In the safety business, we often look to management for leadership and buy in. Those leaders also have to contend with their own changing issues.
In the past 10 years CEOs in particular have been having shorter tenures. Common business strategy consistently has shown that long-tenured CEOs and executive teams tend to take a longer view and companies that do that are more successful than companies that pursue short-term profit. Pursuit of sustainable, long-term profits and growth has given us most of the companies we recognize as very successful today. Unsurprisingly, these also tend to be the best-managed and safest companies.
The flipside to this is that longer-tenured CEOs also can become out of touch and past their “best-before date.” However, in the last decade there has been a rise of activist investors demanding accountability and some serious questions about CEOs who also are chairing the board of directors, effectively making themselves their own boss.
The corporate scandals of Enron, WorldCom and even Tyco have changed the landscape and CEOs are being asked to justify the huge pay packages and/or stock options that are more common in the United States.
The new workplace dynamic generally is shorter-term positions. In a recent article in Forbes, the average tenure of a U.S. employee is pegged at 4.4 years and millenials (born 1977-1997) expect to spend three years or less in their current jobs. In fact, a 2013 Gallup poll found more than half of employees were disengaged, with 18 percent “actively disengaged.”
Job hopping is common in just about every profession and safety people are no exception. Today’s workplace is much more strongly focussed on short-term results.
CEOs are under pressure to produce results (positive moves in share price) by investors and if they happen to have a lot of stock options, it is in their best interest to make them worth something when they leave the company. So shorter tenures can make CEOs risk-adverse, which may sound great for safety but there are some good reasons why it probably is not.
Short-term CEOs are interested in short-term fixes. Building a safety system or rehabilitating one takes years, as does sustainable improvement. Moving from practice to habit takes time. Some CEOs simply do not have a lot of time to play with.
Enter the Hawthorne effect (also known as the observer effect). This refers to a study conducted 1924-1932 at the Hawthorne Works outside of Chicago, which was a factory owned by Western Electric. Also known as the illumination studies, researchers changed the lighting level and monitored productivity. Each change saw productivity go up and then slump back after a period of time, regardless of the light level.
Researchers assumed that the changes in light level affected productivity but it was actually something else. It was the attention to productivity that actually affected performance and not the light level. So, performance improvements and motivational effects were not caused by changes made but by the fact that these workers were being observed and attention was being paid to their productivity. The researchers tried other changes and saw the same effect. The initial interpretation of the results – that changes in light levels or other aspects of the workplace drove increased productivity – were wrong. This form of confirmation bias (interpreting results as expected outcomes) has since been replicated in other studies. The effect is real but it is the novelty or change that changes performance, not the change itself.
So it is no small wonder that many companies spend a lot of time and money on awareness programs because although the Hawthorne effect is temporary, it is real and can drive improvements temporarily. For the short-tenure CEO or executives, temporary may just be good enough. Investors want results this year, not three years from now. Wall Street has long chanted the mantra of delivering shareholder value. Short-term fixes are good enough if they allow the company to sidestep or transfer risk or responsibility.
As companies embrace the corporate social responsibility concept and look at their social licence to operate, there is a focus on people and the environment along with profit. While this sounds good, as with most things the execution is driven by many forces. It seems logical that a socially responsible company would make operating safely a priority. However, that may mean breaking with the status quo in order to find innovative ways to drive sustainable safety performance. Short-term CEOs are risk-adverse and unlikely to take such an unnecessary risk when things appear to be fine. This particularly is true when the return on investment has a timeline longer than their probable tenure.
Safety Awareness Versus Safety Process
How do we see the effects of all this? Well it is apparent in one thing I already mentioned: the strong focus on awareness rather than process. In a previous blog, I talked about safety culture and how we seemed to have forgotten the second component – the system and processes the company should have in place – instead concentrating much more on awareness.
Culture mostly is a top-down exercise and if the CEO or executive are more interested in short-term performance, then they more likely will emphasize quick fixes or canned programs or processes that can be implemented quickly for short-term results. This obviously can extend to the safety system and how it operates.
We also see a stronger focus on lower-level controls in the hierarchy of controls. Most incident reports recommend administrative controls (policies and procedures) or the least effective, which is PPE. Both of these are quick and relatively cheap, which makes them attractive for the short-term-focussed thinker. PPE can be purchased and issued within a few days and certainly is a visible activity. Training/retraining also is very visible and easy to initiate. The same can be said for new processes and procedures. In some cases, new procedures quietly are added to a huge manual without any briefing or training.
This sort of approach also leads us towards things like behavioral observations and programs. They are very visible and are tailor-made to take advantage of the Hawthorne effect. They also can be implemented quickly.
While everything described can be part of a well-functioning system, alone or without a supporting system they simply are window dressing. In the short-term results-driven environment, we see a lot more focus on behavior control or modification instead of motivation and communication.
Shorter CEO Tenures Equal Bad News
So, shorter tenures for CEOs are not great news for the safety profession. Like great companies, sustainable success in safety means thinking and acting for the long term. However, we must also live in the present and so take both the short term and long term view.
The reality is that health and safety professionals must offer both short- and long-term solutions in order to be effective. While the Hawthorne effect has served us well, the effect is diminished over successive initiatives or awareness projects. Serious injury and fatality rates are at a plateau and concentrating on behavior and emotions only can take us so far.
Understanding that many companies need and want short-term fixes does not mean they do not want sustainable safety systems or superior safety performance. The focus on short term can harm safety performance by ignoring the key elements that make a safety system effective. These elements – knowledge, competence, supervision and responsibility/accountability – tie together the tools that constantly must be refined and developed to identify, quantify and mitigate risk in the company.
Losing sight of the long term can lead to surprising drops in performance or the “Black Swan” event that no one sees coming. I personally have seen examples where a company and its safety staff were so focussed on a safety awareness program that their actual working safety system virtually collapsed (with the expected results).
It remains incumbent on safety professionals to continually develop and improve the underlying safety system and tools for the long-term performance while addressing the need for short-term wins. Truthfully, the need for short-term results has always been present as executives and customers demand visible action to address concerns and issues. High turnover has never boded well for corporate performance and the fact that safety professionals deliver an intangible product can be a source of frustration for some.
So we still need some flash to engage the workforce, but must continue to ensure that there is substance behind it in the form of a system based on continuous improvement. Change is a risk for which many executives do not have an appetite. For the short-tenure executives, the status quo is much safer and more attractive.
Short-term CEO and executives are here to stay. Understanding what this means for the company’s approach to risk and risk management can help us better understand and align with corporate objectives.
Dave Rebbitt is a long-practicing safety professional with over 25 years of experience. Since leaving a senior post at the Canadian Department of National Defence after 22 years of military service, he has held senior positions in various companies. Dave is an experienced speaker and has spoken at conferences and to industry groups on various topics. He holds CRSP and CHSC designations as well as a CET technical designation. Dave also holds an MBA from Athabasca University and has instructed in the University of Alberta OHS Diploma Program. Dave currently is president and owner of Rarebit Consulting, a safety and management consulting firm.