The old NASA slogan "failure is not an option" is appropriate to describe the safety challenges faced by leaders of multinational companies. For an increasingly well-informed public, safety, health and environmental problems are becoming less and less acceptable.
Though no one really believes perfection is possible, it appears to be a growing demand of the marketplace, especially in environmental, safety and health (EHS) performance.
In building an effective EHS program, global companies face additional hurdles not faced by organizations that operate in just one nation. As a result of our combined 35 years of experience assisting international organizations, we have found there are a number of key success factors common to the experience of companies who have overcome these hurdles.
The Growing Demand for Safety
"Having a poor safety system can affect how our products are perceived in the market," says James C. Morgenstern, vice president for safety and quality assurance at Kimberly-Clark, a paper products company with headquarters in Dallas and production facilities in North, Central and South America, and Europe and Asia. "Therefore, we have made up an action plan in which a systematic approach to control loss is basic in our safety strategy."
Stakeholders in any organization have always held that organization accountable for managing the risks of its business. More recently, a number of factors have combined to "up the ante" on companies' EHS performance:
- When serious EHS issues within an organization are exposed, consumers may become concerned about the quality of the product or service they are buying.
- Regulators are reacting to losses with more stringent requirements and significant penalties.
- Employees who perceive excessive risk in their organizations, even in the absence of major accidents, are more aggressive than ever before in airing their concerns.
- Shareholders, concerned about stock value, are insisting that leadership be more aggressive in dealing with safety and environmental risks.
- The ever-present media see great opportunity in airing the inadequacies of prominent organizations.
These aspects of today's business environment, coupled with an increasingly complex web of new technology, aggressive marketing, changing priorities, and acquisitions and mergers, challenge organizational leadership in ways never before experienced.
Why a Global System?
Many international organizations have stated their intention to be a "world leader in safety" or manage a "world-class safety process." Part of this effort is driven by ethical and humanitarian concerns, but as indicated previously, a large part of it is in response to the organization's recognition that safety and environmental performance have become competitive issues along with price, quality and reputation.
As a result, to be successful, many global companies must demonstrate that they apply appropriate risk technology to their decision-making processes in all operations, wherever they may be located.
Some organizations have stated their intent to be world leaders in safety without really examining the investment that must be made or the specific characteristics, activities and processes that must be developed and implemented to make it happen. There are numerous sources that provide insight into critical success factors for implementing a global safety system. Among them are the Cullen Report (Cullen 1990), the report of the official government investigation into the Piper Alpha explosion; OSHA's Process Safety Management standard; OSHA's Voluntary Protection Programs; and the safety guideline Occupational Health and Safety Assessment Series (OHSAS 18000), which is gaining international recognition. The success factors listed in Figure 1 are extracted from these resources.
OSHA programs are referenced for two reasons. First, many U.S.-based organizations with worldwide operations use OSHA regulations and guidelines as a basis upon which to build their global systems. Second, many of OSHA's new initiatives are derived from trends or requirements in the international arena.
The common structure of management systems standards such as ISO 9000/2000, ISO 14000 and the OHSAS guideline provides a simple illustration of how a global safety system should be structured. Figure 2 depicts that structure.
An organization's experience in implementing any global initiative can have a profound influence on that organization's ability to implement a global safety system. Many success and failure factors tend to be the same for any initiative, regardless of its specific discipline or focus. If an organization has little experience in global activities, it can learn from the successes and failures of others. Many of those "lessons learned" are an additional source for the items listed in Figure 1.
An additional success factor, not specifically identified in any of our references, but implicated nonetheless, involves the status of safety within the organization. Safety has traditionally been seen as a "cost of doing business" and relegated to a position within the organization apart from the seat of power and outside the mainstream of business strategy. Organizations that are successful with global safety systems are those that value safety as an integral part of the risk management process and use risk technology to develop and implement their overall business strategies.
Overcoming the Barriers to Global EHS Success
International companies likely will confront a number of challenges peculiar to building an effective global EHS program.
Such potential obstacles, however, can be overcome. Minneapolis-based Cargill Corp., one of the world's largest privately owned companies and a major part of the international agricultural products industry, believes that its success, at least in part, is the result of creating a common safety culture in which communication is critical to tying its worldwide operations together. Some organizations, in recognition of the importance of knowledge management and shared experiences, have established "competence centers" within their international operations specifically for the purpose of gathering information and making it readily available to those who need it.
It is critical that organizations develop internal processes to facilitate sharing of information and experience as implementation progresses. Communication becomes even more important as safety initiatives become global in scope due to physical distance, variance in communication technology from country to country, cultural and language differences, and varying regulations.
When establishing a global safety system, one must consider not only the organizational culture, but also the cultures where the organization operates. The human stakes of health and well-being, the beliefs often encountered in reactive organizations, the necessary interface with productivity - these and other factors can combine to make safety one of those volatile issues that brings out adversarial tensions in an organization.
According to Dr. Wolfgang Viefers, head of Bayer's corporate staff department for quality, safety, environment and safety policy, it is not up to corporate management alone to define how EHS work is to be carried out. Instead, Viefers believes a global consensus by company managers on these issues is necessary. "We can give directions and suggestions, but it is up to the individual unit to accept our proposals based on consensus," he wrote in a January 2000 article published in DNV Forum.
Companies spend vast amounts of money to train their managers in financial and project management techniques, personnel management principles, etc., but they rarely teach them the techniques to manage safety. While detailed expertise is not required by managers, they must be able to understand the concepts, processes, limitations and application of the various techniques and tools available. They also must be able to connect their responsibilities and functions with the company's safety management philosophy. Effectively communicating these priorities across cultural boundaries is a major challenge for an organization implementing a global safety system.
Another factor to consider is that in many global organizations, the various business phases may be spread around the world. A phase or activity that takes place in one country must satisfy safety requirements in all countries where the organization operates. All business phases should be subject to active safety management, not just the operations phase. The management focus, however, may shift from one phase to another.
Safety Management Systems
All organizations have systems that specify how things will be done. A safety management system allows for linking safety processes with other key activities within the organization.
When the safety system is aligned with other systems and working properly, the combined effect of all systems will enable the organization to address the challenges of implementing a global safety system and to achieve its overall business objectives. Designing a proactive safety management system is a delicate process that takes careful thought, commitment and deliberation from management in a company.
To be effective, an EHS system must include systematic risk identification and evaluation and be based on:
- The organization's expectations for EHS management;
- A management system model that ensures continual improvement;
- A built-in assessment process;
- Guidance for EHS management; and
- Examples of best practices for EHS management.
When management commitment, policies, acceptance criteria, responsibilities, resources and programs are in place, effective planning and implementation can take place. There are literally thousands of such activities going on in a given organization, each managed by appropriate managers. Decisions at any point in the process can have big impacts on safety.
For example, decisions made in the engineering phase can significantly affect the safety performance in the operations phase. The engineering phase is normally dominated by decisions regarding equipment and hardware, while the focus in the operations phase is on people and the organization. Acquisitions and procurement decisions offer a second example, as these can affect production and maintenance, as well as reclamation and abandonment phases.
The Changing Regulatory Environment
We believe a shift from prescriptive to goal-oriented regulations is beginning to take place on a global basis. Companies with international operations must understand the global dimensions of the business and regulatory environment. While a comprehensive discussion of the business environment and international safety regulations is beyond the scope of this article, we hope to illustrate the growing importance of this new approach to regulation.
The United Nations is the only international organization that has legislative and judicial authority to create and enforce laws on safety, health and environment on a global basis. Its main focus has been in specific industries, such as maritime shipping and aviation, where due to the international nature of the industry, it has long been recognized that action to improve safety would be more effective if carried out at an international level.
The European Union (EU) became concerned with major industrial hazards following four incidents that occurred there in the 1970s. The Seveso Directive (82/501/EEC), passed in 1982, can be summarized as a law that puts into place a structure to identify, assess, control and mitigate the major hazards of certain industrial activities. Since 1989, the directive has undergone a fundamental review, and a formal proposal for a new directive for the Control of Major Accident Hazards was published in April 1994. The directive calls for a more proactive role for safety management and is binding on all EU member states.
In the United Kingdom, legislation is based on a goal-setting philosophy centered around a safety case. The thrust of this approach is to demonstrate that a given company has an effective management system for controlling health and personnel risks throughout the lifetime of the facility. This is to be based upon an assessment which demonstrates that major hazards have been identified, risks evaluated and measures taken to reduce those risks to a level that is "as low as reasonably practicable."
In the United States, OSHA issued the Process Safety Management (PSM) rule (29 CFR 1910.119) to regulate process safety management. Under the Clean Air Act of 1990, the Environmental Protection Agency (EPA) proposed the Risk Management Program. While the OSHA PSM rule emphasizes worker safety, the EPA regulation looks to protect the surrounding communities and environment. A potentially larger and more proactive influence in the United States has been initiatives by the various nonlegislative bodies, such as the American Institute of Chemical Engineers and the American Chemistry Council.
For a variety of reasons, industry is increasingly taking initiatives to stay ahead of minimum safety requirements and reap the benefits of reduced loss through better safety. Companies with global safety systems understand that:
- Executive and senior management's expectations and commitment must be communicated clearly, accountabilities established and performance measured.
- Implementing a global safety system should not be addressed bit by bit. A total safety approach is necessary. This requires a complete "system view" of safety and a profound insight into a wide spectrum of risks, management skills, topics and influences.
- Safety should be viewed as an integral part of the overall business process. Most of all, safety improvement is dependent upon commitment and attention from management. The importance of the environmental, human, organizational and cultural factors cannot be overstated.
- Effective communications, training and feedback are essential during implementation.
- An effective system can demonstrate due diligence, reduce accidents and costs, result in a positive response from stakeholders and enhance the corporate image.
Global Safety Systems: The Keys to Success
- Organizational structure - Staffing, documentation, resources and leadership commitment must be sufficient to support the desired process.
- Planning - Strategic planning and development of appropriate activities must be based on systematic and comprehensive assessment of risks.
- Management personnel standards - Safety must be integrated into line and operating management responsibilities, and their roles must be clearly defined in written standards of performance.
- Training for operations and emergencies
- Procedures - The organization must develop written procedures for design, operations and maintenance activities to control routine work and probable emergencies.
- Management of change
- Mechanical integrity - The organization must establish systematic and comprehensive means to assess the integrity of process equipment.
- Management of contractors - Safety must be a prominent consideration in the selection of contractors, and appropriate means to monitor the work of contractors must be in place and working.
- Involvement of the work force
- Accident/incident reporting, investigation and follow-up - Monitoring and auditing methods must be in place to monitor the on-going, day-to-day performance of the safety system, as well as to audit thoroughly compliance to all requirements on a periodic basis.
About the authors: Larry Walker is a principal consultant with Det Norske Veritas (USA) Inc. Training Solutions in Atlanta. Trained in the field of psychology, Walker has served as a consultant and trainer with DNV for 19 years. He has conducted safety management assessments and training for a variety of industries in more than 20 countries. He is a regular contributor to professional periodicals and a speaker at various professional conferences.
Les Smith, CPS, also is a principal consultant with Det Norske Veritas (USA) Inc. Training Solutions in Atlanta. Smith has served as a consultant, auditor and trainer with DNV for 14 years, working with Fortune 500 companies implementing safety systems in North and South America, Europe and Asia.