Risk management

What is Resilience?

What is a High Reliability Organization?

PICT213

Dr Layla Branicki – [email protected]

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In this lesson…

• We will examine what it means for an individual, or an organization, to be resilient

• We will investigate how High Reliability Organizations, such as airlines, can work towards producing near error free performance

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What is Resilience?

Resilience is usually understood as the ability to bounce-back from a crisis or set-back

• Coping with things that individuals or organizations were not designed to face

• Return to status quo following an unexpected event

• Ability to adapt to changing circumstances

KEEP

CALM

AND

BOUNCE

BACK

Why Does Resilience Matter?

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Carmeli and Markman (2011) argue that resilience can

enable survival, or even flourishing, despite an

individual or organization being stretched to, or past,

breaking point.

Definitions from the Literature

• ‘…Ability to adapt, endure, bounce back…’ (Markman & Venzin, 2014:1106)

• “The developable capacity to rebound or bounce back from adversity, conflict, and failure” (Luthans, 2002 p. 702)

• “The amount of disturbance the organization can absorb before it loses its structure and function” (Linnenluecke & Griffiths, 2012:19)

• “Ability to quickly recognize and seize opportunities, change direction, and avoid collisions” (McCann, 2004:47)

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Figure 1: Two- dimensional framework for organizing the extant resilience literature, from Branicki et al., 2016

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Figure 2: Mapping the extant resilience literature, from Branicki et al., 2016

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Resilient Individuals tend to…

✓Accept reality ✓Believe life is meaningful ✓Improvise

Coutu (2002)

✓Have high self-esteem ✓Experience subjective well-being ✓Are self-determined ✓Have strong support systems

Bimrose & Heane (2012:339)

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Resilience enables an individual to outperform their peers whilst under stress (Jacelon, 1997), or to

maintain well-being in high-pressure environments (Dunn, Iglewicz & Moutier, 2008)

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Organizational Resilience Capabilities

(1) Resourcefulness: the capacity of managers to identify potential problems, establish priorities and mobilise resources to avoid damage or disruption

(2) Technical: the ability of managers to ensure that organisational systems perform to high levels when subject to extreme stress

(3) Organisational: the preparedness of managers to make decisions (however counterintuitive these might sound initially) and to take actions to reduce disaster vulnerability and impacts

(4) Rapidity: the capacity of managers to make decisions on threats (e.g. from terrorism) without undue delay

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What is a High Reliability Organization?

• Initially HRO theorists, such as Weick (1987), characterized HROs based on total elimination of mistakes and inability to learn by trial- and-error due to the severe implications of failure.

• Later reassessed to allow for the inevitability of error, referenced in the literature as “preoccupation with failure”, and the importance of trial-and-error learning, albeit in a limited way (Weick et al., 2008).

• Another early HRO researcher, La Porte (1996) defined HROs as organizations that must continuously operate at a very high level of efficiency using complex and hazardous advanced technologies without major failure while maintaining the capacity to address unpredictability.

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Examples of High Reliability Organizations

• Air traffic control systems

• Chemical production plants

• Hospital ER/Intensive care units

• Incident command teams

• Naval aircraft carriers

• Nuclear power-generation plants

• Offshore drilling rigs

• Wildland firefighting crews

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Weick and Sutcliffe’s HRO Theory

HROs are…

• Preoccupied with failure

• Reluctant to simplify

• Sensitive to operations

• Committed to resilience

• Defer to expertise

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Preoccupation with Failure

• Report errors no matter how small

• Look out for early warning signs that let you know how well the whole system is functioning

• Catch problems when they’re small

• Systematically collect information about performance (e.g. record and grade landings on an aircraft carrier)

• Avoid ‘liabilities of success’

Ask questions like…

- To what extent are you aware of close calls and near misses?

- How is information about near failure or failure recorded?

The challenge - in practice learning from failure of near-failure is tough psychologically and operationally

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Reluctance to Simplify • Take nothing for granted

• Challenge your expectations

• Seek out alternative perspectives or interpretations

• Encourage variety in experience and skill

Ask questions like…

- Do people take their work and / or work environment for granted?

- Would a staff member feel able to express an alternative view point?

The challenge – we see what we expect, express what we have ‘labels’ for, and factor in what we have the skills to manage

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Sensitivity to Operations

• See the big picture / helicopter view

• Maintain detailed real-time information

• Know how technologies, processes and systems work (and how they inter-relate)

• Keep talking / communicating at all times

Ask questions like…

- Do people come into frequent contact with each other on a daily basis?

- Are employees familiar enough with what happens beyond their own job?

The challenge – resource and time consuming, easily becomes marginalised in practice

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Committed to Resilience

• Skilled at improvisation • Avoids over-confidence (admit what you don’t know) • Work effectively with others, both inside and outside of organization

Ask questions like… - Is there a concern with building people’s competence? - Do employees have informal contacts that they can draw upon to solve problems?

The challenge – people feel like they can predict better than they can (see, Taleb), people on average are not comfortable with uncertainty

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Deference to Expertise

• Decision making is based on expertise, not formal authority • Decision making rests at all levels of organization (particularly during crisis) • All employees have to recognise that they do not know everything

Ask questions like… - Under pressure would employees know who has the expertise to respond? - Do people in the organization value expertise over hierarchical rank / role?

The challenge – formal structures may over-ride an emphasis on expertise if the culture is not supportive, people are often over-confident about what they think they know

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HRO Theory Summary

Mindfulness

Preoccupation with Failure

Sensitivity to Operations

Commitment to Resilience

Deference to Expertise

Reluctance to Simplify

Reliability

Weick and Sutcliffe

(2001, 2006) view

‘mindfulness’ as a

cognitive capability

that is critical to

HROs, as it leads to

‘enriched awareness’

Capability to Discover and

Manage Unexpected Events

Adapted from, Weick, Sutcliffe and Obstfeld, 2008:37

Tutorial Activity – CheapFly Adapted from a case by Dr Bridgette Sullivan-Taylor, University of Auckland

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Scenario:

‘CheapFly’ is a low-cost ‘no-frills’ airline. It has been operating for ten years with a fleet that has now grown to 50 planes flying to and from small airports in the UK, the south of France and Spain. CheapFly is in the process of expanding, and will shortly fly into the Baltic states, Turkey and parts of the Middle East. This is considered to be riskier airspace by some CheapFly staff.

Key to the service offered by CheapFly has been its workforce. Staff are granted discretion by managers in how they do their jobs, with efficiency being the overriding priority. There is a perception that CheapFly was able to operate a service in which, post 9/11 and 7/7, security procedures were met with the minimum of fuss and with little inconvenience to passengers. As CheapFly expands it will have to recruit many new staff, and some of the older informal ways of working are now being questioned.

In particular, there are concerns about security, It is feared, by some staff, that these new destinations might increase the chances of CheapFly experiencing the threat or actuality of terrorism/ conflict. Security fears have also grown across the sector as a whole. Scene:

The scene is the boardroom of CheapFly. A review meeting has been arranged by the firm’s CEO, Seamus McSweeney. He wants to hear options for the firm’s strategy in relation to resilience and reliability that are well-grounded in theory and analysis and that also give him a clear view as to action. He is torn between two views of the airline’s future: continuing as a very low-cost producer; and hitting an agenda of quality and security.

What advice will you give to Cheapfly?

Your tutor will allocate you to one of the roles below at the start of your tutorial

CheapFly’s Emergency Planning team, led by Chief Emergency Planner Hugh Rellaby

Your task is to lay out and justify a ‘high reliability’ strategy for CheapFly

Please prepare your presentation in your allocated role

Part 1 (25 minutes):

In your allocated group discuss and answer the following questions,

1. Why does CheapFly need to pursue a high reliability strategy?

2. What will the airline, and its staff, need to do differently to improve resilience and reliability?

Part 2 (25 minutes):

Be ready to share your answers with the rest of the group, and to discuss the issues raised by this activity.

CheapFly’s finance team, led by Chief Financial Officer Laura Kost

Your task is to defend the low-cost model used by Cheap-Fly

Please prepare your presentation in your allocated role

Part 1 (25 minutes):

In your allocated group discuss and answer the following questions,

a) What is the disadvantage of pursuing a high reliability strategy for CheapFly?

b) How can you meet at least minimum standards of security and safety without dramatically increasing costs at CheapFly?

Part 2 (25 minutes):

Be ready to share your answers with the rest of the group, and to discuss the issues raised by this activity.

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