads of departments and directors of sites (middle managers)	5.6%	66.7%	22.2%	5.6%	36
Lower managers: deputy directors of sites, chief engineers of sites, heads of workshops, heads and representatives of HSE services at sites	14.4%	61.5%	17.3%	6.7%	104
Engineers, foremen, and ordinary employees who operate critical infrastructure at sites	22.6%	60.5%	4.8%	12.1%	124

1. Interpretation of responses: according to the majority of participants in the pilot project, the relationship between managers and subordinates in this company is in a transitional state (neither “cold” nor “warm”). A one-way, top to bottom communication channel between managers and subordinates prevails; the level of trust of subordinates in their managers is average; the level of trust of managers in their subordinates is average; and the quality of information about risks transmitted up the corporate hierarchy is often average (in some cases low). It is interesting to note how the responses of senior managers and ordinary employees differ regarding the assessments of “warm” and “cold” relations. Among ordinary employees, four times more (22.6%) believe that the relationship between subordinates and their management is warm, honest, and trusting when compared to senior managers (5.6%); five times fewer ordinary employees (4.8%) believe that the relationship between managers and their subordinates are cold as compared to senior managers (20.5%). This disparity may be due to the fact that ordinary employees frequently work in small, tight-knit units (regular work teams) under the direction of a single line manager. Such working practices tend to engender a very powerful team ethos and a correspondingly strong bond with the immediate line manager, with unwritten codes of behavior such as “united we stand, divided we fall”; and “all for one and one for all”. That is why some employees could perceive their relationship with their immediate line manager as trusting.

The results of the surveys indicate that this theoretical model is easy to understand and is shared by most respondents within the pilot project. Based on this model, a set of practical solutions to improve risk information transmission was developed at several of this company’s sites selected for a pilot project (Chap. 4 of this handbook).

6 Recommendation No. 6: Middle Management Are Allies of Senior Management in Building an Organization Where Active Dialogue Between Superiors and Subordinates Is Welcomed

©Dmitry Chernov, Ali Ayoub, Giovanni Sansavini, Didier Sornette, All rights reserved

Middle managers have a better understanding of the critical risks of an organization than lower-level employees

According to the HSE director of an oil company, the middle managers in charge of production facilities know more about the situation at an organization than shop floor employees or lower-level managers. If a company only asks for the opinion of shop floor employees about the critical risks of an organization, they may not always get an accurate assessment of the situation. Most lower-level employees are only familiar with a small proportion of the total work of a business, and only aware of problems with the equipment on which they directly work. Failure of a given piece of equipment (which a shop floor employee can report) can potentially threaten to disrupt the whole production process. However, in most cases, the middle management level will have backup solutions to cover specific equipment failure without disrupting production; a lower-level employee may not even know about these backup options. This means that a temporary shutdown of most individual pieces of production equipment will not affect the efficiency of the entire production process. As a result, getting information about critical risks only from lower-level employees may just lead to an increase in information noise, making it more difficult for senior management to understand the true picture of safety at a site.

The HSE head of a mining and metallurgy company also believes that it is a mistake to rely mainly on shop floor workers for information on critical risks. In his opinion, 95% of the critical risks in a large industrial company are recognized at lower and middle management level. The most serious concealment of risks does not happen at the bottom of the corporate pyramid—between employees and lower or middle managers—but at the top, when middle management hide critical problems from senior management, or at the very highest level, when top managers hide them from shareholders. Here concealment can have even more serious consequences. Therefore, once honest dialogue has been established between senior management and owners about critical risks and how to handle them (see Recommendation No. 1), the next step is to establish the same honest dialogue between the leadership and the middle management level.

The middle management problem

Some interviewees consider that in the traditional hierarchical model, the middle management level is the key blocker of risk information coming up from shop floor employees and lower managers.

The vice president of an electricity company believes that middle managers are often the main culprits in distorting or editing reports from their subordinates when they refer them up the corporate ladder. He has seen this occur many times, when middle managers have comprehensive information about problems within the production unit they are running, but often decide not to say anything to headquarters.

An HSE consultant working mainly for oil and gas as well as in air traffic control offers this example from his own experience. In one company, senior managers requested to receive information about problems from ordinary employees, but this did not happen. They told the respondent that this was because of an impenetrable “clay layer” of middle managers who did not want to report any serious problems, fearing this would reflect badly on their effectiveness as managers. It would suggest that they were failing to cope with their duties, that they were incompetent in solving problems, that they expected senior management to deal with these issues.

In the experience of a global director of safety for the oil and gas industry, the attitude of senior management towards occupational health and safety is usually very positive, showing a commitment to creating a corporate culture in which bad news can be conveyed seamlessly from the bottom to the top. However, the middle management level (the so-called “permafrost layer”) often creates an obstacle to this free flow of risk information. According to the respondent, most critical infrastructure companies pay a lot of attention to the leadership skills of senior management—but in truth, communication and problem solving would be improved more effectively if greater attention was devoted to looking at how middle management are functioning.

According to some respondents, most of the problems with risk communication from middle management are the result of owners and senior management setting overly ambitious goals for production, profit and costs. Middle managers cannot then freely discuss the problems that inevitably arise when they have to try and meet these targets in the imperfect reality of the production site. They are torn between the often unfeasibly ambitious corporate plans imposed by senior management, and the reality of operating outdated infrastructure. In addition, they are under the pressure of a company’s cost reduction strategy, which restricts both the resources available to modernize critical infrastructure and the wages payable to the workers operating the equipment. All too often, strategic goals and objectives are not discussed with middle managers: they come down to them as a diktat from owners and senior management. Many companies have created a culture of “no bad news”, where subordinates can only report achievements and successes. In this culture, it is very difficult for middle managers to pass risk information up the hierarchy to senior management and owners. Clearly then, there will be far less concealment of risk information if senior managers show that they actively want to hear the opinion of their subordinates, and then give them the resources to solve the problems they have identified.

The vice president of a gas pipeline construction and repair company believes that risk concealment at the middle level will effectively disappear if senior management are as eager to receive bad news as they are for good news. Middle managers conceal problems because senior management make it clear they do not want to hear about them. The problems of concealment at middle management level often arose because of the penalties that senior managers used to impose on production sites managers for the “offence” of giving an honest and objective report on local problems.

The head of an oil production facility explained why middle management seldom disclose the problems at their sites to their seniors: they are afraid of negative feedback from senior management, and of being ignored or misunderstood by the top brass. The middle level is boxed in by a strict framework of business targets. For the most part, senior managers want to hear about achievements and successes, not about problems. Middle managers are compelled to hide information about risks because of the priorities of an organization and the attitude of senior management. It is not that mid-level managers have an inherent desire to hide information. It is more that their bosses simply refuse to listen when they say that it is impossible to follow the plan and hit all the targets that have come down to them from headquarters. Mid-level managers know what their bosses want to hear—“everything is fine, it’s all under control”—and thus site problems are simply not mentioned.

The HSE manager of a metallurgy company echoes what other respondents have said. He attributes this “economy with the truth” to the corporate culture of a company, formed over decades, in which there is an unwritten taboo on bringing bad news to the boss.

The HSE head of a chemical company believes that it is senior management who set up the systems that make it difficult for middle managers to openly discuss production problems. Middle managers cannot challenge the CEO’s decisions on production and financial plans at the sites without consequences for their own careers. The ambitious plans launched from headquarters are often impossible to implement without serious violations of safety regulations.

Mid-level managers are interested in reporting problems: they want to share responsibility with senior management for solving them, and they need headquarters to allocate the financial resources. If executives show middle management that they are ready to listen, discuss and find resources to solve problems, they will be pushing at an open door.

The HSE director of an oil company does not consider that the problem lies with mid-level management: they only act as their bosses direct them. Therefore, middle management will only change if executives demonstrate that they want to hear about problems, that no one will be punished, and that resources will be allocated for them to tackle the problems they are facing. Senior managers should demonstrate a positive response to signals coming in from the field, in a way that all production site managers can appreciate. They need to prove that they will listen attentively to their site managers, explore problems with them, allocate resources, show appreciation to those who take the initiative, and so on. Middle managers will then know exactly the kind of response they will receive when they do go ahead and inform bosses about a serious problem at their site. If colleagues have had a previous positive experience when they warned headquarters about a risk, then all site managers will be encouraged to do the same, knowing they can expect a sympathetic and constructive reception.

Summing it up, the main reason for middle management concealing information about risks is because senior management are unwilling to hear about problems. Subordinates withhold this information from superiors, not in general because they are dishonest or malicious, but because senior management have made it clear one way or another that they do not want to hear about the problems that their subordinates are facing. Middle managers have got that message, and will only send reassurances and good news to the top. If senior management demand their subordinates fulfill production plans at any cost, without giving adequate resources, then they will respond by keeping quiet about the real picture on the ground. If instead senior management establish a dialogue with subordinates, and genuinely look to find a balance between achieving production indicators and maintaining occupation health and industrial safety, then middle managers will no longer hide risk information. They will quickly adjust their own practices, and in turn encourage their own subordinates to share problems with them. Risk information will only be communicated effectively throughout a company hierarchy if senior management: (I) genuinely want to receive information about problems; (II) do not penalize middle managers; (III) reward employees who make honest, objective reports; (IV) provide the necessary resources to solve production problems.

If penalties for bringing bad news are removed and subordinates guaranteed job protection whatever “awkward truths” they reveal, then most employees will willingly reveal site risks to their superiors. Not least because they recognize that the control and reduction of these—be it faulty machinery or inadequate procedures—is in their own self-interest. Not only does it reduce the likelihood of injury to workers operating the equipment, but it also protects their income and job security by reducing the chances of a serious accident that could mean a lengthy plant shutdown or even collapse of the whole business.

Attempts to bypass mid-level management

If senior managers believe that middle managers are hiding the real state of affairs in a company, then they may decide to bypass them entirely, and communicate directly with shop floor employees at the sites concerned.

The HSE head of a gold mining company has an example of this. On visits to production sites, the CEO would give some site workers his personal email address so that they could inform him directly about problems, thus bypassing the traditional managerial hierarchy. One day, he had an email from an employee at a remote field complaining that the toilets at the site had not been working well for over a year. As none of the field managers had paid any attention to requests from the workforce to solve the problem, the employee had decided to write directly to the CEO. It might be a small thing in terms of the overall business, but it mattered to the day-to-day comfort of employees at the site. The boss immediately forwarded the message to the head of the field, hiding the sender’s details. Unsurprisingly, the toilet problem was solved within a couple of days. A week later, a second message arrived from the employee, thanking the boss for sorting out the repair of toilets, even though they were located several thousand kilometers from headquarters. The CEO admitted, in personal communication with the respondent, that he had been ashamed to hear that some managers in the field could not solve such minor problems without involving their superiors, and requested that he intervened. The respondent was irritated by the situation, not least because it suggested that he was not managing his field teams effectively.

This case raises a major potential headache for senior executives. If shop floor employees across a company are taking their problems directly to the leadership, bosses will drown in messages requesting that they intervene in what are essentially local site issues, thus undermining the entire hierarchical structure. Lower and middle managers would become largely redundant if every local problem landed in a CEO’s inbox. A better solution would be to address the quality of work of the entire management team, so that non-critical site and workforce problems are satisfactorily resolved at the appropriate management level. Employees should only be going to the next level of management if they cannot solve a problem after raising it with their immediate supervisors.

One of the key questions that the authors of the handbook asked the first 30 interviewees was concerned with the creation of additional specific channels for communicating risk information directly from field level workers to senior management, bypassing the traditional hierarchy of lower and middle managers. At first glance, this seems a logical approach if executives remain ignorant about serious risks because managers all the way up the line are failing to pass critical information upwards. The respondents identified advantages and disadvantages of such an approach.

Advantages of introducing an entirely new alternative communication channel between shop floor employees and senior management—and why it is reasonable to question the wisdom of relying on a traditional corporate hierarchy as the only channel for obtaining critical risk information:

• The presence of an alternative communication channel reduces the likelihood of risk concealment by middle and lower managers, and shop floor employees. If senior managers have an independent system for getting information directly from the field, their subordinates will quickly realize that it is useless to try and hide risk information, because it will eventually reach senior management anyway and they might then be reprimanded for concealing it. An alternative channel can reduce the temptation for middle managers to distort or conceal the real situation, a subterfuge that is in any case a laborious and risky process. If they know that information about problems in their area of responsibility will inevitably reach senior management directly from shop floor employees, then that time, effort and risk will not be worth it—better to take the initiative and speak out first, sending accurate reports up to senior management via the traditional hierarchy of an organization.

  It is worth noting that immediately after the Chernobyl accident—when the plant management failed to communicate the gravity of the radiation situation and the state of the reactor to Moscow—a system was put in place to automatically transmit information about the operating parameters and radiation situation from every nuclear power plant across the USSR, effectively bypassing the individual site operators and directors in the flow of risk information. Some of the respondents have given other examples of the effectiveness of such alternative channels from their own experience. For example, one of the contractors of a mining company was involved in the provision of services for lifting goods. Employees there committed a safety violation during cargo handling. Under their contract with the mining company, the contractor should have paid a large fine for allowing such dangerous conduct. Instead of paying the fine, the contractor proposed equipping all their cranes with video cameras, set up to send a direct live stream both to the headquarters of the organization and the contractor’s office. Crane workers, realizing that anything dodgy they did during loading operations would now be recorded, began to avoid any behavior that could be later analyzed and lead to a penalty or their dismissal. After the introduction of this monitoring system, safety violations during cargo handling fell by 70–80% from the level before the cameras were installed.

  Another example comes from the oil industry. In one exploitation region, video cameras were installed at oil rigs. A team of specialists with extensive practical drilling experience was assembled at headquarters, and the team began to analyze drilling operations to identify any hazardous actions. This expert real-time analysis of drillers working in a remote region allowed immediate feedback to the drilling rig supervisor on anything that they had observed that required flagging up, most importantly any dangerous activity. Videos were edited at headquarters to exemplify driller errors, and then played in front of the drillers involved. This proved to be very effective feedback in preventing them repeating their mistakes. In the first month of operating the system, about 600 violations were detected. By the third month, violations had dropped by 89% to only 50–60. Here then was empirical proof: if workers realize that their superiors are monitoring them and analyzing their mistakes, they will be more vigilant about observing safety rules. The disadvantage of such a system is that nobody within the company can simultaneously observe and analyze dangerous conduct 24/7 on the dozens of cameras installed on every rig across multiple sites. This company is now actively working on introducing automatic monitoring of the driller’s activities. This project, called “computer vision”, aims to “train” artificial intelligence to automatically identify dangerous conduct.

  Based on this example, it is reasonable to conclude that the introduction of a comprehensive system of direct feedback on the situation on the ground leads to a reduction in operational safety violations. This alternative communication channel delivers much better information than previously received via the traditional models that rely on lower and middle management. Any alternative risk information channel acts as a security camera. Aware of the camera—whether literal or metaphorical—employees realize it is impossible to conceal their actions. It makes more sense for a worker to report dangerous actions, errors and risks to the management proactively, rather than waiting for management to come to them with the recordings that prove their wrongdoing. This kind of approach shows that while the traditional hierarchy can still perform many useful functions, it is worth considering a range of alternative channels to collect accurate information on the situation on the ground. The more channels providing information, the clearer the picture that senior managers can form of the true state of affairs, and the better their decision-making can be.

  When senior managers receive evidence of unsafe practice on the ground or risks being ignored at the bottom of the hierarchy, it is important that they do not automatically seek to blame their subordinates. They need to do all they can to minimize the tendency for lower and middle managers to be defensive when discussing risks identified by their subordinates, as this can have a devastating effect on an entire company. When they disclose risks identified by ground level workers, it is good practice to reassure managers at all levels that the leadership have no intention of penalizing them. On the contrary, they want the whole company to work together to prevent major incidents by maintaining and modernizing equipment. In this context, information about critical risks from employees or from automatic risk transmission systems is valuable to all levels of management. The best approach is for a senior manager to discuss the information received with the middle manager in a calm, non-threatening manner, elicit their views of the risk situation and together discuss ways by which the problem can be solved.

• Having an alternative channel motivates middle and lower managers to actively seek information from down the corporate hierarchy. An alternative communication channel will help the leadership to understand how well the middle and lower levels of management are communicating with shop floor employees about operational problems. This will motivate those managers to be more deeply immersed in the problems and challenges facing their workforce. That extra motivation could well be needed, as local managers can sometimes ignore what is happening on the ground. The fact that employees can go straight to senior management if they feel issues are not being addressed by their line managers will be perceived as a threat—“the sword of Damocles”—for lower and middle managers. At the same time, it will encourage employees to become de facto internal auditors for an organization, and to proactively identify risks in their area of responsibility.

• Other pluses. An alternative channel can transmit risk information very quickly from employees to senior management as it bypasses other levels of management. This could be crucial in a rapidly escalating emergency and make the difference between a full-on disaster and a close shave. Workers also see that senior management actively want to hear from them and that their opinions and observations are highly valued by the leadership.

Disadvantages of introducing a completely new alternative communication channel between shop floor employees and senior management—and why the traditional hierarchy should not be compromised for the sake of direct communication between senior management and shop floor employees:

• An alternative channel undermines the sustainability of the traditional hierarchy. The presence of alternative information channels can undermine the work of management. After all, if senior managers hear about risks directly from shop floor employees and make their own decisions, it is not clear exactly why middle and lower managers are still needed. If they are excluded from the decision-making process, then the reported issues will be decided at the top level. This will have the inevitable consequence of information overload for bosses. If this form of communication continues for any length of time, a company will just grind to a halt. All the interviewees who raised this issue advised against invalidating the traditional hierarchy in this fashion, and recommended working to strengthen it: trusting middle and junior managers, listening to them, seeing them as allies in a shared endeavor, and delegating responsibility and resources to them to identify and manage critical risks.

  If the middle managers already in place continue to hide information despite these initiatives, senior managers will then need to recruit new qualified and loyal middle and lower managers who understand and accept the importance of getting accurate feedback up the corporate hierarchy. Some leaders try to control every aspect and layer of their organizations. But with a large technology company, it is physically impossible for senior management even to know about, let alone actively manage, everything that happens. Employees on the ground will understand the situation more fully, and thus make better informed decisions on risk management, than senior managers based at headquarters thousands of kilometers from the production site. This is another reason that most of the respondents were against replacing or weakening the traditional hierarchy by establishing an alternative risk communication system: it takes local decision-making out of the hands of managers at a site. There was unanimous agreement that leaders should support their lower and middle managers to improve the quality of communication up and down the hierarchy.

• When middle managers fear for their careers, they may take reprisals against employees who, by speaking out, negatively affect the organizational climate of a company. If mid-level managers are liable to be penalized when their subordinates disclose information about risks, then they are likely to fear shop floor workers going over their heads to senior management. They will try to identify any employee who seems to have a strong sense of civic duty and a high degree of confidence and endeavour to dissuade him/her from speaking out to senior management. They may even take reprisals against such proactive employees. This will silence most of the workforce, or at least ensure that any information reaching senior management from the shop floor will not be objective, but “edited” as another “good news story” to avoid such reprisals. At this point, senior managers can end up in a lose-lose situation. If they fail to protect employees who have had the courage to speak out and contact them, those employees will lose confidence in senior management. However, if they publicly support the whistleblowers and make an example of a middle manager by publicly punishing them for taking reprisals against their subordinates, they will alienate and de-motivate their middle and lower managers. In general, neither scenario will help create an atmosphere of trust within a company. Middle managers will be left trusting neither their bosses—who have created a system that undermines their authority and scrutinizes their work—nor the workforce, any of whom may go over their heads by reporting directly to headquarters about the real situation on the ground. Ultimately, this whole approach will damage confidence and trust throughout an organization. Instead, leaders need to empower and reassure their middle managers, and encourage them to discuss their problems openly. The declared policy of a company, and the systems it puts in place, should enable both managers and ground level employees to report information about risks and problems without fear. This is more productive than undermining the traditional hierarchy by creating alternative information channels.

• Employees can use an alternative channel as a tool to challenge decisions of middle and lower managers. If a channel is set up for employees to take problems directly to senior management level, they are being given a tool that allows them to bypass lower and middle managers and effectively challenge their decisions. In companies with a reactive culture, this could create internecine conflicts and increase mistrust between different levels of the hierarchy. Such alternative channels should only be implemented in companies that already have an open corporate culture, where managers are ready to hear about problems and solve them, and where there is no penalty system for mistakes. If the workforce is well trained and competent and feels secure, then such a system can be effective and function as an additional communication channel. It can help all levels of management to better understand where the problems are on the ground, supported by the professional assessments of the people who are operating the equipment on a daily basis. In a healthy corporate culture, middle managers will not feel that this means senior management do not trust them: on the contrary, they will welcome having an additional channel available to facilitate the communication of important risk information, which may not have been visible to even the best site manager.

• Shop floor employees do not have detailed critical risk information. The value of the risk information they can provide is lower than that received from middle management. Lower-level employees have narrow competencies and limited information about the work of the rest of the organization. Shop floor employees often fix problems that could affect their own personal safety or might lead to failure of the specific equipment they are working with, which may not always be critical. They also may not be aware of the technological condition of the equipment they are operating or have the training to make such evaluations. Many critical infrastructure companies have specially trained employees who evaluate equipment according to clear criteria and objective assessment—the ratings of such experts can be relied upon. In addition, shop floor workers are usually not thinking in relation to the whole organization or even their workshop. Thus they do not see the wider picture of risks across a company. Therefore, if there are direct channels for employees to transmit risk information to senior management, then headquarters risks being flooded with information noise about insignificant risks or fragmentary information about production sites. In addition, as some employees prefer to work on new equipment, they will do their best to discredit older equipment even if it is still perfectly serviceable. As mid-level managers receive information from many subordinates, they have a greater breadth of understanding of the situation. An issue that seems critical to the employee affected by it may seem less significant to a manager making risk assessments across a whole industrial site.

  The head of a power plant cites an example. In his plant, there are 400 workers, but only about ten shift supervisors and shop managers actually understand the critical risks of all the equipment in use across the whole plant. Senior management do not need information about all risks—only those that could have serious implications for their company as a whole, including a major accident. These critical risks are not usually well understood by shop floor employees, but only by middle and lower level managers who have an overall view of the entire site. In addition, middle managers have the industry experience to be able to rank risks, and determine the likelihood of the occurrence of adverse events. There has been a trend in recent years for people with a good business background but no industry experience to become senior managers. However, most middle managers have worked their way up from the shop floor to being head of a production site. It is these people who best understand the intricacies of a production process, and can make professional assessments of the state of critical infrastructure.

  For all these reasons, it is more important for a company leadership to build good communication with middle managers than lower-level employees. Senior management can usefully visit sites and meet with the limited number of shop floor employees who monitor critical risks on a daily basis, but this is only a small proportion of an industrial company’s workforce.

  It does not follow that the information about other less serious risks that shop floor employees provide should simply be ignored. The task for senior leaders here is to ensure that their middle and lower level managers have the resources they need to act independently. Then managers at site level can deal with the secondary problems their workers have informed them about, without requiring the attention of senior management.

• If you ask for risk information from every employee, you will need huge resources to reduce and control all the risks. If a company starts collecting information about all risks from every employee throughout an entire organization, so many are likely to come to light that a company simply does not have the resources—organizational and financial—to tackle them all. But if employees see that the managers have paid little attention to their reports, fewer will take the initiative in the future: why waste your time and effort raising an issue if you will probably just be ignored? If managers ask employees to report risks, they must be prepared to give feedback to everyone who takes the initiative to do so.

• Maintaining an alternative channel requires significant resources with no guarantee of genuine, practical improvements. Responding to all the data coming in via an alternative communication channel is challenging and expensive in terms of time and organizational resources. A company can invest hugely in investigating every negative comment made by employees, to find that only a few percent of these messages were relevant—everything else was no more than information noise. The HSE manager of a metallurgy company has an example from his practice. Two years before the interview, 600,000 safety audits were conducted in his company, and the results were entered into a data system. A year before the interview, 400,000 audits were conducted, and the assessment methodology was slightly adjusted to reduce information noise. HSE units spent a lot of time entering data into the system. However, the practical impact in terms of improved safety has been modest. The respondent had to go to the CEO for permission to reduce the amount of data being collected, since most of it has proved of little real-life value to the company. The safety audit system made it possible to monitor the managers who had to respond to the problems identified, but a huge amount of time and money was spent conducting these audits. In the respondent’s view, the work of any alternative communication channel for risk information may have similarly modest results.

  An analysis of the pros and cons suggests that the creation of a completely new channel to communicate risk information, as an alternative to the traditional hierarchal systems, will only be effective in organizations where senior management (I) actively want to receive information about critical issues; (II) do not penalize any employees for highlighting problems; and (III) support their subordinates to solve any problems.

  However, almost all the respondents asked about introducing alternative channels advocate strengthening the traditional hierarchy—especially the relationship between senior and middle managers—as an essential first step to improving the identification and control of critical risks. A majority also recommend that an alternative channel should only be introduced as an addition to the more conventional chain of command systems, and not as a replacement.

  Development of automatic electronic channels to transmit information about the operational situation, bypassing both the operators and managers of industrial sites, is seen by many respondents as a promising and useful development for critical infrastructure companies. One respondent from the oil industry makes the following powerful argument in its support. It is difficult for workers to feel offended or insulted if it is a machine that is collecting information about their performance and sending this on to their superiors. However, they may well resent a flesh-and-blood colleague who reveals their shortcomings and mistakes by ‘shopping’ them to the management. Such grievances build up and have a negative impact on the entire production workforce. For this reason, alternative transmission channels will generally operate better if they are based on automation rather than on the reports of employees.

Middle management and senior management can work as allies

Senior management can only build an effective system to obtain accurate information about risks, and change the safety culture in a company, by working with the middle managerial level. Therefore, the best strategy must be to make middle managers allies and not enemies.

In a proactive risk management model, senior managers see their subordinates as colleagues and valued partners, who can be entrusted with identifying risks and solving difficult issues. In this model, the organizational hierarchy of a company becomes compressed and broader. With fewer levels involved, information flows more quickly up and down between different levels of management.

In contrast, a reactive model casts junior managers more as mere subordinates and assumes they will always look to avoid responsibility for problem-solving, cannot be trusted, and need constant, close supervision. Communication is a one-way flow of directives from above, and the organizational structure looks like a tall narrow pyramid with multiple levels, in which information is transmitted slowly step by step, through successive layers of management.

Building an atmosphere of trust between senior and middle management

The HSE manager of a metallurgy company believes that to avoid middle managers feeling under pressure to conceal risks, the leadership should create an atmosphere of trust in which middle managers are encouraged to share urgent problems at their sites with their seniors. They should create a non-judgmental and supportive environment, and always provide the necessary resources from headquarters to solve the problems middle managers have raised.

To achieve this, several respondents recommend that senior management should:

• emphasize that they trust middle management;

• ensure that middle managers disclosing risks and problems are not penalized or dismissed;

• be honest and transparent in their intentions and decision-making;

• appreciate and reward subordinates who provide accurate information;

• show that they want to work together with middle managers to solve problems, and not leave them to tackle local issues alone;

• either demonstrate competence and an understanding of production matters or be straight about the limits to their experience and listen to the professional expertise of middle managers;

• assure middle managers that their position is not under threat if site employees bypass them to communicate risk information to the leadership. Senior management are simply collecting the information they need to make the best possible decisions. Middle managers who understand this are not afraid of alternative communication channels and welcome their more proactive employees as contributors rather than seeing them as a threat to be rooted out;

• identify and empower the employees who are most supportive of a more open approach to risk transmission and best appreciate the importance of the leadership receiving objective information;

• identify and neutralize “blockers” (employees resistant to change and open communication) among middle managers, rather than assume all managers at this level are the same and cannot be trusted.

Dialogue between senior and middle managers

Many of the interviewees emphasize that dangerous operational practice, and the concealment of risks, often stem from middle management struggling to negotiate and adjust the over-ambitious production plans set for their sites by headquarters. This leaves them no choice but to try and implement the plans—even if this means increasing operational risks, or falsifying results. Respondents from one oil company recommend that as part of the business planning process, the leadership invite mid-level managers from all production divisions to headquarters to discuss the feasibility of the plans and assess the risks associated with implementing them. In this way, senior and middle managers can thrash out realistic and achievable production plans, identify the main risks involved, and agree on the allocation of resources to address them. A helpful exercise during these sessions is for participants to swap roles, with middle managers becoming seniors, and vice versa. This gives both groups an opportunity to “stand in each others shoes” and view the problems from their colleagues’ point of view.

The head of HSE of a metallurgy company cites the example of an operating committee that meets regularly at headquarters to analyze the work of all the company’s industrial sites. The committee is attended by the CEO and key senior managers. Each session is conducted as a video conference with the management team of one of the sites, during which the site director (middle management) reports to the top brass about the work of their facility. Before the session, a report with production statistics is sent to headquarters. The site director reports on progress towards production indicators, and on any problems or incidents that have arisen. Senior managers then establish a dialogue to discuss the reports. The quality of the committee’s feedback to the on-site team is crucial: avoiding reproach and blame and focusing instead on practical solutions to any difficulty raised. Middle managers appreciate this collective approach to problem solving—especially if the necessary resources are forthcoming—and thus become motivated to provide accurate and objective site reports, including the bad news as well as the good.

The HSE director of a gold mining company believes that senior management should regularly ask production site managers what serious risks they have identified over the past week, what measures they propose to address them and what is already being done. This demonstrates the new priorities adopted by the leadership. In response, mid-level managers and their subordinates begin to pay much closer attention to the ongoing management of critical risks. According to the respondent, if this approach is consistently implemented, discussion of critical risks and how to reduce them soon becomes a corporate habit across a company.

The HSE head of an electricity company explains how their leadership include middle managers in risk-related discussions. The first step for this company was to set up a leadership committee for the protection of health, safety, and the environment. The committee meets once a quarter chaired by the CEO, and includes deputies, functional directors from headquarters, and the directors of all the industrial sites. They discuss progress towards the implementation of the annual safety plan and identify any key issues across all the sites. All mid-level managers provide a short report on the general situation and any current problems at their facilities. This allows leaders to gain a clear picture of what is happening across the whole company, share experiences and discuss ways to resolve existing issues. Upon returning to their production sites, middle managers hold meetings of the site HSE working groups, which include lower managers, to discuss the goals and objectives set by the committee.

Many interviewees emphasize that the most effective way for senior management to get an objective picture of current risks—in addition to communicating with their middle managers—is to make regular visits to a company’s production facilities. Just as it is important for them to get information from middle management through the traditional hierarchy, leaders also need to hold meetings with the workforce on the spot and discuss both problems and solutions. These site visits provide another vital way of obtaining objective information about the situation on the ground across a whole company’s operations, in a way that does not challenge or undermine the stability of the traditional hierarchy (the issue of senior management conducting industrial site visits is discussed in more detail in Recommendation No. 7).

Delegate the authority to stop the operation of faulty equipment to middle and lower-level management

The managing director of an electricity company believes it is very important that employees at production sites have the authority to stop critical equipment that is not working as it should. To make this possible, there must be clear assessment criteria whenever equipment is showing signs of malfunctioning, and employees need to be clear who has the authority to order a shutdown. It is also important that there are no penalties for taking such action, even if it turns out after investigation that the shutdown was not justified. If a complex piece of industrial machinery appears not to be running normally, a swift and urgent assessment of the situation may well conclude that immediate shutdown is the safest course of action. However, it is also possible that the shutdown may be shown after investigation to have been unnecessary. It is important that management show they are committed to never penalizing employees acting in good faith with a “better safe than sorry” approach. On the contrary, whatever the result of any subsequent investigation, employees should be praised for acting promptly and courageously to prevent a possible serious escalation of the situation.

Results of responses to anonymous surveys within the framework of the pilot project: The middle and lower managers have the power to stop the work of a workshop; and even the entire operation of a plant if critical risks are identified. Employees are given the right to refuse to perform unsafe work. In your experience, how often do managers and employees exercise these rights?

	Very often	Often	Occasionally	Rarely	Never	Don’t know	Number of respondents
All survey participants	2.8%	13.2%	24.2%	40.2%	10.4%	9.2%	326
Senior management, heads of departments and directors of sites (middle managers)	0.0%	17.1%	29.3%	39.0%	7.3%	7.3%	41
Lower managers: deputy directors of sites, chief engineers of sites, heads of workshops, heads and representatives of HSE services at sites	2.8%	18.5%	24.1%	42.6%	5.6%	6.5%	108
Engineers, foremen, and ordinary employees who operate critical infrastructure at sites	3.4%	9.0%	23.2%	39.0%	14.1%	11.3%	177

1. Interpretation of responses: managers and employees rarely exercise the right to stop production or refuse to perform unsafe work. Most staff tend to continue, despite the presence of concerning and potentially dangerous technological problems.

The HSE head of an oil company poses a rhetorical question—why do employees constantly make calls to headquarters about even minor issues? His answer: because they are not sure of their authority to make certain decisions without attracting negative consequences. In fact, these continuous appeals to headquarters arise because of fear in the opposite direction: senior managers are afraid to delegate authority and responsibility for risk assessment and decision-making to site production units. Consider the case of a field manager who independently makes the decision to halt work for an entire oil facility because of some operating issue. Such decisions are inevitably based on incomplete information—at the time, all that the manager can be certain of is that some of the equipment is running abnormally, and that if it fails there is a significant risk of an accident. The stoppage inevitably leads to a drop in the daily oil production rate, which affects the production and financial indicators of the entire company. After the stoppage an investigation is launched, which concludes that the equipment fault was not in fact critical. However, this conclusion is based on detailed information which has only become available to investigators after full examination of the faulty equipment.

Senior managers at headquarters, having seen the investigation report, consider that there were insufficient grounds for the stoppage. They conclude (unfairly) that the field manager was too hasty in deciding to shut down the entire facility, incurring huge costs to the company. In their view, the field manager at this level should have collected more information before making such a major decision. But from the perspective of the field manager on duty, the information available to him at that moment indicated possible serious equipment faults, and every minute’s delay made a serious incident more likely. He did not have the luxury of time to gather more operational information by conducting a more detailed analysis of the equipment.

However, leadership teams worry that if other field and site managers start making similar shutdown decisions, then business will suffer. They must be seen to identify those responsible for such a sudden drop in production and hold them to account. The asymmetry of risk information here is hardly fair. The decision to punish middle managers for the “reckless” shutdown of the facility is taken at headquarters based on information that only became available after several weeks of investigation; while the field manager’s decision was in reality a rapid judgment call made under great stress, based on the inevitably incomplete operational information available at that moment.

News of the discontent of senior management—and the penalty imposed on the hapless field manager—duly reaches the head of the field. Understandably, he decides that if a similar risk occurs in future, he will behave differently: to avoid making an independent decision to shut down the oil field, he will simply report the situation to headquarters. From his point of view, senior management seem to want these decisions to be their sole preserve, so he will obediently pass all responsibility in such critical matters to them. This is likely to have a very negative impact on accident prevention in future—not least because valuable time can be lost waiting for permission from headquarters to stop equipment.

When leaders pull decision-making back to their own level in this fashion, depriving the middle and lower levels of authority, they are taking on the entire burden of responsibility. They are effectively reducing field managers to statisticians, with no power to make rapid, independent decisions in response to changing operational situations. The official policy of this oil company states that there will be no penalties for site managers who act independently to shut down facilities—but in reality, they know this is not true. They will be enormously reluctant to take major decisions, even if a full-blown emergency is developing before their eyes.

Once they have been criticized and punished for taking independent action, field managers will make sure they stay out of trouble. They will never again risk being reprimanded and accused of alarmism or causing an avoidable negative impact on the company’s performance. This creates a very dangerous situation:

• they will choose to convey only positive information to headquarters;

• they may not inform headquarters of observed risks;

• they may report a significant risk but play down its potential consequences, so the chance of early preventative action is missed;

• even when faced with potentially critical risks that demand an immediate response, they will wait for decisions from headquarters.

Conversely, if leaders want to reduce the likelihood of risk concealment at production sites, they must take the following action:

• encourage subordinates not to be afraid of disclosing observed risks;

• jointly discuss ways to reduce risk and delegate authority and resources to deal with them;

• delegate real authority to managers on the ground to stop all site operations if they consider it necessary;

• avoid punishing site managers for equipment shutdowns, even when they later prove to have been unnecessary—on the contrary they should be acknowledged and praised;

• demonstrate that such positive feedback is evidence of their trust in their site managers, and that they have confidence in their ability to do whatever is required to ensure safe production in the long-term.

The HSE director of an oil company cites an episode that occurred in his own organization three years prior to the interview. Site managers (middle management) were given the power to halt field operations to prevent emergencies. One day, a manager exercised this authority—and as a result, the company lost several million dollars in revenue. Later, it turned out that he had overestimated the catastrophic potential of the situation. Fortunately, company leaders had the wisdom not to penalize him or accuse him of reckless action. Nevertheless, there were negative notes in senior management’s feedback, particularly questioning the competence of the field manager to assess the criticality of the situation. Therefore, instead of gratitude for the preventive shutdown of the facility, he was left with a sense of shame that he had made a mistake and incurred the disapproval of the leadership. This treatment remained in the field manager’s memory, and from then on he became more cautious about independent decision-making. For instance, the respondent suggested that after this incident not all information about observed risks at the field was reported to headquarters. The managers of other fields were aware of how senior management had reacted to this case, and they too became more cautious about imposing preventive stoppages. This shows how even a single mixed response by senior management towards a single site manager can inadvertently create unwritten rules of conduct for middle managers. After criticism from headquarters, field leaders may start hiding or downplaying risks, and will become hesitant to take the initiative even when faced with a catastrophic escalation of events.

The leadership of the company did learn from this episode. In similar situations since then, senior management have always thanked site managers for taking the initiative to stop operations, whether or not the action later proved necessary. Nevertheless, it took several years for the entire company to overcome the consequences of this single piece of negative feedback after an unjustified stoppage. Clearly senior managers need to be very careful about how feedback is given. They should consider how their appraisals or comments might affect the willingness of employees throughout the company to report risks and make decisions on preventive risk mitigation.

The company has also ranked the possible risks that the fields might face and determined appropriate levels of on-site responsibility. Decision-making on minor and more routine issues is delegated down the hierarchy: people at the field itself have the authority to make operational decisions, without waiting to hear back from headquarters. With any technological problem that could develop into an emergency, or with certain complex work, field managers and headquarters take joint responsibility. The field provides headquarters with all the information available about the issue in question. Headquarters, in turn, provides the field with technical expertise through a dedicated scientific and technological crisis committee. This brings together highly qualified specialists in both drilling and field operations. In practical terms, it works like this. A designated technical expert is on duty around the clock at headquarters. In the event of a call from the field, they quickly assemble the specialists’ team to obtain a comprehensive analysis of the situation. It is beneficial for managers at the field to consult experts at headquarters, because this leads to the sharing of responsibility and of the expertise to reach the best solutions to complex technological problems. The leadership also benefit as they have access to detailed site information, making it less likely that a serious incident develops that could damage the whole organization. Decisions are made through constructive dialogue. Responsibility is shared: it falls neither on a single site manager, nor on a senior manager at headquarters with limited knowledge of the situation in the field.

Headquarters are there to serve production sites, not vice versa

In recent years, this same oil company has adopted the principle that headquarters are there principally to support the functioning of the fields—not as an overseer and controller, but to assist the fields to operate more efficiently. To this end, headquarters provide scientific and technical assistance to the fields, and allocate resources to them to reduce the likelihood of technological risks. They also advise on how to manage field operations more efficiently. The company leaders have declared that they do not want field performance to be simply reported up the hierarchy: this responsibility is a shared function. The message disseminated throughout the company is: “Headquarters are there to help employees in the field”. All this represents a move away from a top-down monologue model—where headquarters issue orders down a clear vertical hierarchy, and local units carry them out—to a dialogue model where headquarters and the fields discuss risks, problems, and challenges cooperatively and on an equal basis. They take shared responsibility for achieving industrial targets, tackling problems and maintaining a good safety record. This respondent was asked what he thought an ideal model for transmitting risk information from the shop floor to senior management should look like. His answer was that headquarters should be on a par with production sites as a partner, rather than hanging over them as an overseer and censor. The transition from traditional vertical subordination to horizontal partnership is not a step change—it is an evolutionary process of organizational development.

©Dmitry Chernov, Ali Ayoub, Giovanni Sansavini, Didier Sornette, All rights reserved

This company is gradually moving from a rigid hierarchy model (90°) to a model where relations between headquarters and fields are on an equal footing (0°). It cannot yet claim that this has been fully achieved and that all communication is horizontal. The current situation is this: (I) headquarters set goals for the field; (II) headquarters set policies; (III) headquarters set plans for the fields for oil production, etc. However, headquarters tell the sites that if they are unable to fulfill any of the goals and directions set, then they should bring this straight back to senior management, without fear of reprimand. When this happens, both sides are committed to working together to adapt the plans so that the targets are acceptable to both parties, and to find an optimal solution that will address the problem at the site, but without leading to an increase in accident rates. In other words, the goals initially set by headquarters are adjusted through dynamic dialogue to reflect the reality of field operations. In the organizational development of an industrial company, achieving “0 degrees”—horizontal communication in the dialogue between headquarters and the field, or full partnership—can be seen as an ideal goal. The same applies to the aspirational “goal 0”, or zero tolerance to injuries, in the field of industrial safety.

The head of HSE in another oil company shares a similar experience from the beginning of her career in the industry in the mid-1980s. The headquarters of this company was in an oil region, next to a very large field. Over the following decades, the CEO would become a multi-billionaire and one of the most respected oil executives in the world. Once a month, he would gather the administrative staff at headquarters and remind them: “It is not us at headquarters who make the money—it is the people working at the rigs in harsh conditions!”. This brought it home to these staff that they were there to help production units, and not vice versa. The CEO espoused this mantra for many years and influenced the views of most of his employees. He also made it clear to employees that when managing critical infrastructure, a short-term business philosophy is suicidal. For example, he fought to change the attitude among some novice employees that they were there just as temporary workers: many came to the field on a three-year contract. The CEO encouraged them instead to treat their jobs as if they had come to work in this oil region for 20 years. Everything possible was put in place to assist employees to relocate with their families to the local area. A huge social infrastructure was constructed, offering affordable apartments and generous facilities for families, so that people would see their work for this company as a central part of their lives. Salaries were very generous compared to the national average in the country. Very fast career growth was possible, partly because new fields were constantly coming into operation and the organization was rapidly expanding. Though the climate in the region was extreme, everything was done to make employees’ lives as comfortable as possible. This strategy shows a deep insight into the value of mutual support, shared interests, and common values. When employees realize that they will be working in a company for 20 years or maybe even a lifetime, they have a different attitude to how they go about their job, including how they operate equipment: with more care, a proactive disclosure of risks, and preventive repairs. This approach clearly had a positive impact on the workforce: employees looked forward to a long-term, personal relationship with the company, to forming close social and family ties and making the company and the region their home. From the senior leaders of the company, the consistent messages to each employee were: “you are needed and welcome here for many years”; “everything you desire—work, family, colleagues, an apartment, social infrastructure, good salary—is yours for the taking”; and “take pride that you are part of a new industrial project that will benefit the whole country”. All company employees lived in small single-industry towns near the oil fields. Many site managers lived next to regular workers in the same street. Any employee could easily make an appointment with the senior managers of the company and discuss any problems or risks that were troubling them. Moreover, there was no strict hierarchy or stern subordination. To make the best possible decisions, managers recognized that they needed to hear the opinions of every employee who was working with critical infrastructure on the ground. This approach means that employees will generally do everything they can to give them comprehensive information, as they feel valued and honored that managers are turning to them for advice. News of the company’s open attitude and the management’s willingness to listen spreads quickly throughout the company, especially in a small, single-industry town. People naturally begin to reach out to their superiors. Eager to gain their trust, they will work hard and with integrity to prove to their leaders that they are all in this together.

Move company headquarters closer to key production sites

Headquarters and production sites should be in constant communication so that there is no barrier to discussing risks.

The HSE head of a fertilizer mining company explains that their senior managers are located close to production workers. Their headquarters are in the city where the mineral salt is mined, and from headquarters to the main mine is only a 15-min drive. By contrast, most extractive companies have headquarters in capital cities closer to governmental and financial centers, hundreds or even thousands of kilometers away from their production units. Locating headquarters near the production sites makes it easier for different levels of management to communicate, and for senior management to keep track of the situation at the mines, because all production meetings are held at headquarters. In this mining company for example, many production meetings are attended by both senior and middle managers. Mineral harvester team leaders are also invited to some meetings to discuss key production issues. A typical example: the CEO of the company is very familiar with the design of the harvesters used for mineral salt extraction, including operational strengths and weaknesses. Even though the company still operates a traditional hierarchical structure, senior managers personally know all the key lower-level managers responsible for controlling critical risks, and employees are free to request a personal appointment with the CEO. This physical proximity builds cooperative working values and assists the leadership in making faster and more balanced production decisions, even on complex issues, than they could if the headquarters were far away from production.

The managing director of a company supplying heat and electricity to a city of more than 12 million people gives another example. Over several decades, the company has developed a culture of regular reporting from subordinates to managers about operational problems within its infrastructure. This culture has probably emerged for several reasons. Firstly, the company is managing critical infrastructure, the failure of which can immediately affect the quality of life of millions of people. Everyone working there understands the enormous consequences of major accidents, and they do not need to be convinced of how important trouble-free operations are for their fellow citizens. Secondly, because the company infrastructure is all within the city, the physical distance between employees and managers is small: any employee could drive to any of the company’s managers within an hour or so and discuss a problem in person. Shop floor personnel who have the experience to assess the consequences of specific risks are required to immediately report any deviations in the operation of the equipment to their supervisors. If resources are not available on the spot to solve the problem, supervisors will report to senior management to quickly get them authorized. In short, the company has created a management system that allows them to respond very rapidly to solve production problems. Employees at this company willingly report any risks they encounter in their area of responsibility, in large part because they know they can quickly gain the attention of senior management, and the problems will quickly be resolved. The respondent said that in his whole time as the managing director, every single occasion that an employee noticed a dangerous development they put the situation under surveillance and reported it. Shop floor workers always inform their superiors about significant risks, and they in turn report to senior management.

The head of risk management at a nuclear power plant admits that one of the reasons why risk communication systems were effectively implemented in his organization was that the managers responsible for implementing the proposals were physically located at the nuclear power plant during the entire period of project implementation. The respondent was on this team and attended all meetings where identified risks were discussed, and his colleagues were also members of the emergency team: “we managers worked together with everyone; we were part of the family; we were in a group. If we said something, then the workers of the nuclear power plant believed what was said”.

Reduce the number of managerial levels

The HSE vice president of an oilfield services company believes that even in a large industrial company operating over a wide geographical area, there should be no more than five or six management levels, with no more than six deputies under each manager at any level. In his experience, this is the optimum structure. With fewer levels of control and a flatter corporate structure, it is easier to manage the company, and the transmission of information up and down the hierarchy is more efficient. He cites the example of one of the world’s leading gold mining companies, where the field managers (middle management) personally know all the workers at their respective sites.

However, the respondent considers that senior managers should take great care in making decisions about the delegation of authority and responsibility down the corporate hierarchy. In projects associated with oil production—for example, the commissioning of a new field in an unexplored geological region—the transfer of broad authority to people on the spot is justified. In this case, experienced local production managers and workers understand the specifics of working “in the field” better than the staff at headquarters, likely located several thousand kilometers away. Nevertheless, in the operation of a sophisticated fixed facility like an oil-refining complex or a nuclear power plant, lower-level employees should be required to follow clear instructions. Any initiative to modify these instructions or operate equipment beyond design specifications should have the full approval of higher managers, informed by qualified experts and by the suppliers of the equipment.

Agents of change

The HSE manager of an oil company believes that nowadays, many companies are trying to move away from traditional hierarchical management models. Special training is available to teach managers how to communicate with employees. For example, his company has a very innovative production site where they are beginning to level out the structures of top-down communication and introduce new principles of organizational behavior. At other production sites where traditional management practices persist, meetings of the drilling teams are held every day, attended by employees and their immediate supervisors. As a rule, the style and agenda are very prescribed: pressure to implement the drilling plan, penalties for errors and target shortfalls, blaming and shaming of subordinates. The same applies throughout the chain of command. By contrast, at the innovative production site, weekly employee tea-parties are held with middle and lower management present. With this more informal environment, discussions about issues and problems faced by specific rigs are much more open and productive. Sometimes there will be a barbecue during working hours to “break the ice” and “oil the wheels” of communication between leaders at different levels, so that it becomes much easier to discuss problems. Sometimes mid-level managers visit the rigs in person, and make time to speak with the drilling teams while they work.

But back at headquarters, many of the “old school” managers do not welcome these innovations. Their main criticism, often unspoken, is that this approach erodes the traditional hierarchy within which they have worked through their entire careers. There is institutional inertia and a resistance to change. They believe it is fine for employees to form friendly working relationships at the same organizational level but they are not willing to establish more friendly relations with subordinates. These “old school” leaders are fearful of closer, more trusting ties as they would make it harder for them to shout and berate the workers, to manipulate and control them through threats and authoritarian attitudes as they have done for decades. If their employees begin to see them as friends—and therefore to some extent equals, rather than as people to fear—it will no longer be the leaders in charge, but employees controlling and manipulating them. For many long-standing managers, a new company instruction to build more trusting and friendly relations with employees can seem unfamiliar and threatening: they simply do not know where to even begin. Therefore, there is much skepticism and unofficial criticism of this approach from outside the innovative production site, including many senior leaders at headquarters. It is ironic that the “old school” managers’ position contradicts the stated new corporate goals, which were created and actively promoted by senior management. Nevertheless, their resistance is understandable: for 15–20 years they delivered acceptable results for the company through their tough management approach and practices. Suddenly the leadership is expecting them to abandon the way they have always treated and managed their subordinates—which though repressive, has proven to be effective in achieving results. Leaders are now encouraging them to make friends with their subordinates, whom they have always tightly controlled and never considered as partners in improving the efficiency of the company. Those adhering to the “old school” are doubtful that this new dialogue model will allow them to achieve the set production targets—conveniently forgetting that the tough monologue communication that used to deliver successful results required them to ignore many critical risks.

With less rigid hierarchical relationships, some individual middle and lower managers can have a very good influence on the production process, so senior management do not need to supervise them so closely to achieve improvements in the field of industrial safety and risk management. If senior management can identify these more proactive employees amongst the critical production workforce, they can use them to build a better system for delivering feedback on technological risks. In this respondent’s company, one of the senior managers likes to say that “the leaders are like preachers in the religion of safe industrial production and their task is to gather disciples who will then go preach the same principles”. These positive influencers need to be recognized, promoted up the organization and given more authority, so that the reluctant majority of conservative employees see the success of their example and are encouraged to follow in their footsteps.

The HSE head of a mining and metallurgy company emphasizes that many employees are initially skeptical of many senior management initiatives, believing that as soon as there is a change in leadership these new ideas will be quickly canceled or abandoned. Many employees think: “I have already survived many company leaders, and no doubt this one will leave soon enough after receiving a huge bonus. Why follow the ideas of this latest one, when everything will change all over again as soon as the next one arrives?”. It is vital that within the first three years of the launch of a new system there are plenty of illustrative examples of positive outcomes from the proactive disclosure of risks, alongside penalties for concealing uncomfortable truths. Only then will employees see the evidence that this is not a temporary gimmick: that rewards for disclosure and penalties for concealment are inevitable, that accurate risk reporting really is important to the leadership, and that they are expected to change their familiar behavior and start working in the new way. The full implementation of a new risk information transmission system is never a quick process. Even with a totally committed leadership team, it will take a large industrial company between three to five years to establish effective operation. It will always require constant feedback, analysis and fine-tuning—alongside a steadfast commitment to invest the necessary resources, both time and money—to create meaningful, lasting change.

Another HSE director in the mining industry believes that when a company’s leadership are trying to bring in new attitudes and practices, it generates a broad spectrum of reactions. Some employees will immediately accept the innovations and change their behavior. Others, though willing, will take longer to change their work attitudes, while some may be secretly skeptical, but will make a show of going along with things to hide within the rest of the pack. Finally—and inevitably—some employees will be highly resistant, and will never accept the change either to their attitudes or their behavior. It is better for managers to identify this last group—the “hard blockers”—and issue them with an ultimatum to comply, which if not met will lead to their dismissal. If they hang around, they are likely to remain intransigent, spreading unrest and resistance in the workforce, which will make the implementation of change that much slower and harder. A clearly laid-out motivational scheme should be created to encourage the rest of the workforce to embrace the change and to secure their long-term future as employees in the company. From the respondent’s experience when his company introduced these changes to working practice, the employees broadly divided into three camps: 10% who fully believed in the process and rapidly changed their behavior; 80% who were cautious about the innovations; and 10% who clearly opposed them. Leaders need to enlist the 10% who fully believe in the changes as active allies, and promote them so they can act as agents of innovation on the ground, and help convince the remaining 80% of the benefits of the new developments. All employees need to be given reasonable time and opportunity to adapt to the changes, and encouraged along on their journey by proper training, allocating them meaningful tasks, and supporting and monitoring them appropriately. Well managed, most of the cautious 80% will slowly come round to the new way of operating, especially when they see the benefits for their everyday work life. Most people are amenable to change once they see it working in practice and will join the ranks of the believers, and even start to persuade others to follow their example. But inevitably, as with all things, there will be a small number who remain resistant and obstructive to change. These entrenched opponents will never be convinced—they should leave the company.

The CEO of a consulting company in human performance and human factors, with extensive experience in power generation, recommends that if leaders are looking to initiate major organizational change they should concentrate initially on the shop floor workers who act as “opinion leaders” within their teams. In a team of say eight workers, there is usually one who takes on the role of informal group leader, who the others instinctively look up to. This may be by dint of personal characteristics—confidence, maturity, intelligence—or because of their experience—high competence, longest track record, being a union activist etc. These employees set their team’s behavior: when to start and stop work, professional standards, teamwork and so on. Though designated as ‘ordinary’ workers, they are the de facto leaders. Involving these “opinion leaders” as cheerleaders for change from the outset—perhaps giving them additional training or introductions to more senior managers—will bring better results. Senior managers often view these employees unfavorably: “That guy is a pain in the bum, and I don’t want to talk to him”. But instead, managers need to be persuaded to build bridges with them and establish effective two-way communication channels. Their efforts will be more than repaid by the real boost it will give to the chances of organizational changes being swiftly accepted by the wider workforce.

The head of the HSE department at an electricity company also believes that when introducing changes, it is important to focus primarily on those that are supporters from the outset. Gradually, these “believers” will swing the bulk of the vacillating workers behind them, and eventually the number of adherents will reach a critical mass and overwhelm the naysayers. Management do not need to wage war against the new ideology’s opponents—it is easier and more effective to give support and recognition to the supporters. In this respondent’s experience, it takes at least 2–3 years to successfully introduce the initial changes in a company’s values and set the ball rolling towards a revolution in corporate culture.

The HSE manager of a metallurgy company agrees that whenever senior leaders are looking to introduce major changes, it is essential to identify employees who, from the outset, have supported the new ideology and been willing to completely re-configure their behavior. Indeed, these workers can become a living embodiment of the new way of doing things, and help persuade the hesitant majority. There is a big difference between dismissing staff after an accident investigation and dismissing those who refused to take on board the new principles of a company. In the first case, one person may be a sacrificial scapegoat, while others who were guilty of the same or even worse safety violations are left alone to continue with business as usual. This culture of “don’t get caught” is pervasive in many companies. In the second case, though most employees are willing to change their behavior, a “resistant rump” will continue to disregard and even undermine the new rules. These people need to go, because they have shown that they refuse to change.

The head of a power plant says that he would always be looking to remove any employee he does not trust. Lack of trust between a leader and a subordinate will never end well. A manager cannot afford the time to double-check every bit of information that subordinates provide. If an employee is discovered (often after the disastrous event) to be lying or withholding information about important safety issues, then dismissal is the best course of action.

According to the HSE vice president of an oilfield services company, no more than 15% of the workforce should leave a company each year. Rapid staff turnover can be extremely dangerous for an organization, as skill levels may fall, experience on the shop floor disappear, and management become chaotic. Fundamentally changing the culture of a large critical infrastructure company will take at least a decade, because although shop floor workers can be relatively easily replaced, the same is not true of the senior management. Most managers have been employed by a company for longer than the workers they are supervising, have grown up in a reactive corporate culture and know nothing else—reshaping their core values and beliefs cannot happen overnight! Nevertheless, if the leaders of change focus consistently on high values and long-term goals, the results can be amazing. If even 20% of the workforce of a company are, or are willing to become, proactive employees who fully share the new values and goals, given time they be the force that will win over the remaining 80% who are more doubtful.

The HSE manager of a metallurgy company insists that there are no bad people: they are just different. Employees are malleable—they can learn and adapt, though it takes time and perseverance from the leadership to change the character of a company. This is never a quick process—it will take at least three or four years of very consistent work to change the corporate culture of an organization, for workers at all levels to embrace a more open and honest dialogue about issues of risk.

The HSE director of a gold mining company maintains that if a company has a multi-level hierarchy, then major changes initiated by the senior management will take time to filter down to the very lowest level. Senior management need to be prepared for it to take several years before they see the first fruits of the ongoing changes. Leaders need to understand that while some people will quickly recognize the new rules of the game, some will be resistant, at least initially, to accepting them and will slow down the changes.

The HSE head of a mining company believes that there is no need to attract “new blood” from other companies—instead, you need to develop and invest in the employees you already have. The most actively supportive employees should be recruited to train their colleagues, along the lines of a production development school. In this framework, it is not specialist teachers who conduct the training, but the most motivated employees who pass on their work experience to colleagues in the enterprise.

The HSE manager of an oil company believes that it is very important to recruit students and recent graduates and put them directly into training in the advanced skills that a company needs. Otherwise—since most companies have at least some leaders who still cling to the ideas of the traditional hierarchy—there is a risk that new employees, coming straight from college, will be unduly influenced by “old school” managers, and encouraged to follow their now obsolete values and practice. The introduction of a more active dialogue across a company is a process that requires constant modeling and reinforcement from senior management, and in some cases, even a new generation of leaders. Factors such as age, experience, and ingrained hierarchical ways of thinking all tend to foster inertia and slow down the restructuring of communication from a directive monologue to a shared dialogue. The choice of mentors for young professional recruits is extremely important—from the very first day of employment, they need to be witnessing how dialogue communication can improve an organization. Years later, when they become senior leaders, they will pass on this early experience to their own newly recruited professionals. If a skilled mentor invests time and effort in a trainee specialist, that trainee may well eventually go on to become a leader and will in turn pass on the accumulated expertise. When young employees come to a company without much experience, a company should invest in the best possible in-house training they can provide. This investment will be repaid many times over in the future, and help cultivate a new generation of leaders with far more progressive and productive business attitudes.

Training employees in new skills and a new ideology of behavior

According to the HSE vice president of an oilfield services company, senior management need to realize that whatever ingenious solutions they come up with, nothing will work unless shop floor employees are brought onboard. Trying to introduce new systems when people do not understand them is just a recipe for anarchy. People need to be taught, given the opportunity to practice their new skills in various safe situations, and rewarded for the successful delivery of the new principles. In this way, innovations become part of their everyday working landscape: consistently followed, they are completely integrated into people’s value systems.

The HSE head of a chemical company believes that it is necessary to train managers and employees to both give and receive feedback based on the analysis of critical risks, and then to make decisions based on the information received. Employees need to practice this process of information exchange and subsequent decision-making for it to become effective.

According to the HSE head of an oil company, managers need to understand that changing the entire corporate culture must start with the training of both managers and employees in a dialogue model of behavior and the acquisition of new skills. Employees need to be taught how to identify risks; how and through which channels to report them; and how to devise and deliver solutions to reduce them. If a company adopts new corporate standards, then people need to be taught how to apply these standards in practice to their real work environment. Without this training, the ideas and processes in the new strategy will remain theoretical, and will not be translated into meaningful change across all areas of a large industrial company. The leadership must create a team of internal trainers to deliver this knowledge to employees at all levels and all sites. The leading trainers from each site should regularly attend update sessions at headquarters, and discuss progress and next steps with senior management. The most outstanding trainers could be selected to do an internship at other companies to gain additional experience or undergo additional professional training. To inspire employees even more, it is recommended that board members sometimes visit production sites to train shop floor employees. This will motivate employees and managers at the site to comply with the new corporate standards, as it demonstrates that senior management are clearly taking these issues very seriously. The importance of training is that it allows employees to build up familiarity and experience with the new corporate regulations in a safe space, before taking it back to their workplace. Experienced employees can become the key “agents of change”, nurturing the new corporate values among their colleagues. From the respondent’s experience in this company, the most effective training programs consist of 30% theory and 70% practice. This is a useful guideline for those responsible for devising new employee training programs.

7 Recommendation No. 7: Use Different Upward Risk Transmission Channels

According to some respondents, it is not worth trying to implement every conceivable tool or new channel for reporting risks in an organization at once. It is better to launch pilot projects in various departments and look at the results. Then the most effective solutions can be rolled out to the whole company.

• 1. SENIOR MANAGERS SHOULD VISIT PRODUCTION SITES AND COMMUNICATE WITH EMPLOYEES WHO WORK WITH THE CRITICAL RISKS OF AN ORGANIZATION

Employees will only trust senior management claims that safety is their top corporate priority if their superiors demonstrate a genuine commitment to solving risk problems on the ground. One of the most effective ways for senior managers to do this is through making personal visits to the production sites. A face-to-face exchange between an employee and a manager is the most effective way of communicating information about operational risks. According to some respondents, other methods of transmission like anonymous mailboxes or telephone hotlines are far less effective. During these trips, management can obtain first-hand, detailed information on the real state of production processes. This is vital in order to identify and prioritize key risks and guide decision-making when implementing solutions. If employees see that the problems they have raised are being solved, their trust in senior managers inevitably grows, which will naturally increase their willingness to report future problems quickly and truthfully.

©Dmitry Chernov, Ali Ayoub, Giovanni Sansavini, Didier Sornette, All rights reserved

The HSE head of an oilfield services company cites the following example. Throughout history, successful military generals often made visits to the front line, to assess the situation, communicate with officers and soldiers, determine the best tactics, and raise morale with their presence on the battlefield. This is rare in corporate practice: senior management usually make their decisions without leaving their “ivory towers” or obtaining a realistic assessment of the real situation at production sites. These central decisions go down the hierarchy and put employees in a difficult and demoralizing position. On the one hand, they do not feel confident enough to complain to management or criticize their decisions. On the other hand, they know that they cannot fully comply with what they have been ordered to do without violating safety precautions, because the problems and limitations on the ground simply make it impossible to attain the imposed targets. According to the respondent, the solution is to narrow the information “reality gap” between the workforce at the site and senior management at headquarters. This can only be achieved if senior managers are willing to leave the comfort of their headquarters and reach down the hierarchy to communicate with low-ranking employees. Employees will have more confidence to raise critical risk information when they see that managers genuinely want to hear their feedback and will use that information in making their decisions.

Why some senior managers are reluctant to visit production sites.

A significant number of respondents note that the main obstacle to senior managers regularly visiting industrial sites is a lack of time due to their busy schedules, but there are other obstacles too.

The HSE head of a mining and metallurgy company shares his experience. On one occasion, he stipulated that a KPI for the management was that they must each visit four different industrial sites every year. This did not work out well in practice. Most of the managers kept postponing their trips until the last possible moment, and then in November and December started calling the respondent asking him to identify the plants closest to their headquarters. It was clear that they simply saw this as a box-ticking exercise: get the visits done as quickly as possible and do the absolute minimum to meet the target. This obviously defeated the intended purpose of the visits. The following year, the respondent changed the KPI: each senior manager had to visit an industrial site at least once a quarter, and this forced them to travel regularly throughout the year. However, the following year the HR director of the company was replaced. The new director was opposed to including this requirement in the list of indicators for senior management and removed it. As results, the site visits by senior managers soon stopped. Many of the managers had noticed that being more familiar with the production sites brought benefits for the entire company. Nevertheless, as soon as it was no longer mandatory, the managers found numerous excuses why they were needed at headquarters and had no time to visit the sites. Trips to production facilities do not appeal to many managers for several reasons: the journey, especially to remote sites, can be lengthy and uncomfortable; it takes them away into an unfamiliar and possibly challenging environment; it requires focus and immersion in listening to staff about problems at the site; and some senior staff are simply uncomfortable talking to shop floor employees. Moreover, they must take responsibility for any new problems that are brought to light. This may require making difficult decisions and taking immediate action. If they make a mistake, they may be left very exposed, and new resources may need to be found to reduce the risks identified. If the main priority for a company is to maximize profit by constantly pushing the equipment to its limits, then any production problems the visiting manager identifies will be seen primarily as an unwelcome distraction and a barrier to achieving corporate goals. Should an accident occur as a result of risks previously disclosed to them but not acted upon, managers will no longer be able to claim ignorance about the risks. They can no longer shift responsibility onto their subordinates for running equipment unsafely or not maintaining it properly, or claim that their supervisors neglected their duties, or failed to pass on vital information. It is now the managers who will be in the firing line!

An HSE manager of a manufacturing company shares a similar experience. On one occasion, the respondent managed to convince the CEO to visit a production site and conduct a safety audit. Fifteen minutes before the scheduled meeting, the CEO rang to inform the respondent that his car had broken down and he could not make it to the meeting. The respondent replied: “No problem. Where are you? I will come and pick you up”. Surprisingly, after this incident, the CEO’s car never “broke down” again—in future, he always made it to the sites for safety audits. The respondent had to be very insistent and inventive to persuade other senior managers to visit sites: “The site’s really not that far away; the local team are really friendly; I’ve booked a top hotel for you; the food’s great…”. It was only after senior managers visited the production facility that they realized the value of such trips.

According to the HSE head of an oil company, an average industrial company does not have channels for direct communication between senior managers, line managers, and shop floor workers. Many large critical infrastructure companies have a multi-level management hierarchy, so there is an information disparity between what the leadership at headquarters understand about operational issues and the actual situation at the production sites. In most organizations, communication between senior management and shop floor employees is little more than an ostentatious formality: rallies and large assemblies, production managers touring a site on important dates, meetings with specially selected employees. A shop floor worker can hardly pull a senior manager aside during events like these to tell them about a critical risk. And even in organizations where there is a stated policy commitment for leadership to communicate with regular workers, information about problems passing up through the hierarchy is rarely useful: almost inevitably, messages are significantly distorted along their way and arrive at headquarters mostly stripped of relevance.

The HSE manager of a gold mining company maintains that this practice arises as a consequence of the monologue model of communication between managers and employees. Many managers do not want to receive feedback from subordinates, considering them just as “worker units” who should carry out their orders without asking questions. If bosses are only interested in whether their orders have been carried out by their subordinates, then they will only send reassuring reports back to headquarters—it is more than their job’s worth to say anything else.

The head of HSE in an electricity company gives several reasons why managers do not want to speak directly with employees at production sites. Firstly, they want to avoid discomfort. They assume that, given half a chance, employees will start venting their dissatisfaction with the situation in the company, and bombard them with all kinds of complaints. Most of these will not even be about production or safety issues: wages too low, holidays too short, working conditions uncomfortable, etc. Secondly, managers will usually not have access to the resources to solve any of the problems raised by their subordinates, so responding positively is almost impossible, making them look both uncaring and ineffective—not a good look in front of the whole workforce. For all the power and status senior managers appear to have, they are likely to have all kinds of concerns about opening conversations with shop floor employees: “What can I say to them?”, “I can’t do anything”, “It’ll only leave me feeling guilty”, “These conversations are so awkward and disagreeable”, “Why put myself through all this aggravation?”.

The HSE director of an oil company also makes the point that senior managers are people too: like anyone else, they can feel awkward and embarrassed talking to strangers, and anxious that a conversation with an employee will take a difficult turn and end badly.

A former chief mining regulator gives the following example of why some managers are reluctant to visit production facilities. One day, a senior manager of a large company who ran a mining division went to visit one of the mines. It turned out that this manager suffered from claustrophobia. He experienced a panic attack while underground and had to be urgently returned to the surface. Some managers are not mentally prepared for the harsh and difficult conditions underground. Add to that the challenge of facing miners who will not hesitate to express their opinion about what they dislike about their work and one can understand why senior managers may not be so eager to visit the workers at the coalface. According to the respondent, the best senior managers in the field of mining are those with enough confidence to fully engage with the workforce: listen carefully to what they have to say, empathize with and understand the conditions and challenges of their daily work, and bring the professional expertise to engage with the problems they raise.

According to a lower-level manager in an oil company, site visits by senior management are a rarity in most companies. In the unlikely event of a senior manager visiting a regional site and asking the workforce about their problems, their answer will usually be a deafening silence. For decades, the culture in most companies has been “only bring good news to the boss”. In a company where this is standard practice, employees will just keep their heads down when senior managers are around: to coin an English phrase, “ask us no questions and we will tell you no lies”. At the same time, middle managers will do their best to focus attention entirely on achievements and successes at the production site. Lulled into a false sense of security by these bland assurances, the boss will return to headquarters under the cozy illusion that everything at the site is going well.

The managing director of a gas distribution company says that some leaders believe that their valuable time should only be spent on general management and finance issues, not on analyzing production problems at facilities far from headquarters. Some of them genuinely seem to believe the reassurances that they receive from production sites that everything is fine, and so see no reason not to continue with “business as usual”—nothing bad has happened so far, so why should anything bad happen in the future?

A risk expert in the oil and gas industry has a similar opinion. Many senior managers believe that the main task of senior managers is to control cash flow, maintain share prices and provide a profitable return for shareholders. Some executives mistakenly believe that an MBA (with a focus on finance) is a kind of driver’s license for running a successful organization, and hold that the first principle of business is to provide dividends to shareholders. This respondent disagrees. In his opinion, the first principle of business is to stay in business! To properly manage a company and secure the long-term future of its assets, senior managers must be willing to reach down the corporate hierarchy and “get their hands dirty”. Only then will they gain a proper understanding of what is really going on in a company and be able to make balanced, prudent decisions affecting the long-term success of an enterprise.

An HSE consultant specializing in oil and gas, but also in air traffic control, quotes workers and site managers commenting on the technical competence of some of their senior managers: “Well, they parachute these guys with MBAs and so on into these positions and they haven’t a clue about what happens on the frontline. They’ve got an MBA and some kind of financial and economics degree but they don’t understand the process, they don’t understand the business: the sharp end of things”. Without this knowledge and experience, it is impossible for senior managers to ask the important questions and raise issues with shop floor employees and site managers—they just end up showing their ignorance. No wonder they are reluctant to visit sites and engage with production teams to gather essential front-line information.

A risk management consultant specializing in oil and gas once attended a seminar in a rich oil-producing country. A couple of guys dressed in work clothes sat next to him and they had a friendly chat: one of them was the director of a small drilling company, and the other a drill operative. The respondent learned that in their drilling company there is no communication barrier between senior management and shop floor employees: they are comfortable sitting down in a bar together to discuss pressing production problems. The respondent expressed regrets that things were different in his own country, where many oil companies have boards of directors without any engineers. Instead, they often consist entirely of professional managers without any experience in production. These top executives might have finance qualifications, but they lack engineering knowledge and have no direct contact with people on the front line. According to the respondent, CEOs should be people with lived experience—an engineering education and self-assured familiarity with production processes—if they are to adequately understand the principles of a critical infrastructure company, and be confident enough to visit facilities on a regular basis to engage directly with the production teams.

The HSE head of a chemical company echoes many of the same reasons why he believes senior managers are uncomfortable with site trips—but perhaps puts it more bluntly:

• they prefer to sit in their comfortable offices and fly to meetings on private jets rather than communicating with shop floor employees in hazardous and remote workplaces;

• they do not want to be dragged into local problems. Many managers believe that as soon as they hear about a problem, they share the responsibility for solving it. If an incident occurs because of a problem which has already been reported to a manager but not resolved, it is the manager who will be blamed, not the staff on the ground;

• they do not know how to communicate with shop floor employees. This is especially true for leaders with a purely managerial or financial background. Those who have come up through the ranks generally understand the concerns of shop floor workers much better, and are able to speak with them in a language they understand;

• they lack technical qualifications and do not understand the intricacies of the production process, so cannot accurately gather or appreciate the important technical information that shop floor employees could potentially provide them with.

The safety manager at a nuclear power plant believes that senior managers fear their employees will overwhelm them with a tidal wave of problems they cannot solve. They may lack the expertise to even identify the potentially critical issues that could lead to a serious incident. Being shown up like this in front of a subordinate can be shaming and undermine a manager’s authority. Better not to ask in the first place than be faced with things you cannot deal with.

Managers can make better decisions if they have objective information about the problems of production sites

A psychologist and consultant in the field of organizational behavior believes that if senior managers do not visit production sites, they will not have all the information they need for good decision-making. Poor decisions can compound existing problems, hamper development and maintenance of safe operations, and eventually jeopardize the future of an entire organization.

The HSE head of an oil company tells the following story about a senior manager who visited a production site. He managed to gain the confidence of the workers and within 30 min, they had told him all about the main problems they were facing. The meeting was attended by the general director of the site (middle management). While his subordinates were talking, he sat in silent shame, well aware that throughout his entire time in post he had only ever sent good news up to headquarters. After the meeting, the senior manager expressed his shock about all the dire reports he had heard from the workers. “How could things be this bad without me knowing?”. On his return to headquarters, he began to make completely different decisions and try to solve the critical problems he now knew about: after some truthful feedback, his decisions were more grounded in reality. For years, the senior management team had made decisions based on all the falsely reassuring information received from down the hierarchy. Unless managers visit production sites, they will remain ignorant of what is really happening in the field, and their decisions will be based on entirely false premises. The traditional monologue model of communication, prevalent in many large industrial companies, automatically encourages employees to pass on only good news up the hierarchy; bad news of safety and technological problems is understated, embellished, or not transmitted at all. This is not a fault of lower-ranking employees, but stems from the unwillingness of senior managers to engage properly with the production process and site problems. No wonder that when leadership do at last visit their production sites, the experience can be a shocking eye-opener. Finally, they realize the colossal reality gap that exists between the sanitized information they have been receiving for years from the field, and the reality of what they now hear directly from the workers and can see with their own eyes.

The head of HSE in a petrochemical company says that if senior managers want to understand how things really are on the ground, they must visit production sites and meet with employees. He pointed to the documentary series “Undercover Boss” as an example: a project involving more than hundred real companies and their leaders. For the documentary, senior managers were disguised and sent to work as shop floor employees under false names, thus taking top company officials right down to the bottom of the corporate hierarchy, so they could appreciate the situation first-hand. Afterwards, the financial director of one of the companies participating said: “What I saw in the reports sent to our headquarters from the field was completely different from what was actually happening”. At the end of each series, the senior managers revealed to their “colleagues” who they really were. It is interesting to note that when shop floor employees were unexpectedly summoned to headquarters for this final “reveal”, a significant number assumed that they were going to be dismissed. This reinforces the suspicion that many employees are (possibly subconsciously) afraid of communicating with their superiors, because of their past experiences. They take it for granted that a call from a superior always means bad news: either a “monologue order” that they cannot question, or a punishment or reprimand for some “mistake” that was probably not even their fault. Most ground level workers could hardly begin to conceive that the call to headquarters might be for the leadership to invite their suggestions about how to improve their company.

The head of a production facility at an oil company (middle management) suggests that senior managers are often under the illusion that everything is fine inside a company. In most companies, reports to superiors are often embellished as they proceed up each level of management, and managers are not in the habit of reaching out directly to employees below their immediate subordinates to obtain objective information. To do this would represent a real gamble for senior managers: they may succeed in gaining first-hand and undistorted information about the risks an organization is running, but this will probably diverge widely from the accepted assessment prevailing at headquarters. According to the respondent, managers should ensure they regularly visit industrial sites to gain a better understanding of the problems shop floor employees are facing. Otherwise, they will be forever “looking at the world through rose-colored spectacles”, and for a leader this can be catastrophic. The truths they uncover may well be unpalatable, but will greatly diminish the risk of misjudging a risk situation, making inappropriate and possibly calamitous decisions. A leader’s visits to production sites also increase the level of trust across an organization: they demonstrate that senior management are genuinely interested in what is happening at the sites, giving shop floor employees the chance to have their say and to provide feedback.

Most of the leaders interviewed believe that managers need to remember that the work that makes a profit for a company is not located at headquarters, but at the sites where the product is being produced. This is where value is created. It is then only logical that they should devote a lot of their time to production issues, including site visits, so they become familiar with the whole production process from top to bottom. Regular management site visits are a relatively simple antidote to the problem of poor-quality feedback in an organization. Better feedback means better management of production processes, which makes a company not just safer—by proactive control of critical risks on the ground—but also more profitable, by improving decision-making and production planning.

Even after visiting industrial sites, senior managers are unlikely to be 100% aware of all that is happening on the ground. But they do not need to know every detail of every operation. What is important for them is to:

• understand how a company is managing critical risks;

• identify key problems and manage their resolution;

• show their employees that they are committed to solving key production issues;

• encourage the views and opinions of employees at every level of a company;

• show employees that management can be trusted and that when a significant problem is identified, it will not be ignored.

The head of the nuclear design department of an international electricity company believes that senior managers must be convinced of the value of site trips to expose a range of potential problems in how an entire organization is operating. Timely identification will allow these issues to be corrected in time, before they develop into significant issues which will inevitably be harder to rectify and require more resources.

It is possible to motivate managers to visit production sites by demonstrating that it will give them a deeper understanding of a company’s problems, and thus enable them to make better decisions and significantly reduce the occurrence of critical risks.

The CEO needs more training than anyone else in the company

Careful preparation is important prior to visiting production facilities if maximum benefit is to be derived. Senior management should undergo special training in a range of important leadership skills, including public speaking, facilitating discussion and complex debate, conflict resolution, etc. It is also important that senior managers lead by example. This includes being familiar—and complying at all times—with the requirements and policies of their own company, especially around issues of labor protection, risk reduction, and industrial safety. In addition, before visiting each production site, managers should be provided with detailed information about the specific technological processes at the site, and any negative incidents and problems that have previously occurred there. This should include reports from the production department, HSE and other key departments, so that the CEO and senior leaders have as full a picture as possible of what they are likely to find and the most important areas for them to focus on. Brief CVs (with photographs) of lower-level managers and the workers who operate critical equipment will also assist in their task and help build good relationships with key staff once they are on site. During the entirety of the visit, senior management should have immediate access to the most experienced experts (advisers) in industrial safety and production processes in order to accurately assess the criticality of problems raised by shop floor employees.

Managers must prioritize production sites where critical risks have already been identified

Employees may be aware of risks that exist in their own area of responsibility, but generally do not have the information to make a comparative assessment of the critical risks across the entire company and understand how all these risks have been ranked by headquarters. Therefore, the first port of call for senior management should be those facilities where risks have been identified that are critical to a company’s survival. Senior managers should send their critical risk assessments to their subordinates who are directly managing these risks, and ask them to provide headquarters with regular feedback on the dynamic situation on the ground, so that plans can if required be modified and resources supplied without delay. If a company has many industrial facilities, then senior management need to prioritize the most problematic.

The fact that the leaders are there at all to evaluate critical safety and technological risks sends a powerful signal to employees of the importance they attach to this issue for the whole company. Employees will think: “If these things are so important for the top brass, then it means we should think about them too”. This is especially important for employees who wish to build a career in a company. The regular appearance of senior managers motivates managers and employees alike to be more conscious about their work, maintain equipment in good condition and comply with rules and regulations.

Managers must show employees that their opinion is important to the leadership

According to many managers interviewed, it is very important that on their trips to production sites, leaders demonstrate they actively want to hear the views of shop floor employees on how to control critical risks. This requires a temporary leveling of the hierarchy: workers competent and experienced in operating key equipment on the production floor meet on equal terms with senior managers who have resources for an open discussion on how to control and reduce critical risks.

If senior executives never visit a production facility, staff are bound to think that headquarters are not interested in what is happening at their facility—they do not care about safety and employees’ opinions, but only about hitting their production targets and making fat profit margins.

Site visits provide opportunities for senior management to see how clearly employees understand organizational goals and perceive the instructions of senior management

A consultant in nuclear safety, with long experience in nuclear power plant operations, believes that 50% of senior managers’ working time should be spent discussing with staff how they interpret a company’s values. When visiting production facilities, senior managers should not only observe employees at work, but also make plenty of time to talk with them about the values of an organization.

By visiting production sites, senior managers can see for themselves whether their instructions are reaching down to and being followed by shop floor employees, and whether the workforce understand and share the goals of the company, both in terms of production and in the field of risk management and safety.

Demonstration of approved behavior

Some executives attend production sites to present awards to their best employees. This demonstrates the kind of behavior approved and encouraged by a company and can motivate other employees to follow the example of their most productive and conscientious colleagues.

Senior management trips to industrial production sites should be regular

One interviewee explains: “Safety is not a sprint, but a marathon. If you don’t keep running, everything will slip back to the starting point, no matter how far you have travelled”. To become ingrained into corporate culture, safety issues should be frequently monitored on the ground by senior management site visits. According to several respondents, a CEO should be timetabled to visit every key site at least once a year. Not just the CEO, but deputies and key managers from headquarters should also make regular timetabled visits so that the whole leadership team gain a better understanding of the real situation on the ground. Every site knows it is then under constant attention from above, via a timetable of visits throughout the year, every year. During the first visits to the production sites, the CEO should not expect employees to immediately open up and report every problem. It is natural that employees will at first be wary of attention from senior managers. It is important that they quickly recognize there will be no penalties for expressing their opinions to their superiors, and it is invaluable to show positive examples of problems being solved as soon as possible. If senior management make their site visits regular and gain the trust of employees by acting on what they are told, then employees will gradually open up. Managers also need to be taught how to collect information on risks and problems without causing conflict. None of this can be hurried.

The management of one petrochemical company constantly visit industrial facilities and communicates with shop floor employees. Over five or six years of this focused practice, the employees have gradually come to communicate more freely with managers: they have become secure enough to share the problems they are facing and make suggestions about how things could be improved. This has helped to reduce the discrepancy between the information local employees have about critical risks, and the limited picture that used to filter through to senior management.

The head of risk management at a nuclear power plant recommends that CEOs of critical infrastructure companies create a staffed office at each production facility. All employees and site managers at a facility are then told in advance when a CEO will be in the site’s office, specifically to receive anybody who wants to raise an issue with them. The respondent suggests that a CEO’s visiting schedule should be set a year ahead so that employees can book their interview well in advance. Executives should make themselves available at each site office for up to fifteen days a year (depending on the size of the company). It is strongly recommended that executives adhere strictly to the schedule they have set, and do not postpone or cancel visits. According to the respondent, the regular availability of a CEO for communication directly with shop floor employees is a decisive factor in obtaining better information about the critical risks of a production site.

Senior management visits should be safe for shop floor employees

Top-level executives should not go to industrial sites to find culprits and reprimand them. They must visit with the purpose of improving cooperation and communication with shop floor employees, and with a longer-term goal of identifying and solving critical risk problems that require the resources and intervention of headquarters.

For employees to feel they can open up about problems, they must trust senior management. This will only happen if they are confident that revealing difficult information will not threaten their job or career—that neither senior management nor the production site leadership will penalize them in any way. One of the respondents maintains that senior management will only get relevant information in person, in a confidential face-to-face conversation with an employee and not in a group setting. For most shop floor employees to start giving real feedback, senior management will need to make regular visits over an extended period, during which real solutions to critical problems at the site start being implemented. The whole workforce can then see that the arrival of the senior management team is not a danger. On the contrary, it is an opportunity to raise serious issues about their site—some of which may have remained unresolved for years and may carry a significant threat to themselves and their colleagues—and witness them finally being addressed and rectified.

If the leadership cannot solve a problem brought to light during a site visit, they must explain to the workforce why that is. Employees must believe that they are being heard, that their voices matter, and that management are determined to solve the problems raised and wishes to continue receiving feedback, even if some issues cannot be resolved immediately. An honest and transparent approach when dealing with subordinates will eventually foster trust between employees and senior managers, and convince workers that they are all on the same side and share the same goals.

Senior management visits should not make production site managers feel threatened

Senior management visits should not be perceived as a threat by the middle managers in charge of production sites. If middle managers feel they are being blamed, they will immediately revert to previous behavior: cease communicating openly and censor their reports to conceal production problems so as not to be the target for criticism and censure.

Most of the respondents recommend that when leaders conduct face-to-face meetings with shop floor employees, local site managers should not be present. However, these meetings must not look to load blame onto the site managers. Finger-pointing and scapegoating must be avoided at all costs, so that shop floor employees are not worrying that their managers will take revenge on them if they disclose problems, and the site managers will not be tempted to try and control the feedback of their subordinates by instructing them on what they should and should not say.

The message must be loud and clear: the leadership are here to support the site managers in tackling site problems that come to light, not to blame them or load all the responsibility for finding solutions onto them. Instead, they should be consulted as equal partners on what they think should be done, and what additional resources will be required. The role of leadership here are to evaluate the solutions that the site managers suggest, fine-tuning if necessary and coordinating the allocation of resources to implement the plan. This approach will motivate site managers to be open about problems, as they know they will be taken seriously and provided with extra resources as necessary. This will encourage them to become more proactive in identifying critical risks as they arise, and dealing with them promptly, as they can see this is what the leaders want them to do.

If senior management return to a site to find that an agreed action plan is not in motion, then the site managers need to be pulled up immediately and told in no uncertain terms that they risk losing their jobs if progress continues to stall. If this inaction persists, then dismissal is justified. The message from leadership must be clear to everyone—the site manager has not lost their job because of a production problem being identified, but because they have failed to follow an agreed plan and utilize resources effectively after a problem had been identified.

Middle managers generally adopt the behavior of their superiors, so if top executives of a company regularly go down the hierarchy to talk directly with workers, this will soon be mirrored by mid-level managers. When leadership show their subordinates how they encourage open discussions about critical risks, middle managers will be motivated to do the same and maintain regular dialogue with both lower management and shop floor employees.

How senior management should conduct visits to production sites

Site inspections can be carried out with or without warning. With a pre-announced visit, production site managers will have time to prepare for the audit. Naturally they will do all they can to have the processes and employees working to optimum efficiency and safety, in line with company policy and regulations. They want to demonstrate the best possible version of the site that they possibly can, according to their understanding of current accepted operational standards. Senior managers should be aware of this and not be deceived into believing that they are necessarily seeing a true and complete picture of how the site normally operates.

One of the executives interviewed cites cases from their practice where site managers had given all the workers a list of questions that senior managers might ask during their upcoming visit. Sometimes recommended answers were even attached to the list—and of course, these were all “good news” answers about how well everything was going. Another clear indicator that middle managers are trying to “butter up” the visiting leadership is when every single employee at the factory seems miraculously to be wearing spotless overalls. This is obviously window dressing—in heavy industry, few workers manage a shift without their clothes getting dirty—and should raise suspicions that some other awkward truths are being concealed from the visiting top brass.

When senior managers visit production sites without warning, they get a much clearer picture of the real situation at the facility. It is still advisable to hold meetings with randomly selected site employees to make sure it is not a group specially selected and tutored by the site managers to respond to likely questions in a particular way. Site visits on the night shift can also be very informative as there are usually no middle and lower-level managers around. In the absence of their superiors, shop floor employees and team leaders on shift will be more talkative about both production problems and more general concerns. Even unannounced daytime visits by senior management are usually monitored by site managers. In order to avoid their visits becoming “the special director’s tour”, senior management should include visits at night or on public holidays.

Leaders can also hold factory meetings with the entire workforce. Admittedly, not all senior managers are good at communicating with a large audience, but many should be reasonably comfortable with public speaking after many years of internal corporate events—and there is always extra training available.

To make the information gathering as effective as possible, senior managers must meet face-to-face with the employees who are monitoring the critical risks of the enterprise on a daily basis. Suitable employees can be selected but should not include middle and lower managers, so that workers are free to voice their concerns and opinions without fear. The site managers can be told: “Thank you, I have heard your opinion—but I need this meeting to hear the opinion of other employees”. Alternatively, the visiting leaders can simply walk around the site and engage shop floor employees in conversation along the way.

In one-on-one meetings, the workers must be reassured that whatever they say will remain anonymous and that their opinions matter. The leaders must make the purpose of their visit and conversations with employees absolutely clear:

• “No one will be penalized for helping us solve safety and technological problems. Conversations are confidential and employees will not be in trouble for giving their honest opinion. On the contrary, we welcome true and objective ‘warts and all’ assessments, however negative”.

• “We want to hear about the real situation on the ground and discuss the risks and problems that you face in your daily work. This is so we can make work safer and more efficient for everybody and make the whole organization stronger”.

• “We are all partners here, and we have come from headquarters to help you solve safety and technological problems, but we can only do this if we all work together to first identify them, second decide what to do, and finally put those solutions into action”.

• “You and your colleagues are the best people to help us leaders to figure out the situation on the ground. You are the people who work on the front line of production every day and you know better than anybody the realities of what is working well and what is not working well”.

Leading questions should be avoided. For example, if a leader asks a worker, “Is everything going OK here?” they are likely to answer with a yes. Open questions are far more productive: “Tell me about what you’re doing here”, “What do you see as the main risks in this process?”, “What do you suggest we do to reduce these risks?”, “Where do you think we should invest money at this site?”, “What are your main safety concerns in your day-to-day work?”, and so on.

After hearing from shop floor employees, visiting executives can begin to form a clear picture of how the site operations really are in respect of health and safety. Rather than asking “head on” about specific problems, it is better to approach from a more general point of view, and then gradually move to the thornier issues. If senior management have technical backgrounds and are familiar with the operation of complex equipment, they can get a head start by studying manuals, and incident and safety logs. They are then fully briefed to be able to ask highly specialized questions about the operation of the equipment. Employees will quickly realize that they are dealing with a professional who knows their stuff and respond accordingly.

After dialogues with shop floor employees, the visiting leadership team should gather with the site managers to present their results, again being mindful to protect their sources and without looking to blame. They should arrive at conclusions about what needs to be fixed at the site and agree what resources will be required and where they are coming from. An implementation plan needs to be drawn up with a clear timetable and designated responsibilities—who will do what, and by when. This program needs to remain under the supervisory control of senior management, so they can check on progress through reports from site managers and further site visits.

An equal dialogue between senior management and shop floor employees

During conversations about the risks of an organization, the traditional boundaries between senior managers and shop floor employees should be set aside so that everyone feels they are in a proper two-way dialogue, communicating on an equal footing about how to solve problems in which they all have a stake. Some critical infrastructure companies prohibit leaders from visiting industrial sites in business suits, and stipulate they dress instead like shop floor workers to help break down traditional hierarchical suspicions. The managers should shake hands warmly with employees and address them like everyday work colleagues to help create an informal atmosphere that encourages confidence and trust. This requires a degree of skill and confidence from the senior managers if it is not to seem false and patronizing. But it is always worth the effort, as it softens the over-deference and unease that could otherwise inhibit employees and make an open dialogue very difficult to establish.

When senior managers genuinely communicate on equal terms, it can improve employees’ job satisfaction, self-esteem, and loyalty towards the company. The HSE manager of a metallurgy company cites an example. In his company, senior management no longer sit at the head of the table during meetings but mix in amongst employees and managers from different levels within the organization, to demonstrate they are fundamentally equal, irrespective of their position in the hierarchy. When there is equality, communication can be built on mutually respectful dialogue. A hierarchy based on dominance and submission inevitably reduces communication to a one-way monologue, from bosses down to subordinates. Asking representatives from the shop floor to create a professional commission can have a very positive effect on workers’ motivation, encouraging them to adopt a more responsible attitude to equipment, and take more initiative to report problems to superiors. Having established opportunities for honest dialogue—through their own representatives even if not every individual—helps shop floor workers gain belief that their voice matters, they are listened to and their contributions are valued.

An oil company executive shares his observations. In some production sites, he often meets workers who remember how the former head of the company would come from headquarters to visit the oil fields, engage in conversations with shop floor employees, and seem to genuinely want to understand what was happening on the ground. Every worker felt that the CEO was “his” and had their interests at heart, mainly because he was friendly and respectful towards them all. You could ask him anything, raise any production problem, with the very real expectation that it would then be sorted out—if the CEO promised something to workers, he delivered every time. This was in contrast to another oil company where the respondent had worked. Here the CEO also traveled to the production regions but never bothered to talk directly to shop floor workers. Few employees remembered his time in charge or had anything positive to say about him.

The safety manager at a nuclear power plant notes that when a manager views his employees as professionals and experts in their field, meetings and communications with them will be much more productive, because there is an atmosphere of mutual respect and confidence.

A senior HSE manager of an oil company believes that leaders should involve workers who regularly operate critical infrastructure in the process of finding solutions for problems disclosed to senior management. According to the respondent, they should avoid imposing their own solutions: often these will not be appropriate for the specific situation, and will be less likely to find support among the workers who are responsible for implementation. Employees working on the front line of production work know best what needs to be done—get them involved right from the start!

On production trips, the company’s top brass must show that they have come specifically to hear the opinions of shop floor employees on critical risks at the facility and how to control them. An employee has a right to have his voice heard if he has competence and experience in controlling critical equipment. The senior management’s main function is to exercise their authority to secure resources and influence policy and regulations. This non-hierarchical communication does not undermine the status of senior managers. On the contrary, it shows that they are confident enough to be open and ready to listen to their subordinates. And if employees feel that they can influence the decisions of the company’s top officials, their self-esteem, loyalty, and motivation to work will all grow enormously. They are then much less likely to casually turn a blind eye to violations of safety regulations or malfunctioning critical equipment.

Visits to non-production areas

Senior managers should not just visit the production zones of a site to discuss critical risks. They should also enter non-production areas—toilets, dining rooms, showers, locker rooms, etc.—to see with their own eyes the reality of everyday life for shop floor employees. The condition of these facilities says a lot about how a company really regards its workers. If these facilities are poor or badly maintained, this suggests that a company does not care much for employees’ well-being. If conditions are good, then the message is also clear: the company wants them to feel safe, valued and looked after. In return for good treatment, workers will generally work harder, value their jobs more, see the company as a valuable part of their lives, treat equipment well, and observe safety rules—so there is a lot to gain. These behaviors fit much better with most employees’ natural inclinations. Most do not want to risk their own life and health in an accident at work, or lose their good jobs—whether through disciplinary dismissal for breaking regulations, or through production shutdowns and financial losses after an equipment failure.

One oil industry executive believes that top-level managers should be familiar with the reality of working on the production frontline and understand how shop floor employees are treated. The factory uniform and the safety equipment issued to them, the machinery they operate, the everyday risks and challenges they face when doing their job: this is all valuable additional information when leaders are looking to improve safety and production, or need to deliver a fair response to employees’ complaints and requests.

The HSE manager of a metallurgy company believes that senior managers need to identify areas of both comfort and discomfort for workers in critical production. More personal questions of their employees are advisable too—their daily work routine, their commute into work, the food at the canteen, wages, and so on—to show that these issues are also important to their bosses. Any significant or safety-related issues that arise should be dealt with as soon as possible, so that employees see that there is a genuine commitment to solving problems—improving working conditions is an obvious place to start. Seeing long overdue improvements to daily working conditions will encourage employees to start sharing critical operational issues.

One of the respondents, the HSE head of a metallurgy company, had some negative experiences at one enterprise. At this site, there were problems with the quality of the overalls, the food and the prompt payment of wages. Trade unions and workers were constantly raising these issues when the CEO visited their production site. Later it became clear that because these issues had not been dealt with, the workers grew so resentful and fixed on their uncaring treatment that they stopped considering wider operational issues. It was only after these basic (and entirely reasonable) demands were finally met that a constructive dialogue could begin on production problems and how to improve safety.

The head of HSE in a mining company tells the following story. Some of the company leaders arrived at the production site and decided to have lunch. The workers’ canteen was not a pretty sight, but they still went ahead and joined the employees for lunch. Mortified, the canteen director ran up to them and begged them to come through to the separate VIP zone where the site managers dined. The executives politely refused, queued up and sat down with the regular workers eating the same food. This gave them a perfect opportunity to experience the workers’ everyday reality and chat to them directly about the food and the canteen environment, etc. After this incident, the leaders spoke to the site manager to express, in no uncertain terms, their dissatisfaction with the state of the facilities and the quality of food. Within a few days, the menu had radically improved, and improvements were made to the canteen. Of course, the reputation of senior management among the workers shot up: they had shown in a simple but profound way that they were happy to share a meal and talk with their employees to understand and improve their working lives. The site managers learned from their bosses’ example and started regularly dining in the staff canteen, where they would chat informally with their workers.

Other possible formats for senior management trips to production sites

Senior managers can conduct safety audits during production site visits, which might include a tour of all areas to assess safe working practices, discussion with workers on existing safety problems, and drawing up an agreed program of safety improvements. The key task for the senior manager leading the audit is to establish clear standards for what is expected from employees, and what is unacceptable. Safety audits should be cascaded down the production site hierarchy so that all managers and team leaders visit the areas of the site for which they hold any responsibility.

Corporate meetings could also be organized at different production sites, rather than always convening at headquarters. This demonstrates to all employees that senior management are paying attention to every facility, however remote. It also provides an ideal opportunity for managers at the production site hosting the meeting to conduct a safety audit. This will allow visiting colleagues to appreciate the positive and negative experiences of another site management team. If one production site, for example, has exceptional statistics on accidents and injuries, then leaders from headquarters and other site managers are encouraged to go along to the meeting at that facility to learn from their experience. The psychology behind this recommendation is shrewd: if managers from other facilities are told that they must attend in order to learn from the best, they will be eager to find flaws, and compare their own practice with this exemplar. If the safety statistics turn out to be flawed or “massaged”, then the visiting managers will draw their own unfavorable conclusions about the leaders of that site. With the entire top and middle management teams there to witness this shameful exposure of exaggerated safety claims, every other site manager will in future think very hard before trying to gloss over their own safety performance.

The HSE head of an oilfield services company believes that visiting key production sites should be included in the KPIs of all senior managers, including company CEOs. When traveling to the regions, top executives should take with them not just the vice presidents for production and industrial safety, but also the chief financial officer and the head of HR. This sends a clear message to people on the ground that the whole senior management team have a keen interest in the problems of industrial sites from all operational aspects.

The head of an oil production facility (middle management) believes that to build trust between managers and subordinates there needs to be frequent systematic communication. This should include regular meetings to discuss short, medium, and long-term tasks for the team and to monitor progress towards achieving set goals. In his company, this is a widespread practice at all levels of the hierarchy. The leader also holds personal meetings with each of his deputies, and they in turn hold similar face-to-face meetings with their subordinates. It is vital that the meetings are based on honest communication and undistorted feedback. For example, the respondent will begin a meeting with his deputies by telling them that he is imperfect as a manager and is aware of many shortcomings and asking them to give him honest feedback. This “breaks the ice”—if an employee has just been invited to give his opinions on the manager’s faults, he/she will more easily accept the manager’s criticism in return. This helps build trusting relationships between manager and subordinates, and allows them to share their concerns about problems without avoiding unpleasant truths. This of course must all be in complete confidence and not go beyond the four walls of the meeting room. If an employee later hears from someone that the manager has revealed the details of their conversation, all trust will be lost—probably for good. Just as in any relationship, confidentiality is crucial for building and maintaining trust between managers and their subordinates.

Decisions arising from site visits

The worst possible outcome of a site visit when employees have opened up, is for there to be no subsequent action from the leadership. Workers need to see production, safety and/or well-being improve in response to the issues they raised. If resources for improvements are for some reason not immediately available, then senior management should be very wary before asking employees to be open about existing problems. A lack of remedial action will only lead to disappointment, and workers will be more suspicious about voicing their concerns next time they are asked.

If a CEO or senior manager from headquarters makes a trip to an industrial site, it is essential that they do not leave the site without committing to tackle one or more of the problems that are highlighted during the visit. On return to headquarters, a designated member of the senior leadership team should take responsibility for handling the issue and go back to the enterprise as soon as they have reached a workable solution. This demonstrates that raising problems with senior managers actually works: that their proposals and initiatives will get to the top of the organization, where the authority and resources exist to deliver effective company-wide solutions. The next time the top brass visit their site, workers will be eager to share other possibly more serious problems, in the expectation that these too will be solved.

With several successful site visits under their belts, headquarters can probably afford to reduce the frequency of future appearances, as the site employees will have grown accustomed to their active feedback producing positive results. Any future problems or risks can then be successfully reported through the traditional hierarchy channels without the need for repeated face-to-face meetings.

Summing up, senior management visits should show all employees at the key industrial facilities that it is safe to give critical feedback, without bringing negative impacts down on their own heads. Senior management must gain trust by explaining to their workforces in face-to-face meetings how they will handle critical risk information, how decisions will be made, and what resources will be made available to solve the highlighted problems—and then they must deliver on their promises. Workers will be encouraged by the results of their colleagues’ previous risk disclosures, and quickly learn that honesty about site problems works better than concealment and lies.

Executives can use direct communication with shop floor employees to send a signal to middle managers

With the option of visiting industrial sites, senior managers have two distinct channels for obtaining information from the production front line: (I) site tours and personal meetings to hear directly from shop floor workers; (II) the traditional chain of command up through an organizational hierarchy, where they hear reports from the middle management level. If middle managers know that a company leadership will now be gathering information about serious problems directly from the workforce and independently of them, then they too will be motivated to approach low-level employees about problems and solve them using their own initiative, without waiting for the arrival of high-ranking officials. A proactive senior management will motivate middle level leaders lower down to engage with problems on the ground, instead of just sitting in their comfortable offices. However, the arrival of senior management at regional enterprises should not destroy the existing hierarchy of decision-making, so that middle managers feel they are being ignored and bypassed. A dialogue between senior management and shop floor employees is only needed to collect information first-hand, so that senior managers gain a better understanding of the critical risks they are ultimately responsible for. Company leaders should never charge in like super-heroes and try to solve every problem for every employee on the site. Their focus must be critical problems across the organization—other matters should be left to the employees’ immediate supervisors to sort out.

Regular tours of an industrial site by mid-level managers

No CEO or senior manager can physically meet face-to-face with all employees of a company. But they can set an example to all managers of how to engage with teams who are managing critical risks, listen to shop floor employees and encourage them to share their opinions, and tackle the problems that are identified rather than “shooting the messenger”. The principle they want to embed throughout the organization is that “problems should be solved at the point of their origin by working together”. This can only work if internal communications between employees and their direct managers is working well. By senior management leading the way, this approach can be cascaded down to all departments that manage critical risks, as subordinates will always try to imitate their leaders and follow their example.

One of the interviewees gives an example involving the director general of a metallurgical plant (middle management). This enterprise employs 16,000 people. Every day the director sets aside time to make a tour of one of the production areas, talking to individual workshop managers, highlighting their achievements and areas where they need to improve. After several weeks of these daily rounds, he walks around the entire plant, visiting all areas and rating every workshop, with the highest score winning an award. Any employee can use the company intranet to access the assessments received by their own workshop. This rating system encourages all the lower-level site managers to improve their position. To move up, they will need to tackle any problems within their area of responsibility so they score higher on the boss’s next visit. This reward system also encourages line managers to visit other workshops and sites to learn lessons from those coming out on top.

The head of HSE in an electricity company cites a similar case at his company. Every month, the manager of each power plant is obliged to conduct a complete site tour, talking with as many employees as possible. A couple of new employees accompany them on this tour, so the manager can show them the key risks and the most dangerous areas of the plant and share the company policies on occupational safety and labor protection, including what the company expects from them. Advice from the production site leader is usually remembered by these employees years later, especially coming as it does at the beginning of their career. A personal chat about safety from the head of the facility can really inspire them to do their best, and this early focus on safety tells newcomers that it is one of the company’s core values. Every third Wednesday of the month, each power plant holds a “Safety Day”. In the morning after an introductory meeting, middle and lower managers disperse throughout the enterprise and spend the day identifying shortcomings and achievements in the field of HSE. In the evening, they gather to “debrief” and agree on a corrective action plan based on the urgency of the issues they have identified.

The head of a power plant gives a similar example. At his plant, there are regular meetings of the whole workforce to enable employees to bring any questions to the plant’s management. 25% of the questions are collected from employees in advance so that the management team have time to prepare detailed answers: operational questions about highly sophisticated technology often require careful analysis before a satisfactory response can be formulated. The other 75% of the questions come live, directly from the audience of employees. If the session is led by a mid-level manager, this creates a great opportunity for employees to raise all kinds of issues.

• 2. FAULT LOGS/RISK REGISTER/RISK DATABASE

Companies should create a database of risk reports from their employees, so that information can be accumulated, analyzed, and acted on. The data must be carefully processed and stored so that it is not lost, and the employee who provided the report must be given direct feedback. A statistical analysis should be made of all incidents, to identify which operational issues are most frequently implicated in causing incidents.

The vice president of an electric utility company supports the view that there should be parallel channels for communicating risk information. One example of an additional channel over and above the traditional hierarchical chain of command is a fault log. He recognized the value of such a system when he was a middle manager running a power plant at which an electronic fault logging system was introduced.

All entries in the fault log were available for viewing across the whole organization. Once a risk was recorded, it could not then be deleted but only archived when the risk was eliminated. Recording faults was a mandatory duty for equipment operators and a requirement of their job description, and management demanded strict adherence to the system across all areas of the plant. Once an employee had recorded a problem in the log, they automatically shared responsibility for solving it—with the support of their superiors, who were notified immediately whenever a new entry was made. Sharing responsibility with their superiors encouraged employees to become more proactive in identifying and tackling risks.

The data collected in the log was analyzed by the management of the plant and the risks graded. From this, a detailed action plan was devised and made available for review by all employees of the company. First, they prioritized funding to address critical key equipment problems. Interestingly, once details of the organization’s production problems were made easily available, many lower-level managers and team leaders found they had sufficient capacity to eliminate many of the risks identified. They proposed these solutions to their superiors, requiring only permission to reallocate existing resources.

It is essential that once risks are logged they are not ignored, so that employees can see that the system is not an empty exercise, but is being actively used by the management to manage problems. This then encourages employees to continue to identify problems, and in time to become the de facto internal auditors of an organization. Based on the data in the system, site managers create a targeted program to eliminate the most pressing problems. With these decisions made at an early stage, they have an empirical basis for requesting the additional funds they need from their superiors and justifying actions and costs to regulators.

Some technical issues raised were difficult for middle managers to fully understand, so they had to request the assistance of the shop floor employees who had first logged the problem. Only in this way could they make a full assessment and devise appropriate solutions. This encouraged open dialogue on equal terms between managers and proactive employees—a productive partnership, with workers bringing their practical experience and a detailed understanding of the problem, and managers contributing their experience in the industry, access to resources and the authority to impose solutions.

The respondent recalls several occasions when the fault log flagged up problems that could have led to serious accidents. The system was instrumental in enabling prompt identification, cooperative decision-making, and effective action, so that a catastrophic development was averted.

The HSE director of an oil company believes that to minimize human error, a critical infrastructure company’s register of identified risks should be digitized as a database and maintained with appropriate software. Every month, a meeting of risk managers at every site should be convened to discuss progress towards addressing the problems. The respondent also suggests that any issues that have not been fully mitigated at production site level should be escalated up to the next level of the managerial hierarchy, so that additional expertise and resources can be made available. In turn, any issue that cannot be tackled effectively at that level should again be escalated to managers based at headquarters, so that senior management are aware of these serious issues and can rapidly employ the necessary resources to bring the situation under full control.

The HSE manager of an oil company believes that only the most critical risks entered in the database should be transmitted up to senior management, so that they can focus their attention on the most significant problems across an organization. All risks entered in the database should be accompanied by full technical details, but a summary of the most serious risks helps busy senior managers to assess their criticality more quickly.

The safety manager at a nuclear power plant maintains that data about serious risks referred to senior management should not be too detailed or time-consuming for them to analyze. It needs to be concise, clear, and detailed enough to establish the current state of play at the production facility. Ease of perception will increase the willingness of senior management to engage in finding solutions, and thus the quality and speed of their decision-making in tackling a critical risk.

The HSE director of a gold mining company gives an example of the escalation of critical risk information through an organization’s hierarchy. The respondent believes that at each production site a special committee—including six to ten of the most qualified and experienced employees at the site—should analyze the information in the risk database every week. The committee’s main job is to identify the ten most significant risks at the site and record the measures being taken to manage them. Once a month, the site director brings the heads of workshops together and the same process is repeated to create a top-ten risk list for the whole site, responsibility for which then transfers to the site director. Once a quarter, another more senior risk committee convenes, with directors from every site of the entire company agreeing on the top ten risks across the whole company. These ten risks are then brought to the attention of senior management, who now assume the responsibility for them. This filtering and prioritizing system, operating from the bottom up, works to bring production risks to the most appropriate level of the hierarchy. Simpler problems requiring fewer resources are dealt with at the bottom, and the most serious risks requiring major resources are referred to the top. Safety thus becomes a shared responsibility throughout the organization.

A safety consultant with managerial experience in oil and gas, chemicals and mining believes that every time a company encounters a new risk, it should be classified in the risk register. It will be assessed according to its prevalence and frequency, the severity of its potential consequences, the probability of it getting worse, and finally the steps and costs required for its mitigation. This ensures that all the key information is there to help managers decide what to prioritize. However, the respondent noted that a company’s lawyers may advise against recording estimates of the likelihood of serious events occurring and the potential cost of their mitigation, considering it legally prudent to avoid calculating the costs and benefits of reducing certain risks.⁵

The HSE head of a chemical company shares his company’s experience. Their chemical plants all maintain operational and business risk registers. The former collect information about technological problems that may have a negative impact on production. The latter contain information about problems that could harm the business: financial pressures, public relations disasters, environmental accidents and so on. Different groups of leaders regularly review each register and take prompt corrective measures to reduce risks and manage existing problems across the whole organization.

• 3. STOP CARDS

Some companies have introduced STOP [Safety Training Observation Program] cards, which document hazardous conditions or unsafe actions that employees have become aware of while performing their duties. Field staff are trained and encouraged to complete these cards. They can choose either to write their name on the card or remain anonymous. The cards are not intended to identify a specific employee as a violator, nor indeed as a whistleblower: their purpose is to identify hazards and dangerous actions in the workplace, in order to make systemic changes and prevent recurrence. STOP cards may be limited to those facilities where critical risks are most likely to occur. Every STOP card is entered into a single company database so that decisions and solutions can be tracked, and no details are lost. Details from each STOP card are collated, and summaries sent regularly from production sites to supervising managers at headquarters. Included is a ranking of the problems and suggestions on possible solutions. Senior management routinely review these reports, and make decisions to eliminate the problems or reduce the risk of their escalation.

In the first year of the system’s operation, employees can be rewarded simply for the quantity of risk information they provide, i.e. for the number of STOP cards filled in. The following year, rewards will be offered only according to the quality of information provided and the significance of the risks identified. Automation of the data allows swift analysis and easy transmission throughout an organization. The respondents agreed that a reward for each identified risk is unnecessary—better to reward employees for the best card of the month or year through a competition. In the early days, rewards for the best card can be material—for example, a bonus or a medal; but they become less material in subsequent years—for example, gratitude and public praise from senior management.

In one large oil company that runs a STOP card system, there is an issue with feedback, as it is difficult to acknowledge all the named employees who have filled out a card. 95% of the personnel at the company’s fields are contract workers, and they tend to have a high staff turnover. Often, by the time the company has taken measures to address the problems received via a STOP card, the employee who filled it in has left the company. However, as far as possible, it is good practice to thank employees who submit useful STOP cards and keep them up-to-date with details of what has been done about the issues they raised.

• 4. ELECTRONIC FORMS AND SMARTPHONE APPS

The head of the well construction and repair department of an oil company gives an example from his personal practice. He used to work for an oilfield services company, where a senior manager was implementing a proactive approach to risk management. If an employee saw a problem, they could fill out a special electronic form on their personal computers—with or without their personal details. The system would automatically forward the messages received to different levels of the corporate hierarchy. Employees were aware of this, and were confident that if they reported a risk on this form, they would see a solution in time. To motivate employees to take an active part, a competition was held regularly for the best messages. Employees who highlighted the most pressing problems were rewarded with a small cash prize. After a few rounds, hundreds of employees were reporting problems. Each message generated instructions to the appropriate division of the company to resolve the problems outlined. On the corporate intranet, each department could view its own list of tasks, and the senior managers continuously monitored their progress. Every data entry stayed active on the system until a successful solution was in place, and the employee who had first sent the message confirmed that the problem had indeed been rectified. There were times when employees logging a problem suffered as a result of their initiative, when the work to solve the problem fell to the line manager of the worker initiating the report. The line manager might then retaliate by refusing to assist that employee in the future. However, these occasional cases did not detract from the overall success of the system in resolving problems raised by production site employees.

To ensure success in introducing this kind of system in a critical infrastructure company, senior managers should:

• encourage employees to take the initiative in making reports and ensure that they are not penalized for raising problems;

• take part in discussions about the most difficult problems logged through the system;

• deal promptly with any crisis situations that arise when solving complex problems;

• personally thank the most active employees who have identified serious issues;

• remain actively involved in solving the problems being reported, especially in the early stages. This shows employees that the company is invested in making the system a success, and they will begin to fill out forms on a regular basis without fear.

The HSE head of a mining and metallurgy company believes that for employees who operate critical infrastructure, there should be clear and concise instructions on how to identify potential operational risks. It is important that the reporting of serious risks is so quick and simple that it can be done on the spot. If the employee has to fill out a lengthy form to report risks, they will simply not bother—and the project, however well intentioned, is doomed to fail. The report form must be automatically delivered to line managers, middle managers, senior managers, and employees of the independent production control systems, who report to the board of directors.

Completing electronic forms, fault logs, and STOP cards on computers is of course already outdated. In one oil company, they are now creating smartphone apps so that any employee who sees a safety violation at work can photograph or video the transgression and send it with a comment directly to the HSE department. The message automatically provides geographical coordinates, so the location of the incident is logged. As soon as the message is sent, it is automatically emailed to the managers of the relevant production facility, senior executives and the HSE department responsible for that site. The site managers are then required to report to headquarters on the measures they are taking to address the violation and prevent recurrences.

The chief risk officer of a national power grid shares his experience of introducing a company-wide smartphone app that allows shop floor employees and contractors to quickly alert management about safety issues they have observed in the course of their work. The app was made available to contractors too because the company outsources much of its work for the maintenance of substations, transformers, and pylons, and the installation of new electric grid assets. The aim of the project was to identify risks and problems as early as possible and resolve them before they could become major problems. To launch the project, an anonymous survey was given to 450 employees and contractors. This survey was itself set up through an app, as it would otherwise have been too time-consuming to organize. The results indicated that senior management, much to their surprise, were simply not aware of many of the problems on the ground that were flagged up in the survey by lower-level managers and workers. This was additional confirmation that the project could fulfill a valuable role for the company. Risk seminars were held for each production unit, senior management team and the board of directors. Participants were asked to review the risks identified in the survey and add any others they knew about. Each risk was then assessed and ranked according to urgency and severity, and a prioritized action plan drawn up to tackle them, including the resources required.

Data entered in the app goes to a special team of a dozen company managers, so that no issue is left unnoticed, unanalyzed, or unresolved. This team is in direct contact with senior management, and can promptly inform them of any serious issues and get rapid decisions on what action should be taken. Many workers gave very positive feedback to the project team: “Look, it’s fantastic, I’ve had this issue and was not able to resolve it, and now I’ve reported it to you and within a couple of weeks it has been resolved”. Seeing a quick resolution of problems they had identified really motivated employees to buy into the new scheme and use it as often as necessary. The project team convinced senior management to hold a bimonthly general meeting, where the CEO gave employees some success stories: instances when employee feedback through the system had worked to solve a serious problem. According to this respondent, employees are generally distrustful of perfect-looking corporate codes and rules, and only trust in what they see with their own eyes. If they witness an employee being penalized for revealing a problem, they know that whatever is written in the codes and rules is simply not true in practice. On the other hand, if they see employees receiving praise from management for flagging up problems, then this motivates them to embrace a new risk alert system. In this example, senior management promised all employees that there would be no reprimands even if the problems were the result of worker errors (with the obvious exception of deliberate violation of regulations). The CEO publicly praised employees who reported serious problems. He added: “I’m not angry or worried if you report something that has gone wrong. Nobody will be punished if, for example, they report an accident in a substation which has been caused by somebody’s stupid behavior. But I will be very harsh and punish everybody who is not communicating these sorts of issues, because these people are depriving the organization of the chance of learning from the mistake. And I will not tolerate people depriving us from learning from… mistakes or from near misses that we have”.

• 5. INDEPENDENT PRODUCTION MONITORING SYSTEMS

According to many of the interviewees, production monitoring systems should be independent of production management. They should operate in parallel to the production system, with feedback directly to senior management or the board of directors, so they can monitor the actions of the entire company.

Production monitoring personnel need to make regular unannounced site visits to conduct independent audits. They do not need to inspect everything—which would be an impossible task—but instead work on the basis that a detailed analysis of 10% of operations can inform accurate and valuable conclusions about the state of an entire organization. Similarly, auditors cannot possibly talk to every single employee—but they can learn a great deal by interviewing a random sample of workers operating critical equipment.

With effective production monitoring, lower and middle management will quickly realize that it is no good trying to hide the situation in the field, because any problems will inevitably come to the attention of senior management. This will encourage line and middle managers to proactively report problems at production sites to headquarters, and take the initiative to propose solutions.

Experience suggests that a production monitoring service needs to recruit professionally qualified analysts who can assess all incoming risk data without bias. The quality of their performance—from diagnosing problems to the effectiveness of their recommended remedial actions—needs to be constantly reviewed.

The experience of one industrial company offers a good example. The production monitoring service in operation here is subordinate to the board of directors, but is audited by a professional external assessor, also reporting to the board. Project documentation and cost estimates are also independently reviewed.

Some respondents also suggest giving some control of safety decision-making to shop floor employees, who clearly have a strong personal interest in making the environment where they work as safe as possible.

• 6. PROCESS IMPROVEMENT PROPOSALS/RATIONALE PROPOSALS

One of the interviewees comments on a highly experienced leader in the coal industry. He held a strong conviction that the best way to get feedback from employees on problems within an organization is through what are known as process improvement proposals or rationale proposals (the terminology varies between different regions). Essentially, these are ways for employees to share their ideas—changes in design, technology, equipment or working practice—that could improve operations. Many companies invite employees to regularly submit their proposals, often by making a “best idea” competition out of it. This can provide management with a great deal of valuable information about the existing problems within a company. Employees tend not to propose ideas that involve a minor tweak or concerning things that are essentially working satisfactorily—they are suggesting significant improvements and overhauls, that could help to highlight major problems and safety issues. Some of these may previously have been unidentified. It is also a safe way for employees to share their concerns and ideas, as they have been explicitly invited to do so by the management. In essence, a process improvement proposal system encourages employees to both identify a problem and propose a solution—the management benefit from both. The system provides a positive and safe “wrapper” for all employees to flag up potentially serious flaws in an organization. Unsolicited bad news requires urgent action from leadership—whereas process improvement proposals can be solicited and analyzed, but do not demand immediate implementation or remedial action.

The HSE manager of a mining company believes that operational development goals, including those for safety issues, are better anchored in the workforce by including shop floor employees and low-level managers in both setting and achieving them. In most industrial companies, managing process improvement proposals is a rather bureaucratic business. To make a proposal, a heap of papers and justifications need to be submitted, which can be time-consuming for employees. This respondent recommends submitting these proposals in A3 format, breaking the page into six equal parts: (I) the name of the project, (II) the essence of the project, (III) the problem that needs to be solved, (IV) the desired outcome, (V) actions to be taken, and (VI) the project budget. Workers devise improvement projects together with lower-level managers and present them personally to the site manager. The simplicity of the submission form allows the manager to quickly evaluate a suggestion and make an operational decision on its implementation. Analyzing a range of these project summaries, each covering specific issues and improvements, gives the manager a good overview of the risks at the site.

Employees are not stupid—if the process improvement proposal system produces good results, then they will continue to use it. Workers become familiar with it as an effective channel for conveying their ideas and concerns up the hierarchy, and take pride in their contribution to the wider organization. This is especially true if they see their suggestions taken up and resources provided to implement their ideas, something that would be impossible without support from higher management. Such experiences provide enormous motivation for employees to become increasingly invested in improving an organization’s operations, by identifying risks and suggesting solutions. Employees see that they are needed, that their opinion is valued, and that they can influence decision-making. This increases job satisfaction and improves performance, motivation, and company loyalty. If some improvement proposals are implemented at one site, then employees working at other sites will want to do even better. Internal competition can boost employee participation and bring even more useful risk information to the management’s attention.

However, it is probably misguided to make it compulsory for employees to submit improvement proposals. The head of a power plant gives the following example. He was on a business trip to a large production site, where a mandatory system for submitting proposals had been introduced. The site manager said that in the first few years after the system was introduced, employees contributed some really interesting and relevant suggestions. But gradually, the submissions became less helpful, with a lot more information noise and very few workable proposals. It appeared that employees were just plucking any old idea out of the air just to meet their compulsory quota. It reached a point where the company had amassed 3000 different proposals from employees, which would have required ten years of intensive work and huge resources to implement—it was clearly impossible to do this, even for a small proportion of these suggestions. This is bound to disappoint employees and make them less likely to contribute in the future. If managers are not to be swamped with ideas that they do not have the resources to implement, it may be prudent to limit process improvement proposals to ideas involving critical equipment, operational safety, and overall organizational efficiency.

• 7. APPLYING A COMPANY’S EXPERIENCE OF SUCCESSFUL SAFETY PRACTICES

Sometimes, it can be difficult to start a dialogue based around the problems of an organization. Many employees and managers are not immediately willing to start discussing their past mistakes. It is easier to begin introducing dialogue by talking about the points of strength of the company concerning safety and risk management, to help disseminate the best practices throughout an organization.

The HSE head of an oilfield services company shares the following experience. When his company reached a plateau in safety performance, senior management tried to figure out how to continue to drive up standards. To this end, they opened a dialogue with employees and lower-level managers and soon realized that it is vital not only to study accidents and things that have gone wrong, but also to identify areas where the company has got safety right. Across all production sites, they began to count the days that passed without an incident. They also collected feedback from employees about what they were doing on a day-to-day basis to minimize the risk of accidents, and examined the behavior of production teams that had the best safety statistics. These best practices were then implemented across the entire company. An effective bottom-up communication channel was established, based on the willing participation of all shop floor employees and a management who actively welcomed information about the steps employees were already taking to improve safety. Neither employees nor managers were threatened by this information as it did not focus on mistakes but on successes—everybody likes sharing good news! Senior management supported this initiative by introducing additional information technology, so that all employees could easily communicate and discuss these successful experiences across all departments. This shift in emphasis from negative to positive was so powerful that it changed the entire corporate communication culture. Two-way dialogue up and down the hierarchy has now become the corporate norm. Such profound changes were achieved by senior managers showing their commitment to constantly communicating with shop floor employees on an equal footing. Once workforce is engaged in discussing the good news, they can gradually be encouraged to extend the dialogue to include safety problems and negative issues, and identifying the root causes of safety incidents and poor work practices.

• 8. PROBLEM SOLVING BOARDS

The HSE manager of a mining company recommends setting up a problem-solving notice board at every workshop across all company sites, with the aim of gaining a better understanding of the concerns of shop floor workers. Anyone who sees a problem can enter it up on the board using the following table headings: (I) date, (II) essence of the problem, (III) author of the entry, (IV) action to be taken, (V) who is responsible for the solution, (VI) deadlines. Line managers study the board at the end of every day and coordinate solutions for all the issues based on who is assigned responsibility. This system has obvious similarities with a fault log, where managers take responsibility for fixing any fault that they have been made aware of. The boards are photographed daily by the site HSE representatives, who send details of any new entries up to headquarters. They also periodically collate all the data to generate a report, especially relevant prior to senior management visiting that site. Leaders can easily identify the issues of most concern to shop floor employees and raise these with the entire workforce, including senior and middle managers.

• 9. “RISK HUNTING”

The head of a thermal power plant believes that “risk hunting”—where small teams of employees and managers walk around a facility in search of risks—has proven to be a very effective tool in his experience. It allows all identified risks to be gathered in one operation and presented to the site director who, in turn, analyzes the risks and designates who is responsible for tackling them. Then once a month, the facility holds a meeting of all managers, during which progress on mitigating all the problems is assessed. This ensures that the focus is on effective problem solving and the provision of suitable resources to wrap up issues promptly. Visual documentation—such as “before/during/after” photo reports—is a valuable tool to enable progress to be closely monitored.

One large metallurgical plant launched a similar project. 12,000 different risks and problems were identified. However, the project had to be eventually closed. The problem was that when the risks were “hunted”, they were not assessed and ranked according to their criticality and urgency. The vast array of 12,000 risk records baffled managers of the plant: with no initial assessment it was very difficult to understand which were the most critical and required urgent solutions. The vast majority were minor issues that did not have a serious impact on the safety of production, and just distracted managers from solving the most dangerous and urgent operational problems. This experience suggests that however information about risks is collected, it is important to rank the risks initially so that managers can understand where to direct their immediate efforts to prevent any critical developments.

• 10. MESSAGING APPS AND GROUP CHATS

A low-level manager at an oil company cited the use of modern messaging platforms to provide rapid communication between shop floor employees and their line managers. His production team has a group on the Viber platform, which has proved its value again and again in helping assist information transfer about operational issues. The group chat creates a forum for drillers, foremen, and lower-level managers where they can share information daily, and operational problems are freely discussed. Many lower and middle managers at the site also subscribe to the group, though employees generally remain unaware of this, as most only appear on the group under nicknames, allowing them to observe conversations incognito. Leaders can also message the group, though in the respondent’s opinion this is unwise, as it may spook employees, who then stop posting on the group. With hundreds of employees on the chat, it is easy for a couple of leaders to remain in the background, using the information to tackle the problems that come up, while allowing the group discussion to continue without interference.

• 11. VOLUNTEER RESCUE WORKERS AS INTERNAL AUDITORS OF COMPANY RISKS

The head of the HSE department in a company that uses hazardous chemical processes shares the following experience. When they began training field staff running a critical chemical facility on how to respond to emergencies, they identified a need to train volunteer rescue workers. This was a return to the practices of the past, when chemical plants had their own reserve fire teams that could provide on-site assistance to the professional fire brigade when dealing with an emergency. When shop floor employees are trained in tackling emergencies, they gain a better understanding of the existing production risks and how well the site is prepared if those risks escalate. When they witness equipment malfunctioning, they have a better understanding of the potentially serious consequences of its failure—so they will take urgent measures to control risk, even initiating a shutdown if need be.

Initially, the senior management of the company thought that staff would be reluctant to volunteer without a financial bonus. But it turned out that the opposite was true: employees rushed to sign up to the emergency teams. Like most people, employees want to show that they care, that they are brave, decent people. They are willing to take responsibility for providing an emergency response to prevent disasters—not for financial reward, but to save the lives of their colleagues or residents near a production site. Site managers should also task these volunteer teams with the job of proactively identifying health and safety risks, and shutting down production if they see worrisome equipment faults or serious infringements of safety protocols. Some employees even get tattoos to show they are members of a volunteer emergency team and, at some sites, there is a waiting list for volunteer fire training. The teams have monthly goals—for example, to find a certain number of safety violations, which they will report via a dedicated channel to factory directors and on to headquarters. Management then rank all the issues received by criticality and probability using a special risk database, and make decisions based on this analysis. The volunteers are encouraged to attend further emergency trainings with the regular fire crews.

Every site manager also has a KPI that requires them to reward these volunteer teams when they flag up safety violations. The teams soon become de facto site safety auditors with broad risk control powers, and are highly motivated to uncover more violations. Their immediate supervisors are similarly eager to prevent further infringements, while management’s role at all levels is to make sure the resources are in place to implement remedial measures. This process inevitably creates a degree of information noise—in their eagerness, some volunteers will report issues too minor to bother with. Nevertheless, all the data is entered into a single risk database. Experience shows that there is no need to restrict the teams’ activities: they soon learn to regulate themselves, letting insignificant issues pass and focusing instead on serious matters, independently ranking them according to criticality and probability of occurrence. The most important learning from this example is that, if company leaders create the right conditions—specifically that risk information is actively welcomed and rewarded—then employees at all levels will willingly play a role in identifying and managing critical risks, including offering their own solutions.

• 12. ANONYMOUS MAILBOXES AND HELPLINES

All the respondents who mention anonymous communication channels are skeptical about their effectiveness compared to more “open” risk communication channels. The HSE head of an oil company maintains that anonymous postboxes do not work in most organizations, because people must have trust before they will willingly share information about problems in their area of activity. If there is trust, then posted messages do not need to be anonymous—if there is none, then people will not risk posting anything critical, even anonymously.

For companies with a reactive approach to risk management, anonymity can reduce the threat to employees who disclose information to senior management. If the identity of the employee who reported a problem remains unknown to their colleagues and immediate supervisor, then work relationships should not be damaged. The best safety guarantee is for the problem to be promptly solved. It is vital that senior managers do not penalize the employee’s colleagues or supervisor. On the other hand, companies with a more proactive approach to risk management generally do not need anonymous risk communication channels.

The HSE manager of another oil company gives some statistics on an anonymous hotline that went directly to the head of the HSE function for directional drilling. More than 11,000 people work in this oil company, but over the year the hotline was in operation, there were only three calls. One caller reported that there was no drinking water on the drilling rig—a problem quickly resolved through the regional manager. The other two cases were even less serious. Either the company was virtually perfect… or the hotline was not working!

The head of the HSE department in a mining company cites similar statistics from his work at various coal and mining companies. In his experience, 80–90% of anonymous messages transmitted through drop-boxes and hotlines were about personal grievances: employees trying to take revenge on their superiors or their work colleagues. Most of the rest were small local issues, leaving only a very small number that actually raised significant safety concerns. In other words, most of these anonymous messages were no more than information noise.

To address this problem, the CEO of one company instructed the internal safety managers to monitor the hotline, and only inform him of a problem if it was mentioned three times. To work effectively over the long-term, senior management must respond promptly and publicly to hotline reports that are significant. More cautious employees, seeing that management seem really committed to reducing risk, may then decide to use the hotline or mailbox to inform them of a problem they have noticed. It is important that there are no rewards for disclosing risks through anonymous mailboxes and call lines—employees should have no interest in using these channels beyond the fact that they want the problem to be solved.

• 13. DISCUSSION ABOUT CREATING A NETWORK OF SENIOR MANAGEMENT REPRESENTATIVES

Several respondents recommended creating a network of special senior management representatives covering all production sites, whose role is to receive risk information directly from employees who, for whatever reason, do not want to communicate with middle and lower managers. Employees must recognize that this team is acting in effect like the ears of the CEO/owners/board of directors. Information shared with them should be of sufficient importance to justify bypassing normal hierarchical channels and going straight to the top. However, other respondents disagreed with this model, believing the possible benefits are outweighed by the disadvantages, such as undermining trust, especially the efforts of leadership to build good relationships with site managers.

8 Recommendation No. 8: The Words of Leaders Should Be Supported by Their Actions: Problems Once Identified Need to Be Solved

If leaders want their employees to believe them when they say they want to improve the quality and speed of risk communication, then they must consistently address the issues that their subordinates bring to their attention. If identified problems are not satisfactorily solved, then employees will inevitably lose faith, and will not bother to disclose risks to their superiors anymore.

When asked how to increase employee trust in a leadership, 45 out of 100 respondents said that the most important factor was that leaders should never say one thing and then do another—their words must be matched by their deeds. If not, employees will in the future simply not believe what leaders say. This is especially relevant if senior managers call for risk disclosure and then do nothing to solve the problems that their employees have dutifully reported. Trust will be lost, and once lost it is a hard thing to recover.

Results of responses to anonymous surveys within the framework of the pilot project: In order for employees to trust managers, their actions should match their words.

	Strongly agree	Rather agree	Rather disagree	Strongly disagree	Difficult to answer	Number of respondents
All survey participants	75.4%	22.9%	1.4%	0.0%	0.0%	280
Senior management, heads of departments and directors of sites (middle managers)	86.1%	13.9%	0.0%	0.0%	0.0%	36
Lower managers: deputy directors of sites, chief engineers of sites, heads of workshops, heads and representatives of HSE services at sites	76.0%	22.1%	1.0%	0.0%	1.0%	104
Engineers, foremen, and shop floor employees who operate critical infrastructure at sites	72.1%	25.7%	2.1%	0.0%	0.0%	140

The HSE head of an oil company cites the following example. The CEO of a company may state that the company’s priority is “goal zero”—in other words, a declaration that the only acceptable target is zero accidents, injuries, or oil spills. He can start walking up the stairs holding onto the handrail, using his seat belt in corporate cars, wearing a helmet when he arrives at a production site, and so on. These are easily achieved at no real personal cost. The real test will come when discussing things like production plans. If the boss has boldly declared that “safety trumps everything”, but at production meetings only wants to focus on achieving the latest ambitious production plans and profit margins—and shuts down any discussion about the safety issues and production risks that those targets will entail, and their impact on his “goal zero”—then no one will believe that safety is really a priority for the company. In other words, a leader’s eye-catching declarations must be reflected in the real decisions he makes when planning future production and financial goals.

The HSE head of a mining and metallurgy company also emphasized that the words of managers should be matched by their deeds. He always tells his fellow managers “If we’re not yet ready to launch a new initiative, let us wait until we have all our soldiers in a line before we make any announcements”. Managers who successfully build trusting relationships with their employees never make promises that they cannot fulfill. If they are not yet ready to make safety issues paramount instead of profit, it is foolish to make any heroic claims about prioritizing safety.

The head of risk management of a renewable energy company believes that he can only gain the trust of his employees by following through on his promises. If he does what he says, then he becomes a role model for subordinates. Leaders should try to show fairness, honesty, and openness in all their actions, so that subordinates can witness the standards that a company expects them to follow in their own area of work.

Issues highlighted by employees should be addressed

Employees will only learn to trust senior management when they see that top managers will act to solve their problems. When employees report risks or problems, they do so in the belief that managers will make the right decisions to solve the problem or at least reduce the risk. A company may well not have enough resources to solve all the problems identified at any given time. If this is the case, then managers must be sure to feed back to the employee who reported an issue and assure them that they will tackle the problem when they can.

©Dmitry Chernov, Ali Ayoub, Giovanni Sansavini, Didier Sornette, All rights reserved

The HSE head of an oil company gave the example of a company boss who visits production sites and invites employees to have a “heart to heart talk”. After such an open conversation, employees expect that any problem they brought to light will be resolved. To meet these expectations, the boss must work with the site manager to resolve the problem, but without punishing them for having allowed the situation to develop. If successful, employees will be ready to disclose additional information on the boss’s next visit: they would rather have safety problems sorted out, so their work becomes safer. After a few visits have led to solutions, the boss will have a good reputation for getting things done, and a high level of trust among subordinates. On the other hand, if these site visits lead to criticism and no positive action, people will stop revealing problems altogether and stick to bland reassurances that everything is fine.

The HSE manager of another oil company believes that when it comes to encouraging employees to openly share their concerns about technological risks, the moral qualities of the boss can be more important than their technical knowledge. Employees do not need their leader to understand every minor aspect of their job and the equipment they work with; but they do need to be confident that the manager will take responsibility for solving a safety problem that they have reported, and get it remedied as quickly as possible. Whether the boss has the competence and resources himself, or needs to go to colleagues for technical advice or to the owners for additional resources, is immaterial as long as the problem gets resolved.

The CEO and chief nuclear officer of a nuclear power generation company gives an example from his company, in which an effective process of issuing corrective actions for risk mitigation has been established. Any employee can identify a problem, incorporate it into a streamlined remedial action business process, and then track progress towards its resolution. Each problem identified is analyzed to understand why it has arisen, and what the organization needs to change to make sure it does not recur on another site.

Senior management must have the resources to solve the problems their employees report

When executives say that they want to reduce the likelihood of major accidents, they must have the financial resources to deal with the problems that come up. They must be aware in advance of their capacity to implement remedial actions. For example, they may not be able to build a new facility on an outdated production site—but with careful management they may well be able to maintain existing equipment that is decades old in acceptably safe working condition. Senior managers cannot tell employees that they want to hear about anything and everything that might lead to an accident, and then turn round and say that they do not have the means to rectify all these problems at once. Carrying out extensive operational repairs, making comprehensive modernizations or installing completely new machinery is likely to require a huge investment. Before raising expectations, senior management must ensure that they have the unconditional support of owners, shareholders, and the state to tackle critical problems, however expensive the solution may be. Not all critical risks will cost a fortune to mitigate—some may simply require minor adjustment of equipment or staff reallocation.

Once a list of the critical problems facing an organization has been drawn up, senior management should turn to owners/shareholders for the resources they need to solve these problems. Generally, the resources requested from shareholders exceed their capabilities—or at least their willingness to invest further. Managers should understand this, and be prepared to re-analyze their wish list and set priorities on the most urgent issues. Therefore, when requesting risk information from employees, they are advised to limit this to the most urgent and hazardous problems.

The HSE director of a mining company cites one such example. As a consultant safety expert, he attended a strategic session for a large manufacturing company. The CEO told the mid-level managers present that he wanted to hear about the problems they were facing at the production sites, insisting he was willing to solve all of them. The session was promoted as an open, honest forum but, during the discussion, it became apparent that the subordinates did not consider the CEO to be very sincere and were skeptical about whether he was genuinely looking to solve site production problems. In their experience: (I) it is always difficult to get a meeting with the CEO to discuss outstanding issues; (II) few of the senior managers of the company ever give clear responses (if any) to messages from subordinates about problems at the sites; (III) if a subordinate brings a problem to the CEO, they inevitably end up having to deal with it themselves, because senior managers always look for someone convenient to blame; (IV) there is no point in informing senior managers about problems because they will not approve the allocation of necessary resources, always using the excuse “there’s no money”. The CEO was very surprised to find these negative opinions so widespread among the middle managers of his company, as there was a large fund available specifically for solving urgent problems, which could be accessed without long bureaucratic procedures. He invited mid-level managers to contact him directly in case of future critical risks, so they could be promptly dealt with. He ended by clarifying that this fund was there only to address critical risks. The mid-level managers agreed that they would work to divide their site risks into critical and non-critical, and in future would ask the CEO for his help in solving critical issues.

Frustrated expectations destroy trust

To promise the world and then do nothing is the quickest way to destroy trust in leaders. When managers ask their subordinates for information on equipment problems, they should not raise false expectations. They must demonstrate with their actions that they will tackle all the most hazardous problems that come to light through a planned program of works. In real life, this may take some time—it is impossible to do everything at once. But it should start as soon as practicable, so workers quickly see the truth of a manager’s words.

One leader noted that it is critical to be straight with your employees: act as you want others to act. If senior management depart even once from the publicly declared risk transmission procedures, then their credibility will be permanently damaged, and no one will have any part in disclosing risks in future.

The HSE manager of a metallurgy company insists that, if the boss promises to solve something, then it must happen. The worst scenario is a leader who promises everything and delivers on nothing. This automatically destroys employees’ trust in senior management initiatives. This respondent believes that, if managers cannot realistically do anything about a given issue, it is better not to make any promises. If the problem is not immediately fixable, then managers should study the situation until they can bring a workable solution back to their employees, and not just put it on the back burner and hope everyone forgets about it. Employees need to see clear communication and resolve from senior management if leaders are to gain their respect.

An important basis of trust is transparency. Subordinates can see a mile off when their superiors are lying to them. If they hear lies, they will no longer be willing to listen to senior management and will just disregard all their promises. If management do not have time to solve a problem, or complications arise, then they need to be straight with the workforce and tell them that everything is not working out as planned. It is also important to manage expectations. Bosses must make it clear in advance that it is impossible to fund every proposal or fix every problem that the employees raise. However, they will all be looked at, their risks assessed and ranked, and the most pressing issues given a funded solution. Any risk that comes to a manager’s attention should be actioned and solved—or if not, the employee who raised the issue should be told why this is not currently possible. This involves making clear: (I) the obstacles that are preventing a resolution; (II) why the problem is not a priority for the company; (III) why there is a delay in dealing with the problem. Leaders should acknowledge that they are not omnipotent: “Even the boss can fail and make mistakes”. Such an honest and transparent approach will win greater respect from employees and help develop a sense of shared responsibility for solving problems.

Justice and honesty when discussing difficult issues

Employees should understand how a manager makes decisions. If leaders can be seen to make fair judgments, then their actions are far more likely to inspire the respect and confidence of their workforce.

If an industrial facility is in an atrocious state, then the manager must be honest about the severity of the situation, and that the only way to pull through is if everyone works hard together to bring things back from the brink. Penalties for negligent work or for ignoring problems may be necessary, but the leader must always be fair, consistent, and make sure to supply the resources required to rectify the situation. This approach will help gain the trust of the workforce.

An interviewee from the metallurgical industry shared the observation that, in some companies, corporate slogans are written to express an idealized image of a company. The corporate media and public relations department will always seek to portray an organization in the best possible light and focus only on the good side of things. However, nobody knows better than employees about the real state of affairs and all the knotty problems that these glossy publications are choosing to airbrush out of existence. Indeed, the employees’ opinion of their bosses emerges from the way the leadership manage these issues.

Senior management should have an action plan and make sure it is implemented

One of the strongest factors influencing how much a workforce trust their leadership is if senior managers share ambitions they have for a company, and then successfully reach these goals. Keeping promises about major company developments encourages employees to believe that senior managers can be trusted to keep other assurances around improving safety systems and communication within an organization.

Some respondents recommend that senior management should form an action plan that is shared with all employees, so that they know where a company is heading, what goals it sets for itself, what the leader requires from them, and so on. It is very important to show employees what they can expect from a company in the future: what their place might be in the workforce, what skills they should develop, what the workplace will be like. Employees are less stressed when they understand the leader’s plans for the future of the company and recognize the opportunities and limitations that may arise. Establishing clear strategic goals and working tirelessly to achieve them has a very positive effect on the trust the workforce feels towards senior management. It helps boost motivation.

In this respect, the example of cleaners working in a spacecraft assembly workshop is illustrative. Based on their duties, we could dismiss them as “just floor polishers”. But we would be forgetting the context. In fact, the cleaners help to launch the spacecraft: keeping the final assembly shop spotless will have a direct effect on the operation of the equipment in space. Seeing constant improvements in a workplace, and an exciting picture of their future in a company, will encourage employees to dedicate their careers to that organization. Employees will be willing to “go that extra mile” in their duties: perhaps they will stay late to get something finished, or willingly work extra “on call” shifts, because they want to be part of something they believe is worthwhile and is destined for success. The strategic goals of a company should be “packaged” into a convincing and attractive vision that all employees can buy into and be motivated by. If employees are to believe that a paradigm shift has occurred with risk reporting and communication, then they need to see frequent real-life evidence of this in operation, both in their area of work and across the whole company.

The professional competence of managers and the adequacy of their decisions

Several interviewees emphasize that the level of professional competence of managers and the adequacy of their decisions has a huge impact on the level of trust among employees. Leaders must be professionals in the field in which a company operates, so that their employees are confident that management know what they are talking about.

Several senior managers from the electric power industry express this view. For employees to trust senior management, they must be competent and experienced. Trust is based in part on what employees know about a manager’s performance at previous workplaces; this competency assessment is then modified as they begin to see how they are shaping up as the new boss. Employees generally respect leaders who have worked their way up within their industry.

The HSE director of a metallurgy company believes that the head of a critical infrastructure company should be competent in both technical and production issues. They should show employees that they have a good grasp of equipment problems, understand the complexity of any given problem in the context of a company’s industrial policy, and have a wider knowledge of the state of affairs across the whole company. If subordinates feel the boss is not competent, they will not respect them. If they do not respect them, they will not trust them, and this is likely to be mutual.

Some respondents expressed concern that these days, many companies operating critical infrastructure facilities are appointing senior people with little or no industry experience. Some managers do not have specialized technical training and their education and career have been more in the world of finance and business economics, so they know little or nothing about the key operations of an industrial facility. Unfortunately, this is a global trend. For such leaders, production is a very grey area. Without previous industry experience, they have only a very sketchy idea of what they are managing, and this unfortunately can lead to unhelpful bombastic behavior. They want to appear competent in the eyes of their subordinates—so they “compensate” for their lack of knowledge by being overly assertive, inflexible and categorical. With a dogmatic mindset like this, there is only one right opinion and that is the manager’s: the opinions of their subordinates are totally ignored. This tends to result in monologue communication from manager down to worker. If dialogue fails within a company, then there is less shared professional communication about risks.

Defensive and ignorant managers like this try to avoid visiting production sites. They are worried, at least subconsciously, that their lack of knowledge will be exposed in front of subordinates, and they will look foolish. As the respondents point out, a significant proportion of senior managers in critical infrastructure companies now come from the world of finance and economics. Mid-level managers running production sites, on the other hand, will often have begun their careers as shop floor workers and risen through the ranks through merit and hard work. These two levels of management often have conflicting goals. Senior managers tend to be oriented towards getting a financial result—they measure everything in money. Middle management are more focused on the implementation of the production plan, on the production process itself—and not least, on the safe operation of the facility. This can lead to misunderstanding between managers at various levels, and foster mistrust between headquarters and industrial sites. This, of course, has a negative impact on the quality of information about risks and problems being passed between the sites and headquarters. A lack of “coalface” experience at the top of a company can affect the level of employee confidence and trust. Shop floor employees start to doubt that managers are focused on the efficient and safe operation of equipment and suspect that they just want to maximize profits—even if that means disregarding the safety parameters of equipment and concern for employee wellbeing.

The best solution to offset this tendency is for any manager who arrives in post with little appropriate industry experience to be given supplementary training. By accepting such training, leaders are honestly acknowledging their lack of industry knowledge and showing a willingness to learn from professionals in technical fields, even though they may be their subordinates. Actively involving competent employees from different levels of a company in developing solutions helps create a respectful atmosphere, and allows dialogue to flourish around the optimum functioning and development of a company.

9 Recommendation No. 9: Do not Penalize Specific Employees: Look for Systemic Defects Within the Organization

No penalties for disclosing information about risks, errors and incidents

According to the HSE head of a gold mining company, managers should not penalize individual employees for incidents, but instead look for the systemic shortcomings in a company’s operations that forced the employees to commit safety breaches. He gives an example from his practice. In the past, he knew one leader who received an incident report that placed the blame on specific workers. The manager concerned put this report aside and, instead, initiated a real investigation of the incident asking: “What were these employees ordered to do by the leadership?”; “Were adequate resources provided?”; “Was employee training fit for purpose?”; “Had the workplace been set up for safe work?”. As soon as employees realized that there was not going to be a witch-hunt to find individuals to blame and punish, they felt free to reveal the true motives behind their behavior, enabling management to identify the systemic causes that were the real reason why the safety violation had happened in the first place. Working to eliminate systemic shortcomings by analyzing specific incidents in this way will prevent the recurrence of similar incidents in the future. If systemic problems are solved, employees will no longer have any reason to violate safety regulations.

©Dmitry Chernov, Ali Ayoub, Giovanni Sansavini, Didier Sornette, All rights reserved

The head of the HSE department at a chemical company believes that employees need to be shown that disclosure of risk-related information is in their own interests. It should be made clear that preventive identification of risks avoids: (I) the recurrence of emergencies, thereby reducing the likelihood of serious injuries and deaths; (II) staff and wage cutbacks due to production shutdown after accidents or equipment breakdowns. Employee motivation may differ from site to site and country to country. Managers should identify the issues most relevant to their employees and tackle these when devising new models for transmitting risk information.

It is worth noting that for the most part, employees who violate safety precautions are not deliberately trying to do something wrong. Generally, people want to do the right thing and are more likely to be acting to try and save a company’s expenses, or cut corners to increase productivity, and so on. Despite such good intentions, they still find themselves being penalized for breaking safety regulations. When investigating incidents, the key task for management is to look beyond individual workers and identify the systemic shortcomings of a company, so that these can be addressed, and the workplace made safer. As well as being a far more effective approach than blame and recrimination, this reassures employees throughout the corporate hierarchy that they need not worry—letting the company know there is a problem will not lead to them or their colleagues being hauled up in front of everyone and publicly reprimanded. The honest disclosure of risk information must come to be seen throughout a company as a positive action and one that any conscientious and loyal employee will carry out without hesitation. Clearly, this will not be the view if employees continue to be penalized for being the bearers of “bad news”.

The head of an oil production site believes that penalizing employees for incidents is appropriate only if they have deliberately disregarded safety rules. In his experience of incident investigations, he has never once identified deliberate negligence or malicious violation of safety regulations. Generally, employees fail to follow safety measures not out of malice, but because they want to maintain or increase production output. Unfortunately, through error or overload, they find instead that they have caused an accident.

If senior management wish to radically improve the transmission of risk information throughout a company, they must give employees a very clear message: “When we learn that an accident has been caused by an employee being over-ambitious or go-getting, we recognize the truth that the whole company is to blame, that we allowed mistakes in various aspects of our operation, or demanded production targets that meant the employee felt forced into committing the safety infringement which led to the emergency. We are not trying to blame a specific employee, but to work together to learn from any negative incidents that occur so that we can improve the whole system”.

The purpose of removing recrimination or punishment for accidents is that employees are no longer afraid to analyze their own mistakes and start discussing them with colleagues and management. It is only when fear of retribution is removed that employees will begin to send more honest and objective information about problems to their managers. According to the respondent, we should remember that employees will always feel some trepidation when it comes to reporting bad news to their superiors. The challenge for managers is to reduce that fear, even if it cannot be completely removed. To achieve this, they must openly declare: (I) there will be no penalties for disclosing negative information about the situation on the ground; (II) senior management want to be actively involved in the discussion of the problems facing production units; (III) middle managers are eager to hear from their subordinates; (IV) senior management have resources, and are happy to invest them in solving critical problems; (V) senior managers are more than willing to share the responsibility for solving problems with their subordinates—“We are in this together. We are all on the same team”. In time, this approach will create a shift in culture, and instead of being afraid to admit there is a problem, employees will be afraid to conceal it. Why would they try and tackle the problem alone or risk hiding it, when they have been encouraged to work together with senior management, to share the responsibility and find effective solutions?

Results of responses to anonymous surveys within the pilot project: When employees report a problem to a manager, they then share the responsibility for solving it. If employees keep a problem to themselves, they are taking full responsibility for whatever happens.

	Strongly agree	Rather agree	Rather disagree	Strongly disagree	Difficult to answer	Number of respondents
All survey participants	35.4%	45.4%	14.6%	2.5%	2.1%	280
Senior management, heads of departments and directors of sites (middle managers)	44.4%	44.4%	5.6%	2.8%	2.8%	36
Lower managers: deputy directors of sites, chief engineers of sites, heads of workshops, heads and representatives of HSE services at sites	37.5%	50.0%	8.7%	2.9%	1.0%	104
Engineers, foremen, and shop floor employees who operate critical infrastructure at sites	35.0%	45.7%	14.3%	1.4%	3.6%	140

Several interviewees share their experience within one specific oil company. The policy there is not to penalize employees after conducting incident investigations. The company denies interest in penalizing particular employees, but instead seeks to understand the flawed organizational and production processes that led to the accident and to work out how they can be changed to prevent future accidents. When investigating incidents, the priority is to identify systemic flaws, not the mistakes of specific employees. The company has informed employees of the principles it will follow when investigating incidents: (I) the most important thing for the company is to ensure the investigation is transparent and that all employees actively participate to help identify the root causes of the incident so that it does not happen again; (II) once identified, these causes will be comprehensively dealt with; (III) the company has no desire to penalize individuals.

Based on the results of each investigation, a report is written on what changes the company needs to make in order that employees in future are not forced to contravene regulations or take unjustified risks. Applying these principles to their incident investigations has had a positive impact: employees have become more open, and cooperate willingly in investigations aimed at identifying the causes of incidents. It took time to embed the principle of “no penalties for industrial safety violations” but, once accepted, the corporate culture around the discussion of safety issues radically improved. Employees are no longer fearful of penalties: they proactively identify risks in the early stages before incidents occur and are willing to discuss how to eliminate them with colleagues and managers. When incidents had led to penalties, employees had—subconsciously or not—avoided analyzing the causes of incidents. When this threat has been removed, almost all employees showed a real willingness to join dialogues on how to increase production safety.

According to the respondents, harsh penalties based on the results of an incident investigation should be entirely abolished: penalties are only appropriate for cases where serious risk information has been concealed, or employees have blocked efforts to rectify production problems or follow safety regulations. Employees need clear guidelines for what is approved and what is prohibited. Management must instill a proactive approach in all employees to maximize occupational safety, rather than simply looking to blame individual employees for their perceived infringements and disobedience.

The head of the HSE department at an oilfield services company believes that reports to management should only contain information about dangerous working conditions and risks, rather than the actions of specific workers. If a risk report does contain information about individuals’ faults, then this should be removed and discouraged in the future, so that employees do not try and use risk communication channels to advance their own interests or pursue vendettas. If a specific employee’s name appears, it raises the question of who benefits and who suffers from its inclusion. Managers must focus on analyzing the risk inherent in a situation, not the actions of specific employees.

Most companies have designated HR channels for reporting employees for perceived unacceptable behavior—even then, such information must be handled with confidentiality and care to avoid any suggestions of a witch-hunt or purge. Senior management need to send the following message to the whole company: “We want to identify risks and improve processes to make them safer, not to penalize people”. Rather than reprimanding those involved in dangerous incidents, managers must endeavor to remove the conditions that put pressure on employees to act unsafely in the first place. Then employees will begin to welcome investigations, since they can see these are now focused on improving safety and working conditions, and not on inflicting punishment.

The vice president of an international oil company believes that if, after an incident, senior management automatically ask the question, “Who did it, who did something wrong?”, then employees will be afraid to report risks and own up to their mistakes. They will instead try to hide the truth about incidents. The respondent recommends that senior management ask the following question after an incident: “What lesson can we learn from this incident to prevent a similar thing from happening again?”. In the respondent’s company, the Incident Review Team has been renamed the Learning Team. This immediately changed the attitude of the employees towards the team’s activities. The learning team does not blame employees involved in the incident, but simply asks the questions: “What systems failed here? What can we learn from this? What do we need to do differently or change to avoid repeating the same mistakes in the future?”. In response, the employees involved in the incident turn from defensiveness to cooperation and become willing to help analyze the shortcomings in the company’s operations, even if this means admitting personal mistakes. As a result, the company produces objective information about the incident, which helps identify root causes and the changes needed to achieve meaningful and lasting risk reduction.

The head of a power plant gives the example of one energy company where owners and senior management decided to work together towards preventing major accidents involving the company’s infrastructure. The CEO told the entire workforce that he wanted to hear about every problem, equipment failure and safety incident: “We will never penalize you for incidents that occur. Tell us about all the problems and safety incidents and we will use that information to ensure that the accident rate at the factory really is reduced”. Confident that they would not be penalized, employees then began to take the initiative in disclosing risks. From this huge influx of new information, much of it about relatively minor issues, the HSE department are isolating the causes of incidents and taking measures to prevent critical developments. According to the respondent, this company has one of the highest equipment failure rates in the industry, but this is because employees are no longer concealing this negative information, and any failure is duly reported. Elsewhere across the industry, the opposite is true. At senior management level, the goal is to keep the official accident rate down, whatever that takes. Employees are tacitly encouraged to hide incidents at all costs, manipulating statistics and reports to prevent an increase in registered accidents. Ultimately, this approach is against everybody’s best interests: it just leads to a situation where senior managers no longer have any real idea of the true risks and accident rates prevalent in the infrastructure that they are responsible for. They are only deceiving themselves, and their illusory “rose-tinted” accident-free world may at any moment be shattered by a major accident. This may come as a complete shock, even though in reality the danger signs had been there for years, in plain sight for anyone who had been willing to look properly. The plain truth is that some managers just do not want to know about organizational problems.

Even for a manager who has the courage to take real responsibility, there is a balance to be struck here. The goal of minimizing equipment breakdown inevitably brings increased costs—major repairs, modernization, or a total refit. Safety and reliability costs money. According to the respondent, it is not economically feasible to try and achieve zero-accident conditions—it costs too much! Such an extreme goal is only appropriate in manned space exploration. Elsewhere in industry, if equipment failures are not catastrophic or life-threatening, then it is reasonable to expect and accept their occurrence at some point. The only question is the frequency of failure and the amount of damage this will cause. The priority has to be reducing the likelihood of the critical risks that could wipe out a company, result in casualties or precipitate an environmental disaster.

The head of risk management at a renewable energy company also believes that, to improve the transmission of risk information, senior management need to create an atmosphere in which employees know that they will not be blamed or penalized if they reveal problems. Managers should make it clear to subordinates that when they report a problem, they will not automatically be assumed to be responsible for causing it. There is a fine line between making a mistake and being responsible for it. The analysis of many incidents shows that, when employees take risks, it is often because a manager has put them in a position where they felt they had no alternative but to contravene safety procedures, in order to pursue time-saving, cost-cutting, and profitability indicators. Managers should promote the belief that mistakes and bad news can be the very best way for learning hard lessons and for employees not repeating the error—ultimately improving efficiency, safety, and productivity.

A manager at an oil company believes that any mistake can be considered as an opportunity to understand where they, as an organization, have gone wrong. Managers and employees can work together to untangle any incident into its components and understand how to avoid repeating the same scenario. But this can only be achieved when the practice of penalizing specific employees for mistakes is abolished. Managers should not be acting as judge, jury, and executioner, but helping their employees learn from their mistakes so that they do not repeat them. Sometimes employees lack the training or experience to draw the right conclusions from their own errors. The manager’s task here is to help them figure that out.

The respondent gives the following example. Several senior managers were walking round a site and saw a gross violation of the safety regulations: the employee in question was doing a great job but did not have the right protection devices to run a particular piece of machinery. The leaders approached the employee to tell him of his transgression, but immediately reassured him that he would not be penalized for this oversight. They invited him to join them in a nearby office, where they gave him a pen and paper and asked him to write down what his mistake was. The worker wrote a detailed account of what he had done, and what would have been the right thing to do. He felt humiliated, but appreciative that there was no official reprimand or penalty. He left with a clear understanding that he must not make the same mistake again, and that if he did his bosses would not be so lenient next time. He was never seen breaking safety regulations again. After this incident, it came to light that, at the time of the visit, the employee’s supervisor had left the team to work unsupervised without explaining the safety measures the employees were required to take. The supervisor was spoken to about this lapse, but again without being penalized. After this, the supervisor was careful to always explain to employees at the start of every shift about the possible risks involved with the work. By debriefing everyone involved in this incident, without imposing any penalties, the managers succeeded in permanently changing how the employees were working. This is the important thing—to achieve a permanent change in workforce behavior, not to penalize mistakes.

The head of a power plant believes that there should be an unshakable rule that any employee who reveals a problem will not be penalized for their part in causing it. Repeated demonstration of this policy in action, and praise from superiors for any employee who discloses problems, will convince even more cautious and insecure colleagues to do the same, providing managers with a great deal of valuable but hitherto hidden information.

The HSE head of an oil company believes that the first step in implementing a new “no penalty” system should be the declaration of an amnesty: all employees are given the opportunity to report any shortcomings or mistakes in their own work, the times they or their colleagues have taken risks or disregarded safety protocols, and existing problems they are aware of but have not reported—all covered of course by a ironclad guarantee of no penalties. This gives managers information to assess the real situation in their organization. If during this amnesty period, any employee still fails to volunteer information about a problem they knew about that later comes to light, they are liable to be dismissed.

The respondent relates the experience of an attempt to set up an amnesty along these lines in an oil company. The CEO here told the entire workforce that the senior managers were launching an amnesty, that they were poised to hear about all the problems within the organization, that they were committed to solving these, and that nobody would be penalized for disclosing difficult or uncomfortable details. Despite this clear statement, 30–40% of lower and middle managers continued to keep quiet about risks and problems in their area of responsibility. They had worked for the company for years—they thought this was just a new gimmick from the CEO and his inner circle to play about with, soon to be forgotten. These skeptics acted as a damper on the new policy of transparency and the free flow of risk information. In the end, the company had no choice but to dismiss some of them after the amnesty period, when it came to light that they had concealed risks they knew about. They were sacked very publicly to make it crystal clear to the remaining employees that the new system of open transmission of risk information was serious and long-term. It took two years to build trust between the top officials and the workforce, who gradually began to share problems, and enter dialogues about how to solve them. But at this point, two middle managers informed senior management of some serious problems, and were promptly fired. This was a disastrous move by the leadership. As soon as the news of their dismissal spread through the workplace, all disclosure of risks from the bottom up instantly dried up. This is a vivid example of how easily the trust of employees in their senior management can be undermined—one hasty decision which betrayed the CEO’s promises was enough to destroy two years of careful cooperative bridge building.

The moral is that, if managers tell employees they will not be penalized for volunteering information about risks, this principle must be upheld at all costs. In the long run, maintaining trust increases the likelihood that an employee who makes a mistake will promptly report it to the authorities, rather than hide it. This patience and good faith will pay huge dividends in the end. The company will find out in advance about emerging problems and be able to tackle them before they become more serious and are still relatively quick and cheap to rectify: far better than being faced with a full scale disaster, and losing a fortune having to deal with the consequences of serious hidden problems about which senior management were ignorant until it was too late.

The head of HSE in a mining and metallurgy company describes how his company decided to make deliberate concealment of safety issues completely unacceptable. An amnesty was announced throughout the company, during which no penalties would be imposed on employees reporting safety problems and violations of the regulations. Middle and lower managers were encouraged to disclose any problems and risks they knew about, whether recent or long concealed, and this produced lots of disclosures. Some of the chief industrial site engineers later commented on the initiative in an informal conversation: “Well, finally, someone wanted to hear us. At last, we were able to clear our consciences, otherwise it would have been hard to keep working”. At the same time, they made it clear that, in the past, they would never have gone to their superiors to discuss the risks in their area of responsibility. Feedback only became possible when senior management explicitly asked them for it, with the promise there would be no retribution. Voluntary disclosure of risks can potentially damage the careers of many employees. They are admitting their mistakes, so laying themselves open to accusations of professional lapses and failure. Despite the measures they had taken to reassure staff during the amnesty, senior management found out later that some middle managers had continued to hide serious problems. The entire leadership team were shocked: “Why are you still hiding critical risks, when we have promised that nobody will be penalized for reporting these problems?”. In most cases, the answer was that these middle managers were still focused on achieving their production plans—finally trying to solve problems that they had successfully concealed for ages would put them behind schedule and reduce their bonus.

The HSE vice president of an oilfield services company believes that an amnesty is only appropriate when senior management need quick information about risks within an organization. If there is no hurry, he maintains that patience is the best policy: one should make gradual changes in the corporate culture and seek to create a safe environment for discussing problems. In the end, employees will no longer be afraid to talk about risks, and will be ready to give feedback on systemic shortcomings within a company. But this is only possible if managers have time: changing corporate culture is a slow process and can take years.

The HSE manager of a metallurgy company also believes that the process of obtaining information from employees cannot be hurried, because they need to see plenty of positive examples of how senior management react to bad news. It takes time to build trust and employees must be sure that they are not in danger if they disclose negative information.

Severe penalties for concealing risks, errors, and incidents

The HSE head of a metallurgy company believes that there is no need to penalize employees when they first make a mistake—they need to be given the opportunity to correct this mistake on their own. However, if they repeat the same infringement, immediate dismissal should follow. He recommends that senior managers personally go to production sites to investigate the most serious incidents. By doing this, they can show employees that the incident investigation will not be a search for individuals to blame, but for the right operational improvements and changes to implement for preventing a recurrence. If there is clear evidence that the incident has arisen because risks and failings have been concealed, then site managers must be dismissed—regardless of their popularity, status, and past merits.

The HSE head of a mining company recommends that companies should have no more than three to five key working principles, so that every employee knows, remembers, and follows them in all circumstances. One of the core principles in the field of industrial safety is the inadmissibility of concealment and fraud. Given that many employees distort information when reporting to their seniors, it is advisable to select only one well defined area in which distortion like this is categorically forbidden. For example, you can choose the issue of industrial safety and make concealment of safety violations explicitly unacceptable. If senior manager are found guilty even once of double standards in the application of these principles, the whole system will be discredited—consistency is key. If employees are discovered to have knowingly concealed risk-related information, they should know that they are liable to be dismissed, regardless of previous performance or their status in an organization.

This respondent cites an example from his own experience. A director of a large mine was publicly dismissed for lying, despite many years of loyal service. After that, the flow of reliable information from other production units improved significantly, because middle managers realized that the leadership were serious about wanting a true picture of the situation in the field and was willing to severely penalize employees who concealed the truth. When middle managers grasp the serious consequences of communicating false or distorted risk information, they will begin to insist that their subordinates tell them the truth about any risks they know of.

The HSE head of a production company managing a large number of hazardous chemical processes believes that penalties for communicating bad news should be abolished, and that the reaction of managers to receiving reports about problems needs to change. All employees need to realize that this information, painful and troubling as it may be, can help the company identify critical risks in time to take remedial action—action that could prevent a catastrophic cascade of events. Barriers between subordinates and managers need to be broken down so that employees are not afraid to enter a dialogue about production problems, because they understand that this is a shared threat—they are all in the same boat. In his organization, the management team spent a lot of time reassuring employees that they had no interest in looking for specific workers to pin the blame on, and nobody would be singled out for punishment for disclosing risks. Their aim was to identify the systemic causes of the problems and tackle them. However, even this clear approach does not guarantee that employees will start freely sharing risk information. When investigating incidents, this company still on occasion uncovers deliberate concealment of risks, even though the proactive disclosure of these risks would not have posed any threat to the employees concerned. The senior management have thus started to adopt Al Capone’s principle that “You can get so much farther with a kind word and a gun, than with a kind word alone”. If the owner, board of directors and senior management want to maximize the disclosure of risks, then they should have recourse when necessary to the ultimate sanction for deliberately concealing critical problems: dismissal—irrespective of rank, length of service and skills. The respondent is convinced that having a “big stick” like the threat of sacking is more effective in encouraging compliance than avoiding penalties altogether.

The HSE head of a metallurgy company expresses the view that employees need to be clear about the consequences of hiding information. If there is an emergency or accident, and it turns out that they knew about the risks that led to the incident but did not report them, they will be held responsible. In addition to the injuries and deaths that might occur, production may have to be halted, the entire site may even be closed, and they and their colleagues may lose their jobs. If this message is really rammed home, then employees will realize that they have lots to gain by passing on whatever they know about existing critical risks—and lots to lose if they remain silent.

The HSE head of a mining and metallurgy company believes it is important to convey to shop floor employees that a company’s policy of transparency around critical risks is not just a management affair, but has as much, if not more, relevance to them. Early preventive shutdown of malfunctioning equipment can save the health and the lives of the operating team, and prevent more widespread incidents that could cost jobs, precipitate environmental disasters, and even threaten the lives of nearby residents. If disruption to the production process can be kept brief and as local as possible, rather than requiring the wholesale shutdown that would likely follow a major incident, then this will be much better for the stability of the operation and the job security and incomes of employees. This respondent also recommends abolishing any penalties for bringing bad news, while severely penalizing any deliberate concealment of critical risk information. Senior management should publicly thank and reward employees who disclose serious risks, and reprimand those who have hidden the truth. However, penalties must always be fairly applied. If the investigation shows that the employee or crew involved concealed the risk because of pressure from their supervisors, then it is the supervisors who must go, while the others might, depending on circumstances, receive a lesser sanction. Two or three such cases should be enough to get the message over, and the company should start to see significantly fewer problems going unreported.

Changing the script: bringing bad news should be seen as positive, not negative

Some of the interviewees express the view that a positive attitude to communicating bad news about risk should be fostered at all levels of an organization. Employees who have the courage to inform managers about progress or regression in controlling critical risks should not be viewed as “informers” or “traitors”. On the contrary, they should be respected by their colleagues for transmitting information that is likely to benefit them all. In the opinion of the respondents, you need to “change the script”. Rather than risk transmission being seen as a negative action (bringing news about problems), it should be reframed as positive (protecting their colleagues, preventing serious emergencies, saving a company). For most shop floor employees, saving themselves and their colleagues from injury and death is likely to be the strongest motivator.

The head of HSE at a mining company believes that the best career guarantee for an employee who is brave enough to take the initiative and report a serious safety issue is to make them a company hero, whose prompt actions saved equipment, prevented injury to fellow workers, perhaps even prevented a full scale disaster. Public shows of approval for those who show a strong sense of civic duty are the best protection for employees from supervisors or line managers who would prefer to hide negligent or dangerous practices in their area of responsibility. Publicly acknowledging such employees as heroes shows the whole workforce the qualities senior management wish to see, and courage and integrity like this are to be encouraged across an organization. If people follow their example, over time these altered attitudes will become ingrained company values.

The head of the HSE department at a chemical company also believes that successful examples of risk disclosure should include an assessment of the costs and damage avoided, and be publicized throughout the company. If employees who reported a problem are acclaimed as heroes, their actions will inspire other employees to do the same. At the same time, this very public corporate approval provides protection for the employee, making it virtually impossible for vengeful retribution to be inflicted on them by their colleagues or immediate superiors.

10 Recommendation No. 10: Reward Employees for Disclosure of Safety and Technological Risks

©Dmitry Chernov, Ali Ayoub, Giovanni Sansavini, Didier Sornette, All rights reserved

Public recognition is a universal reward applicable across an organization

The safety manager of a nuclear power plant believes that the best way to reward employees is to recognize their important contribution to an organization, as everyone derives fulfillment from having their work appreciated and praised. Management should deliver this not just through a private conversation, but also in front of the whole workforce. Expressing gratitude publicly in this fashion provides an opportunity for senior management to highlight the kind of behavior and performance they wish to see from all their employees. Public recognition will motivate the employee to even greater efforts and encourage colleagues to raise their game, including when it comes to communicating risk problems up through the hierarchy.

The head of the nuclear design department of an international electricity company believes that recognition is what employees crave most from their managers—it means a lot to feel appreciated. When an employee receives positive feedback from their manager after taking proactive action around risk transmission or problem solving, then this naturally motivates both them and their colleagues to be more vigilant in identifying future issues in their area of responsibility, and in communicating them to their managers so that corrective measures can be implemented at an early stage.

A consultant in nuclear safety with long experience in nuclear power plants operations suggested that senior management should always be ready and willing to say a genuine “thank you” to any employee who has carried out their role within an organization with skill, diligence, or integrity.

An HSE consultant working mainly for oil and gas as well as in air traffic control believes that a heartfelt “thank you” is an obvious but excellent way for senior management to show appreciation for that employee’s contribution, and helps motivate the whole workforce. The respondent believes that senior managers should do this far more often, along with a warm pat on the shoulder when they want to show their appreciation, rather than handing out food vouchers, iPads, or some other material reward to employees.

A global director of safety in the oil and gas industry also notes that publicly saying “thank you” to an employee who has identified a serious risk or prevented a major incident is a powerful signal from senior management to the whole organization. The respondent believes that senior management should make more effort to demonstrate its recognition and appreciation of proactive employees by publishing success stories in corporate magazines and on online channels. These reports should describe in detail how prompt action by shop floor employees has averted major disasters, prevented injuries and loss of life, jobs, money and so on.

The HSE head of an oilfield services company believes that one of the most important non-material reward mechanisms is the public recognition of employees among their colleagues and across the company as a whole. This company has an annual CEO’s award for safety, awarded on the basis of specific safety performance metrics that it wants its employees to demonstrate throughout the year. However, this award is focused on recognizing and rewarding teams, rather than individual employees. This company also has an HSE director’s award, which is given to the lower or middle manager that the HSE director considers has best exemplified the advanced safety culture the company is striving for. The company also has quarterly safety awards, where employees can nominate colleagues and line managers who they believe have demonstrated outstanding safety performance over that three-month period. Such awards motivate employees to keep constantly improving their safety performance. The details of the polls are not made widely available, so the winners have no idea who has nominated them. However, they feel proud to have been recognized for having made a positive impact on the safety or productivity of their team and the wider organization. These awards are focused on recognition, not material rewards. The HSE department creates media presentations of the award winners and the most outstanding safety performances, and these are distributed across the company’s sites around the world. Global recognition like this has motivated the workforce to work harder on safety performance, and many employees now take part in these regular competitions and strive to demonstrate the very best practices in safety and risk control to senior management. Winners have also been offered promotion opportunities.

A risk expert in the oil and gas industry gives the example of a company senior manager and mentor. When he visits the production sites, he would gather all the workers and lower managers together at the end of the day shift and say: “Guys and girls, thank you for your work today, thank you for keeping us all safe”. He would then stay behind to shake employees by the hand and chat face-to-face.

Remuneration preferences depend on the employee’s goals and perception

One regional manager, responsible for the operation and maintenance of turbomachinery in the power industry, insists that it is difficult to rank different types of reward for risk disclosure because their importance depends on the perception of individual employees. Some prefer financial rewards and are not interested in promotions, perhaps because they do not see themselves as having a long-term future with that company. Others prefer non-material rewards, because they believe recognition of their good safety performance will help them achieve promotion within the company or industry.

The head of HSE in an oil company believes that one needs to combine both psychological and material rewards, since employees react differently to different types of motivation depending on what suits their particular needs.

Defining terms: material stimulation vs. non-material motivation

The HSE head of a mining company suggests the need to define terms. Stimulation comes from the Latin word stimulus, meaning a sharp metal tip on a pole used to drive a buffalo harnessed to a cart. When employees are stimulated, someone who wishes to motivate or control them exerts external influence in the form of material rewards, so that they do something in the interest of the “controller”. Stimulation is usually financial—a salary or a bonus. Therefore, any material form of reward could be described as stimulation. In the respondent’s opinion, if you offer people material incentives for disclosing risks, many employees will mistrust colleagues who disclose to managers the risks that their team is dealing with. They will react especially sharply if the management then penalizes someone else in the team who they blame for the situation. Workers considering disclosing risks are faced with a dilemma—either to preserve their relationship with their work mates by keeping quiet or disclose to their superiors and collect their “thirty pieces of silver”. The respondent believes that, to better protect employees who are willing to speak out, it is more effective not to use material incentives to encourage feedback.

Motivation comes from the word motive, meaning the reason for an action or deed. Therefore, the most effective way to motivate employees to disclose risks is through non-material psychological rewards: an appeal to a person’s better nature, to stand up for high universal values, to act in the greater collective interest rather than their own. These higher motives allow employees to develop as individuals, to step beyond just going to work to earn a living. For most whistleblowers, it is more important to be able to convince the leadership that their ideas and solutions have implications and applications throughout an entire company. This is the highest recognition of an individual’s contribution to improving a company. As well as receiving public gratitude and praise, active and effective employees willing to disclose safety issues should be further encouraged by being rewarded with greater work responsibility: perhaps they could be promoted to take a role within areas of the company that are most problematic, so that they can help drive fundamental improvements. If there is no appropriate higher vacancy to reward a worthy employee, then they could be transferred horizontally to a larger work area, with an increase in responsibility and income. If they perform well in this new role, a more senior position can be offered later. Proactive and confident employees are part of a company’s talent pool: when implementing new projects, they should be invited to lead from the front.

Non-material motivation is more effective than material stimulation

The head of HSE in a mining and metallurgy company shares his experience. Proposals to start paying employees for disclosing safety problems have been made on the board of directors of every company he has worked with over the past 20 years. This seems to many managers the most obvious way to stimulate employees not to violate safety regulations, especially after a series of incidents. However, if you start paying money for disclosing information about critical risks and triggering preventive shutdowns of equipment, there is a risk that operators will deliberately bring equipment to a pre-critical state so that they can report it and receive their reward. Material rewards are a false way forward and are likely to produce a very distorted picture of risk, because the desire for financial reward will encourage employees to come up with as many problems as possible. Instead, he believes that to the best approach is to identify the most proactive employees and encourage them to focus on relevant information about serious problems. These employees need to be promoted up the career ladder, or given the authority and resources to solve the problems they have helped identify in their existing area of work. In both cases, an increase in wages should be linked to increased responsibility and authority, not perceived as a payment for their actions in disclosing risk. The employees concerned should also be publicly acknowledged and thanked for their active contribution in improving the safety of the enterprise.

The managing director of an electricity company agrees that financial incentives for disclosing risks are likely to lead to employees deliberately pushing facilities into a pre-emergency state in order to report the situation and be rewarded. They may then end up intentionally damaging or neglecting equipment in order to earn a premium. It is unwise for senior management to attempt to buy employee loyalty—better to motivate employees to be loyal by non-material recognition. Employees, like other people, want to feel valued and appreciated for what they do. They need to see that the contribution they can make by disclosing risk and safety issues is vital to improving the safety of a critical infrastructure facility. They would love to be acknowledged for doing something that may save the health and the lives of their colleagues and of nearby residents, and protecting the well-being of the whole country which relies on the organization’s services. The respondent’s main advice is that employees’ loyalty to an organization should be encouraged by non-material incentives. If a company tries to buy loyalty with cash, then the entire corporate culture will favor self-serving employees who only care about maximizing their own financial bonuses. If you build loyalty on the values of vocation, duty, responsibility, and teamwork, then over time a company will begin to reflect and embody those very same virtues. A company should nurture those employees who will “fight for the cause”, and not just for themselves: employees who will not ignore risks, or fabricate new problems, but strive for the greater good and bring serious issues to the immediate attention of their superiors.

The HSE head of an oilfield services company witnessed several occasions where employees tried to bring the equipment to a pre-emergency state, so that drilling could be stopped and they would be rewarded for a preventive shutdown. This is obviously a very dangerous and unwelcome development: to get paid for a preventive shutdown, some employees are willing to gamble with equipment that costs hundreds of millions or even billions of dollars, and may damage the livelihood of everyone involved in an organization and have even wider adverse impacts. This is not a sustainable motivational system.

Several HSE executives from the metallurgy industry agree that it is best to exclude material incentives, since they can trigger a wave of fake messages from workers looking to use the reporting of non-existent or amplified risks to make money. They also shared the same concerns as the three respondents cited above, regarding equipment tampering and neglect as a way of gaining financial rewards.

A psychologist and consultant in the field of organizational behavior also maintains that it is better to focus on non-material rewards. If the rewards are financial, there is a risk that people will disclose information primarily for money rather than from any real sense of duty, and this can have negative consequences for the corporate culture. The best solution is to motivate people to disclose information under the principle of doing the right thing, not for mercenary reasons. People should raise the alarm about dangerous conditions or working practices out of concern for their own and their colleagues’ safety, and a desire to safeguard the organization and its operations. We all understand and largely share these inherently good human instincts, but they can be weakened and lost if the community around us—in this case work colleagues and managers—does not foster and constantly reinforce them. Money can act as an incentive to get employees moving—for example, when launching a raft of changes—but in the long run only the more meaningful and enduring psychological reward of recognition, praise and the respect of colleagues and superiors can motivate people to do the right thing.

The HSE director of a gold mining company refers to a related circumstance. At a senior management meeting, they unveiled the motto: “We do not pay for values”. Everyone agreed that a company should not pay employees extra for working safely: this should be an integral part of the duties of any worker. Similarly, there is no need to reward them financially for disclosing risk information—if there is a reward, it should be non-material. For example, an employee who has identified a critical risk can be thanked in front of the whole workforce, to show their colleagues what senior management expect of them. In such a public acknowledgment, it should be made clear that, by raising the alarm, the employee has helped save the lives—and livelihoods—of their colleagues. Otherwise, the worker concerned is at risk of being labeled a “snitch” who has dared to inform against their workmates, and been praised by the boss for doing so. It is crucial that whistleblowers are perceived by other employees as people who took an action to try and protect their workmates, by preventing an accident through the early disclosure of risks. Everything should be done to encourage their colleagues to admire their actions and want to follow their example, rather than resenting them. According to this respondent, in addition to not giving material incentives for conduct that people should see as their duty, avoiding financial rewards will help prevent these kinds of accusations. And if there is money to be made, some less scrupulous workers will create fictitious problems, or even report equipment failures or concerns that they have deliberately created.

The head of HSE in a metallurgy company expresses the same idea by saying that the contract for the transmission of risk information within a company should be social, not material. The most effective social message is “be your brother s keeper”, i.e. be responsible for the safety of your colleagues and friends. If everyone takes care of each other in the workplace, risks will be identified and reduced much more effectively than when everyone is acting primarily out of self-interest. Safety is not a private matter, but the business of everyone in the team. By working safely, employees are saving their colleagues from injury, and worse, as well protecting themselves. It is a mistake to bring material rewards into what should be the realm of shared duty and comradeship. Many companies have tried to introduce material incentives to solve the problem of risk disclosure, but the respondent did not know of a single successful example in any country where this had been effective in creating permanent change to an organization s operating values.

The head of the HSE department at an oil company also believes that non-material rewards are more effective than concrete ones. The impact of material rewards on motivation, both individually and across the whole company, is debatable; intangibles may take time, but their long-term benefit is undeniable. According to her, business is no different from life: nobody can buy love. The focus must be on psychological rewards, on the pleasure and fulfillment of working for a company where you feel appreciated and part of a team. In the long run, employee loyalty simply cannot be bought with money. Instead, an organization must endeavor to find effective non-material rewards to motivate employees to develop company loyalty. The fact that managers respond positively to employees who take pre-emptive action is far more important than the size or nature of a gift. A personal letter from the leadership to an employee s family to thank them for their contribution to the safety of the enterprise, a photo of the “distinguished” worker with the CEO, a dinner with senior management for the team whose prompt action saved the company from disaster—these are all very strong motivators. Employees often remember these honors for the rest of their lives, whereas a bit of extra money is quickly forgotten. This is especially true in single-industry towns, where social bonds are very strong, and news of workers being gratefully acknowledged and lavishly praised by the top brass of a company quickly spreads throughout the city. For example, the CEO of the respondent’s current company made a point of publicly congratulating their best contractors for the high safety standards they were maintaining. The entire contractors’ workforce were so delighted with this that they posted photos from the award ceremony across their websites and social networks, framed the photos, and hung them prominently in their offices. After this event, the contractors “grew wings”: they were so inspired to have been recognized and appreciated by the leaders of the oil company that they worked even harder to promote safety and risk disclosure.

The HSE manager of a metallurgy company agrees that it is worth initially focusing more on non-material rewards. As he described it, it seems immoral to pay money to safeguard yourself. You should not pay employees for their safety efforts—you should already be paying them a decent salary for their efforts in sustainable production: “It may seem crude to say you need to pay for quality and safe production, but you cannot separate out the quality of work from work safety and the implementation of the production plan”. According to this respondent, senior management dinners with outstanding employees from the production sites invited as special guests are a very effective form of non-material reward. At relatively informal face-to-face events like this, the leaders of a company can encourage their most proactive employees to share their opinions on how to improve safety and make immediate changes to implement the best suggestions. The special guests are bound to share their experiences of the evening with their colleagues, their pride for how much their bosses appreciate them, and their willingness to listen and act in response to their suggestions. Naturally, this kind of leadership recognition has a very positive impact on the employees concerned, but also works to motivate the whole workforce.

The HSE head of a fertilizer mining company cites several examples of effective non-material rewards for progress on safety issues. A company ran regular competitions for project proposals, with the first prize an all-expenses-paid dinner with the CEO. These proved enormously popular. One winner, a shop floor IT specialist, took the chance to tell the CEO all about his project idea. As a result, he was promoted and given the opportunity to implement his suggestion across the whole company. Management also ran a competition for best safety practice for all the work teams at the salt mine complex. Here however there was initially very little enthusiasm. The truth is that the salt miners already make very good money, so most of them are not interested in promotion: their current wages are already higher than those of engineers or lower managers. Finally, someone had an idea of how to motivate them. The company had an exclusive elite recreation center only available as a retreat for senior management—no other employee could use the center at any price, and visitors were not accepted. First prize for the competition was chosen to be a two-day retreat for them and their families. Rationally, the operators of the mine harvesters could have rented somewhere just as luxurious for a family holiday, but the exclusivity of the venue made it irresistibly attractive, and the organizers were overwhelmed with entries! The prestige for workers taking a break at the senior management’s luxury exclusive resort meant they would do almost anything to try and win. The prize was nothing to the company, as the recreation center was idle much of the time, and the cost of organizing food and accommodation for the winning team and their families was relatively small. A seemingly insignificant non-financial incentive turned out to be very popular with a key group of workers managing one of the critical risks of the enterprise. Another successful example of non-material motivation is awarding a special designated parking space, reserved for the most outstanding employees, right at the entrance of the facility next to the spaces for the senior managers.

One regional manager responsible for the operation and maintenance of turbomachinery in the power industry gives another example of a non-financial reward: in return for flagging up a significant safety risk, a worker is granted access to senior management. They write a report highlighting the issue in question, and the manager passes the report on to a very senior corporate figure such as the vice president. The employee does not get a quick promotion or a financial reward, but does get recognition for the good work. Next time promotions are being decided, the vice president may well remember the employee’s name: a potential longer-term reward to encourage workers to take the initiative.

The head of HSE in a mining company recommends that, when bringing in any non-financial system to reward good safety practice, managers should keep in mind these three criteria: significance—the reward should be seen as substantial by employees; effort and not outcome⁶—if the employee made a credible effort to stop an incident which still could not be avoided, they should still be rewarded; timeliness—the reward must reach the recipient quickly to keep it linked and relevant—rewards made at the end of a year can be less effective.

Respondents also mentioned the following examples of non-material motivation to improve identification and transmission of safety risks:

• workers receive an award at the main annual corporate event at headquarters (all expenses paid);

• awarding medals to outstanding employees with their family members in attendance;

• letters from a company to the families of employees who have excellent safety records in performing hazardous work, and have acted decisively to disclose problems to superiors in their area of responsibility;

• training of outstanding employees at other company enterprises around the country and the world;

• selection of outstanding employees to attend advanced training programs, all at the company’s expense;

• specialists who have identified critical problems in an organization are invited to attend international conferences in their specialized field;

• posting photos of the best employees and a brief description of their safety record in the corporate media;

• photos of the best workers posted on the boards of honor at the entrance to site offices (celebrating the achievements of rank-and-file employees and not senior management);

• opportunity for employees to meet with senior managers over an informal lunch to discuss their ideas;

• excursions to other cities and abroad;

• tickets for worker and family to attend major sporting or cultural events;

• extra holiday allowance;

• lifetime health insurance.

The head of an oil production facility recommends asking the views of employees and lower managers before introducing a safety reward system in an industrial company. Each organization will have its own specificities, and a set of policies and recommendations to motivate their employees to disclose risks. It is better to avoid face-to-face surveys where senior management convene the whole workforce to get some idea of the general consensus. These tend to result in employees simply going along with whatever senior managers are proposing, although they may think differently. To get a real answer to a safety question, it is better to conduct anonymous surveys as nobody is afraid of the consequences, so this will invariably produce more honest—and therefore more useful—responses.

The responses of majority of respondents on the topic of non-material motivation vs material stimulation resonate a lot with a theory called “Motivation crowding theory”,⁷ which sets out a very detailed framework to explain why monetary rewards do not work. See also a well-known study of what motivates people by Prof. Frederick Herzberg.⁸

Examples of when material incentives are ineffective

The HSE manager of a mining company believes that offering any kind of material reward can cause ill-feeling from an employee’s work colleagues—envy, resentment, accusations of careerism—and make their position very difficult. He cites an example in support of this in a company where he once worked. There, the senior management introduced a new reward scheme: employees who disclosed risks would get tablets and mobile phones. In the first month after the launch, about 70 messages were received but, before long, an unanticipated problem emerged and the flow of messages dried up completely. Previously, employees who revealed safety violations and production issues could remain incognito but, with this new scheme of being publicly rewarded for this information, workers quickly realized that it was simply not worth it. These employees may have got a shiny new mobile phone, but this came at a high price—they became virtual outcasts from the rest of the workforce, who despised them for having “sold their soul” for the sake of a phone or tablet.

An HSE manager of a manufacturing company gave the following example. One company rewarded any worker who reported any kind of safety hazard in their workplace with US $50 cash. Every month, workers identified thousands of these issues, but this information was worse than useless, as most of the reports were essentially fictitious, or at best distorted. Moreover, the processing of such a huge volume of low-value information noise consumed the resources of labor protection and industrial safety specialists, and made the more significant issues harder to identify.

A consultant in nuclear safety, with long experience in nuclear power plant operations, believes that the reward for disclosure of risk should reflect the amount of likely damage that a critical infrastructure company has avoided due to the timely disclosure of this specific risk. The respondent gave an example of how one organization tried to implement this principle. Many years ago, the respondent was part of a continuous improvement project team. Initially, as a motivation, senior management promised that the team members would receive 10% of the total savings that the improvement project would have brought to the company over the year. However, they had reckoned without anticipating the amazing success of the project’s interventions. In the first quarter of the project, the saving was a massive US $3.7 million—leading to a bonus of $370 000, amounting to more than twice the combined annual salaries of the team members. As a result, senior management were forced to abandon their promises—never good for building trust in the integrity of the top brass—and instead each member of the project team was awarded just $1,500.

The last example also demonstrates how careful senior management need to be when determining a fair material reward for the disclosure of critical risks, based on a percentage of potential damage or saved resources. Employees could prevent a serious disaster that would have cost a company billions of dollars—the potential costs of managing and then clearing up the consequences of a major industrial disaster are almost limitless—and senior management would find themselves in the position of having to pay colossal bonuses to a small group of employees who took timely and appropriate action. Others will see these fantastic payouts and some more unscrupulous employees may then spot an opportunity—if they can engineer a similar sequence of events in their area of operations, they may get rewarded in the same way, and the higher the sum the more tempting it will be. An individual or small group of workers could consciously decide not to monitor or report risks at an early stage, but instead engineer a situation whereby critical infrastructure facilities are brought to a pre-critical state—and then, just before a catastrophic failure actually occurs, inform senior management about the presence of a critical risk, rubbing their hands in expectation of receiving a massive reward for supposedly averting a catastrophe. Such material reward systems can thus create the wrong climate within an organization and set the wrong goals for employees who operate critical infrastructure, so that instead of lowering the risk of major safety breaches, the initiative perversely makes serious accidents more likely to occur.

When material incentive for risk disclosure is effective

The HSE head of a fertilizer mining company also warns that managers should be extremely careful about offering financial incentives for accident reduction to employees who operate critical equipment. Better to motivate employees non-financially: public recognition from the top brass, respect and gratitude from colleagues, the admiration of their families, positive PR in corporate media, and so on. Nevertheless, the respondent cites a striking example of the successful use of a financial incentive to encourage employees to report safety violations. At one of their sites, his department analyzed all the accidents that had happened over several decades, trying to identify what mistakes employees had made in the immediate run-up to the accident. 90% of all cases were caused by the same seven mistakes. The most common accident was workers falling from a height when not wearing a safety harness. Armed with this statistical analysis, they began to think how to motivate employees to “buckle up” on the job. Numerous instructions, rules and penalties for non-compliance were already in place but, for some reason, none of this was enough to make the workers comply—even though it was their personal safety at stake. The company recognized that they simply did not have enough HSE specialists to have one permanently deployed monitoring every production site. Senior management decided that the only option was to threaten legal prosecution for any further violations. And to spot further infringements, they would use peer monitoring with rewards: any employee would be gifted the equivalent of the average monthly salary at their production site for a picture or video clearly showing another employee or contract worker operating at height without a harness. The evidence had to be sent to the HSE department and their representative would be called in to fully document the breach. Anyone caught violating the safety rules would face immediate dismissal. Two or three months passed and the HSE reps toured the site, but none of the employees had “handed over” any of their colleagues, saying that they would never betray a fellow worker. Then one day, the wife of an employee told him they urgently needed a new refrigerator: “I don t care what you do—we have to have a new fridge”. He started racking his brains for a way to make some money. A few days later, walking through the site, he saw three contract workers up on the gantries with no harnesses in sight. A month’s salary for sending evidence of a contractor using unsafe working practices—and here were three of them, practically begging to be filmed! He immediately took some pictures and videos on his smartphone and sent them to HSE. The offending workers were all suspended and banned from returning to the site, while their boss was called in for a dressing-down and issued with a fine. The company employee who had reported the violation duly received his three months’ salary—and a grateful wife got her new fridge! He immediately told his colleagues about the episode and his cash reward—did his fellow workers shun him for “grassing up” the contractors? Not a bit of it: the next day, there were 80 documented cases of high-altitude safety violations in the HSE inbox! For the next few days, the entire HSE department were working overtime verifying similar cases. Back at the site, supervisors and junior managers began to complain that their employees were finding various pretexts to leave their posts and walk around the site looking for more offenders. The unwritten rule of solidarity that “you never inform on your mates” had evaporated overnight, driven out by the smell of hard cash. As promised, rewards were duly paid for each subsequent proven case. There were even cases where an offender tried to bribe his “informer” to avoid the sack, promising them the equivalent of the fine if they took the report no further. Most of the identified offenders were contract workers—over the first year, contractors paid the company US$ 270,000 in fines, and a significant part of this was awarded to the employees who had originally recorded the offences. A year or two before the introduction of this system, the enterprise had had an average of 11 unsecured falls from height per year: after operating the system for a year, the incidence dropped to only one case over the following five years. Within a remarkably short space of time, the previously near-universal attitude that it was shameful for workers to report a safety violation to their bosses had radically changed. Wearing a harness while working at height became effectively obligatory in the company, and not doing so became almost taboo—an offense not discussed among employees, rightly punishable by dismissal.

The same approach also worked well for cases of employees trying to fix machinery without shutting it down. However, it did not generally work at all well for reporting electrical risks. It is more difficult for a layperson to understand when electricians are working without turning off the electricity; and most of the work that electricians do on industrial sites is carried out in enclosed spaces where access is prohibited to unauthorized employees. In conclusion, managers are wise to be cautious where considering material financial incentives to influence attitudes to safety reporting. They can work very well when people are looking out for the misdemeanors of other employees whom they do not know, and the system cannot be misapplied to cheat in any way. It is also important that if a serious safety violation offense is proven, the worker concerned is immediately dismissed and does not have the chance to confront the ex-colleague who reported the transgression.

Results of responses to anonymous surveys within the pilot project: There is a discussion within a company and the participants divide into two groups. The first believes that, to encourage employees to disclose dangerous actions of their colleagues (e.g. working at height without a harness), the management should offer material rewards (e.g. money, valuable gifts, etc.)—the most important consideration being to use any means necessary to identify and prevent safety violations. The second group believes that, to encourage employees to disclose dangerous actions by their colleagues, the management should not provide material rewards, because this may threaten the stability of the work teams. Furthermore, reporting safety violations is the professional duty of any responsible employee and should not require any financial incentives. Do you support the beliefs of the first group or the second group?

	Fully support ideas of 1st group	Rather support ideas of 1st group	Fully support ideas of 2nd group	Rather support ideas of 2nd group	Difficult to answer	Total respondents
All survey participants	9.6%	21.4%	20.0%	25.4%	23.6%	280
Senior management, heads of departments and directors of sites (middle managers)	8.3%	30.6%	13.9%	36.1%	11.1%	36
Lower managers: deputy directors of sites, chief engineers of sites, heads of workshops, heads and representatives of HSE services at sites	8.7%	21.2%	20.2%	26.0%	24.0%	104
Engineers, foremen, and shop floor employees who operate critical infrastructure at sites	10.7%	19.3%	21.4%	22.1%	26.4%	140

The head of a thermal power plant shares his experience of implementing an employee compensation scheme to reduce lost time injuries (LTIFR or Lost Time Injuries Frequency Rate) as part of a corporate drive to achieve zero injuries—“target 0”. If there were no accidents or injuries on site in the first two-month period, then all employees would be paid a bonus. If no incidents were registered for a further two months, then the bonus was doubled. Prior to the launch of this system, shop floor employees did not appear to care if someone at the plant was injured, or how many days a worker was absent due to an accident. Afterwards however, any injury began to attract the attention of workers as it affected them all and meant they would lose their bonus. Employees began to ask questions: “How did this happen? Something went wrong? How badly was the employee injured? How will this injury affect our bonus?”. This remuneration system was recognized as successful, because the number of injuries at the plant dropped significantly, with LTIFR dropping 15-fold in the first five years of the project, and down to zero by the sixth year. To obtain such successful results, the following conditions are necessary: workers need to be honest and trustworthy and fully buy into the scheme; managers need to commit to careful monitoring of worker injuries, despite the fact that along with the injured worker, they risk losing their bonus if the incident is officially recorded. However, it is likely that a system like this may encourage some employees who are injured to cover up what happened in order not to let their colleagues down.

The HSE manager of an oil company shrewdly recommends not rewarding specific employees, but rather entire teams. For example, if a driller at one of the remote fields reports some hazardous practice or safety violation and suggests how to prevent it in future, then the management should reward the whole drilling crew, for example by providing a TV and satellite antenna for their recreational area. Instead of resenting the whistleblower, the rest of the team are more likely to say something along the lines of “Well, you may have shopped us to headquarters, but it was worth it now we can all watch TV together”. Rewarding the entire work team when one member reports pertinent risk information makes future disclosure a less frowned upon practice, and stops teams from marginalizing a proactive risk-aware employee. It also motivates other more cautious employees to follow the example of their more confident colleagues.

According to the head of HSE in a metallurgy company, direct material rewards should only be given when the risk information leads to improvements in an organization’s safety systems. Employees can receive a share of the money a company has saved through introducing new safety solutions—changes that increase labor productivity while maintaining or improving existing safety levels.

Employees need to be clear about what behaviors their company rewards and what it penalizes

The HSE director of an oil company believes that employees need to be exposed to both negative and positive motivations. If an employee deliberately violates safety regulations, they must be strictly penalized in public, up to and including dismissal. However, if they infringe these rules unintentionally, because they were not fully trained or did not understand the risks associated with the work, then a company should invest in their training. When the worker subsequently applies their training and completes their work safely, they should receive acknowledgement and public praise. In this way, employees learn what actions their company will penalize and what it will reward. The same principle should be applied to reporting information about risks: a company should be seen to reward employees for proactive disclosure and penalize them for concealment, distortion and delay.

Consistency is key when dealing with disciplinary issues and sackings. If the transgression is not too serious, senior management should consider giving employees a chance to improve. The “three strikes and you’re out” approach is common: an employee is given two opportunities to rectify a first instance of unacceptable conduct, but after that will be fired. Employees generally understand the logic and necessity of dismissing employees who repeatedly fail to perform satisfactorily, and will accept it as the ultimate sanction as long as the rules are applied fairly across the board.

Results of responses to anonymous surveys within the framework of the pilot project: Managers should reward employees in the presence of other workers, but penalize them only in a private conversation and under strict confidentiality.

	Strongly agree	Rather agree	Rather disagree	Strongly disagree	Difficult to answer	Number of respondents
All survey participants	28.6%	36.8%	23.2%	4.6%	6.8%	280
Senior management, heads of departments and directors of sites (middle managers)	38.9%	36.1%	16.7%	5.6%	2.8%	36
Lower managers: deputy directors of sites, chief engineers of sites, heads of workshops, heads and representatives of HSE services at sites	24.0%	36.5%	25.0%	6.7%	7.7%	104
Engineers, foremen, and shop floor employees who operate critical infrastructure at sites	29.3%	37.1%	23.6%	2.9%	7.1%	140

1. Interpretation of responses: Although the majority of responders supported public rewarding and private penalization, some others, especially lower managers and shop floor employees, commented that public reprimand of negligent employees is necessary to show the rest of the workforce that their behavior was completely unacceptable. If the violation is left unpunished, then employees are left without clear messaging, and may think that the behavior is acceptable.

Discussion about KPIs and bonus models

The head of HSE at a petrochemical company believes employees start treating safety problems seriously when the reporting of identified risks and faults in equipment performance are included in their KPIs.

The HSE director of an electric power company believes that if senior managers’ bonuses are calculated to include markdowns for worker deaths or major accidents, they will be more interested in receiving information about equipment problems or safety violations that could lead to serious accidents at work. He recommends that when a company is looking to improve corporate culture, a comprehensive indicator should be included in the bonus model to motivate action to reduce accidents and injuries. A reasonable starting ratio would be 75% for a decrease in the total recordable injury frequency rate (TRIFR), and 25% for measures to improve work safety conditions—gradually moving towards 25% for the TRIFR and 75% for improving the safety of the workplace. Using this model, workers and managers are progressively penalized less for the fact that accidents have occurred and increasingly for a failure to adequately implement safety improvements that could have prevented future accidents occurring at all.

The HSE director of a metallurgy company does not entirely support this argument. He maintains that it is unwise to include indicators for reducing injuries or accidents in management KPIs, because this will encourage safety problems to be swept under the carpet. Including an indicator for incidents that only happen once and then do not happen again is far more effective. If incidents do not recur, this suggests the company has drawn appropriate conclusions from the original incident and introduced risk reduction measures that have proved effective in preventing them. Senior management should always encourage managers and employees to introduce changes to prevent the recurrence of a safety problem. This requires identifying the root cause of the issue—poor work protocols, faulty machinery, lack of training. Specific measures must then be introduced to reduce the risk, which must include the procurement of adequate resources to implement these measures; and they must be maintained in the long term. A “non-recurrence” KPI can be effectively extended down to lower-level managers, encouraging them to work closely with specific teams on the shop floor to embed the new safety measures and prevent any recurrence. For example, imagine that in February of a given year, there is a death in the workshop. And suppose that through the company’s remuneration scheme, this incident leads to a 20% reduction in the bonus for that shop manager. This will have the effect of removing any motivation for them to change for the better over the remaining 10 months, because at the end of the year their bonus will still be reduced. However, if there is also an additional bonus for preventing the recurrence of a similar incident, then the shop manager will be encouraged to immediately look to implement improvements to prevent another death. If these activities are credible and effective, then most of what was deducted—say 10–15% of the manager’s total annual bonus—may be returned. A scheme like this was introduced at one oil company as the “Five Stars” system. At the beginning of the year, all employees start with five stars (100% of their agreed annual bonus). They can finish the year with up to seven stars if they make relevant suggestions for safety improvements. A leader with 20 subordinates would thus start with 100 stars, and at the end of the year their team tally would be the final total of their combined scores. Stars are deducted for errors and poor safety behavior, but these lost stars can be returned if that employee does not repeat the behavior, thus constantly motivating them to prevent a recurrence. This system also motivates managers to encourage their employees to improve their performance and avoid any mistakes, knowing that their own annual bonus is contingent on how their subordinates get on.

The HSE head of an industrial production company that works with hazardous chemical processes believes that as part of their job descriptions, employees should be required to inform their superiors about critical risks. The KPIs of both employees and managers need to include bonuses for the disclosure of critical risks, but exclude more minor risks in order to minimize information noise. If a one-off risk assessment team finds significant safety issues, they are tasked with running an internal investigation and filing a report to identify causes and set out recommended fully costed measures to mitigate the risk. The risk assessment team’s bonus is dependent on the results of the investigation. The report is submitted to the risk management committee, where a decision is made on the allocation of resources and the appointment of executors. When the risk has been eliminated, a summative report is written—usually called the “lesson”. This is distributed throughout the company, so that employees and managers from all departments can see by example how a particular risk has been successfully addressed. This positive example of one specific department mitigating a given risk motivates others to take the initiative, and reduce critical risks in their own area of ​​operations. With careful planning and successful follow-through, a company can learn how to calmly and cooperatively discuss risk problems, propose and implement solutions, and learn from mistakes.

The choice of remuneration depends on the level of maturity of a company

The HSE vice president of an oilfield services company thinks any channel is good if it transmits accurate and timely critical risk information to the right place, thus saving injuries and lives. He cites several examples where at the beginning of a program to implement better safety communication systems, companies with reactive risk management systems paid employees money for filling out STOP cards—even though a fair proportion of them did not contain any relevant information about serious risks. The main learning point was to encourage employees to always fill out a STOP card when they saw dangerous conditions or actions. Once a company had successfully advanced to more proactive methods, the financial rewards disappeared. The motive for employees to continue improving risk transmission had changed—but the useful habit of quickly filling and sending STOP cards was by then firmly established.

The head of HSE department at an oil company believes that material incentives should be used with caution, and only at the initial stages of implementing a new risk information transmission system. For example, employees should receive monetary rewards—privately of course—for informing about colleagues arriving drunk at the workplace. Material incentives for other safe practice at the workplace, like preemptively stopping production or otherwise preventing accidents, should not be through direct cash payments but rather in the form of gifts: caps, mugs, key fobs, smart-phones, family holidays, and so on. One way he looks at reward incentives is through the application of epidemiological theory. At the start of any initiative, there will only be a small group of “carriers” of the new values and, to help create this group, it may be necessary to use material incentives. Slowly, these “carriers” will begin to “infect” other employees and gradually the new values—in this case, a more positive attitude to open and honest risk communication—develop in the workforce. By this stage, new followers are already being motivated by various non-material incentives: recognition in the group, the desire to receive praise from leaders, and so on. It is important to understand that several approaches may need to be combined for success—it is impossible to overcome all the barriers to introducing a system for open risk communication with just one motivational tool.

The HSE manager of an oil company strongly disagrees with the opinion, held by some respondents, that rewarding employees for disclosing information will always lead to a flood of irrelevant and false messages from careerists and scammers. In his experience, most companies with reactive corporate cultures get little or no information coming up the hierarchy from employees. He maintains that appealing to employees’ sense of duty—without any promises of material reward—is fine once the process of reporting risks and problems has been successfully established. Until then, employees should be motivated by both financial and non-material rewards.

According to an HSE director in the petrochemical industry, companies must go through a number of stages when seeking to motivate employees, so that they clearly understand what a company will penalize and what it will reward:

• material demotivation (fear of losing job);

• material motivation (additional income);

• non-material demotivation (blame and condemnation);

• non-material motivation (recognition).

The HSE manager of a metallurgy company believes that it is not just money that is important to people, but also recognition. His father was a military officer. As such, he was paid well above the national average, but the subject of money or income was never raised at home. Rather, they often discussed the importance of duty, of service to the country. When his father received awards for his years of professional service, the son was very pleased and proud of his father, and he is sure his father was pleased that his son was proud of him. The respondent believes that a similar principle of service and duty should be promoted in critical infrastructure companies: they too are serving their country, and many people depend on them doing their job safely and professionally. Having said that, employees must first have a decent income so that they can cover all their basic needs. Only then can they aspire to achieve anything beyond fighting for a loaf of bread to feed their family. With their basic needs met, employees will be ready to come to work not just for the money, but for higher ideals: to look out for others and save lives, to do their professional duty, to be recognized and respected by their colleagues—all the non-material factors that provide enduring motivation. This is what really inspires workers to give their best and gain endorsement by their workmates, their managers, and the wider community.

In general, there is broad agreement among the respondents that what works best in terms of rewards is dependent on the maturity level of a company. Material incentives work better in reactive corporate cultures, and less concrete motivations work best in proactive cultures. In companies where there is a reactive corporate culture and lower wages, it is better to use material incentives first. In companies with a proactive safety culture and higher salaries, it is better to use non-material incentives. In companies in transition, there is a need to employ a mixed reward menu.

It is necessary to consider the cultural characteristics of the country and the norms that exist in the workforce

A risk management consultant in the oil and gas industry insists that before choosing the most effective rewards to encourage employees to report critical risks, senior managers of multinational companies must have a good understanding of the culture of the country where a particular site is located. If the production is located in a collectivist country, then group awards will generally be more effective: the team receives the reward, not just one person, otherwise it may well appear dismissive of the collective work ethic. Senior managers should publicly present a special certificate to all team members in front of the entire workforce. If the production is located in a country where a more individualistic culture is prevalent, then the respondent believes that many workers will not attach much value to team certificates or recognition from their colleagues: they just value more personal recognition.

Accident prevention and risk disclosure is the professional duty of every responsible employee, so additional rewards of any type should not be necessary

The vice president of an electricity company considers that employees should ideally be enticed neither by psychological benefits nor financial gain for actively disclosing risks. The identification of technological risks is the professional duty of every employee working in a critical infrastructure company. The main motivations for employees to discharge this duty are:

• disclosing information about risks, problems or defects in their area of responsibility is the main way that these issues come to the attention of the leadership;

• leaders need this information in order to tackle the issues and reduce accidents;

• this will make their workplace safer, more comfortable and modern, and bring benefits to the whole organization;

• they and their colleagues will have better career prospects, with fewer incidents and shutdowns and a stable flow of work for the company.

People will only start taking the initiative to report safety issues at work if they see that, once these risks and problems are identified, they are promptly and appropriately dealt with. According to the respondent, if there are no other specific incentives for disclosing risks, these problems will only be reported by conscientious workers who need no motivation beyond the fact that it is the right thing to do. It will filter out selfish careerists, or groups who are trying to politicize an organization’s problems to use as a weapon against managers or other workers.

Results of answers to anonymous surveys within the framework of the pilot project: Identifying safety risks and disclosing them to colleagues and management to prevent accidents is the professional duty of every responsible employee, therefore neither material nor non-material rewards for disclosure of risks are necessary.

	Strongly agree	Rather agree	Rather disagree	Strongly disagree	Difficult to answer	Number of respondents
All survey participants	28.6%	43.6%	18.6%	3.2%	6.1%	280
Senior management, heads of departments and directors of sites (middle managers)	36.1%	27.8%	30.6%	5.6%	0.0%	36
Lower managers: deputy directors of sites, chief engineers of sites, heads of workshops, heads and representatives of HSE services at sites	29.8%	51.9%	13.5%	1.0%	3.8%	104
Engineers, foremen, and shop floor employees who operate critical infrastructure at sites	25.7%	41.4%	19.3%	4.3%	9.3%	140

Other executives interviewed agreed that disclosing risk information to prevent an accident should be viewed as the direct responsibility of every employee of a critical infrastructure company, and the duty of all professionals towards themselves, colleagues, the company, and the wider community.

11 Other Recommendations for Improving the Quality of Risk Communication in Critical Infrastructure Companies

In addition to the Top 10 recommendations discussed above, the executives interviewed also suggested the following solutions to improve the quality of risk communication.

The whole company must learn lessons from tragic accidents

Usually, when a tragic industrial accident happens, only a few people at that site will be directly involved, but the lessons learnt from investigation of these incidents must be disseminated throughout the whole company, so that the entire workforce can learn and not make the same error at their facility.

Results of responses to anonymous surveys within the framework of the pilot project: Do you want to receive information about serious incidents that have occurred across all of your organization’s facilities, including a brief analysis of the main reasons behind each one?

	Strongly agree	Rather agree	Rather disagree	Strongly disagree	Difficult to answer	Number of respondents
All survey participants	39.8%	45.4%	10.4%	1.1%	3.3%	280
Senior management, heads of departments and directors of sites (middle managers)	58.3%	41.7%	0.0%	0.0%	0.0%	36
Lower managers: deputy directors of sites, chief engineers of sites, heads of workshops, heads and representatives of HSE services at sites	42.3%	46.2%	6.7%	1.0%	3.8%	104
Engineers, foremen, and shop floor employees who operate critical infrastructure at sites	33.6%	45.7%	15.0%	1.4%	4.3%	140

1. Interpretation of responses: senior management demonstrate the greatest interest in obtaining information about serious corporate incidents with an analysis of the causes. The lower the respondents sit in the hierarchy of the company, the less interest they have in this information.

Several respondents from the HSE department of the same oil company reveal that they film “crash videos”. Their senior managers require contractors to agree that if they are involved in a major incident at a drilling rig, they will make a training film highlighting the mistakes that led to the incident, setting out the lessons that should be learned and how to prevent similar occurrences in the future. Having to make these videos works as a kind of penalty for negligent work. They are shown to workers in production units throughout the company. In making the videos, victims of the accident are always interviewed, so that they can independently reflect on their errors and omissions and give personal and pertinent advice to other drillers on how to avoid making the same mistakes. The interviewers aim to really draw out people s feelings, in the belief that this emotional content will motivate other drillers not to repeat their colleagues’ mistakes.

A good example of this was a video made after a fire on a drilling platform. One of the rig operators was trapped in a flaming cabin for 40 s, and survived with bad burns to his hands, but his colleague was burned to death. The survivor talked about his experience, but also said that, if he ever saw a safety violation on the rig, he would never work there again. The interview was professionally filmed and conveyed the surviving driller’s emotions very powerfully. The company also wanted to include interviews with the relatives of injured and deceased employees, but in the end decided against asking them to talk about such painful feelings and memories.

One of the most effective ways to reduce injuries is to involve the families of the drillers. They came up with the idea of sending surveillance footage to wives and mothers, showing their husbands and sons violating safety regulations at work. The idea was that close family members could have a greater influence than anyone else on modifying the behavior of workers in such a dangerous industry, urging them to comply with safety rules all the time. Safety violations using equipment as powerful and dangerous as drilling rigs can, in a moment of inattention, permanently disable and kill people, causing tremendous suffering to their families. Another idea was to invite the families of workers to take part in an internal corporate video and broadcast it in the workplace and to workers’ homes. Children could tell parents working on a hazardous production site that they are looking forward to them coming home safe and sound.

Sharing the lessons learned from tragic experiences across an industry

According to these last respondents, insufficient knowledge about previous accidents and disasters is a major industry-wide problem, not only in their sector but in critical infrastructure industries at large. At best, a company analyzes and documents its own corporate experience of emergency situations to educate its own workforce and improve safety compliance. However, most do not learn the lessons from mistakes in other organizations, because there is little or no exchange of information between competing companies within a single industry—or between industries—even though they share similar critical risks. Few leaders are willing to disclose their mistakes to competitors, so in many countries no mechanism exists to facilitate the exchange of risk incidence information between companies operating critical infrastructure. Many countries have no single database of major incidents across an industry. The respondents reported that they only learn about incidents in other organizations through friendships and more informal channels, or from contractors who work simultaneously with different oil companies.

An initiative to improve this situation needs to come from regulators or non-profit organizations within an industry, and it should extend to include exchange of information across borders through international industry organizations. For instance, in the nuclear industry the International Atomic Energy Agency (IAEA) shares positive and negative experiences from all nuclear power plants worldwide. There are also other initiatives to gather precursors and near misses through national regulators, international organizations, and academic institutions.^{9,10 ,11} In the European electric power transmission sector, companies operating the national transmission infrastructure of 35 countries are associated into the European Network of Transmission System Operators for Electricity (ENTSO-E), sharing best practices and accident experience on a large continental scale. In the aviation sector, 193 countries cooperate through the International Civil Aviation Organization (ICAO), sharing information on air safety worldwide and targeting the core areas of global aviation safety planning, oversight, and risk mitigation.

In other critical infrastructure sectors, however, such international exchange of information simply does not exist, or is limited to only the very biggest accidents that receive a lot of media coverage.

The following suggestion was made by the quality director at an international electricity company. National and international industry associations should consider creating industrial safety benchmarks to guide their members operating critical infrastructure. The presence of such benchmarks—which are based on the accumulation and exchange of key information on the very best practice across the industry—will encourage companies to compare themselves against the highest-performing organizations worldwide. It will offer tried and tested ways of improving their safety and reporting processes, and motivate them to raise their standards up to a generally recognized industry benchmark.

Results of responses to anonymous surveys within the framework of the pilot project: Do you want to receive information about serious incidents (and their causes) that have occurred in your industry in this country and across the world?

	Strongly agree	Rather agree	Rather disagree	Strongly disagree	Difficult to answer	Number of respondents
All survey participants	33.6%	50.7%	13.6%	1.1%	1.1%	280
Senior management, heads of departments and directors of sites (middle managers)	52.8%	47.2%	0.0%	0.0%	0.0%	36
Lower managers: deputy directors of sites, chief engineers of sites, heads of workshops, heads and representatives of HSE services at sites	41.3%	47.1%	9.6%	1.0%	1.0%	104
Engineers, foremen, and shop floor employees who operate critical infrastructure at sites	22.9%	54.3%	20.0%	1.4%	1.4%	140

1. Interpretation of responses: senior management show the highest interest in obtaining information about various incidents (and their causes) in their industry. The lower the position of respondents in the hierarchy of the company, the less interested they are in receiving this information.

Intra-corporate opinion polls

Sometimes, leaders genuinely cannot work out what they are doing wrong. One way to combat this ignorance is to conduct an anonymous internal survey every year among employees and managers. Amongst other things, there should be a question about how much they trust managers at various levels, and how willing they are to report safety concerns to their bosses. Once the problematic areas have been identified, managers are in a better position to understand the nature and location of the obstacles, and can then identify which areas to prioritize to improve the situation. Regular anonymous surveys of employees are invariably a useful source of objective feedback within an organization.