For Kim Woods Only

www.occupationalhazards.com May 2005 / Occupational Hazards 43

Want to create world-class safety

performance in your organization?

The answer isn’t more safety programs

and it won’t be easy, but you can

do it – now!

STEPPING UP TO OPERATIONAL SAFETY EXCELLENCE

I n 1985, I dared to ask one single question that ended my 18-year career as a safety practitioner. It also, however, impacted how safety would be managed in companies throughout this country,

and marked the beginning of a second, more produc- tive career as an organizational performance consult- ant specializing in pre-emptive risk management. That question was presented to the profession in March 1993 in Professional Safety’s cover story titled: “Safety Management: A Call for Revolution.” Now, some 10 years later, it is being asked across five (known) conti- nents impacting the thinking of academics and the practices of many global institutions and organiza- tions. That critical question was – and remains – “Why?”

Inquiring minds want to know: ☛ Why... are all industry LWD incident rates only

marginally improved, in spite of 30 years of federal reg- ulation and enforcement?

☛ Why ... do workers’ compensation costs continue to escalate in many business segments in spite of these incident rate declines?

☛ Why ... do multi-location companies with one centralized safety program have such diverse results across their organizations?

☛ Why ... did NIOSH researchers find that compa- nies with better safety efforts had higher accident rates?

☛ Why ... did a Department of Energy study con- clude that sites that invested more (percent of budget) in safety incurred higher loss costs?

☛ Why, in many organizations, is safety managed dif- ferently than all other business functions? And most im- portantly,

☛ Why ... did HR executives of the Conference Board cite “safety” when asked what function could be eliminated due to failure to add value?

These questions frame the bigger question: “If safety programs are a common denominator to organizations that both fail and succeed, what then is the “X Factor,”

BY LARRY L. HANSEN

In his October 2003 OCCUPA- TIONAL HAZARDS article, “Get- ting the Culture Right,” Don Eckenfelder contends that or- ganizational attitude ulti- mately determines whether safety initiatives succeed or fail, and proposes three core truths: “1 – Culture predicts performance; 2 – Culture can be measured; and 3 – Nothing is more important than get- ting the culture right!” The cul- ture of an organization – its basic beliefs and values con- cerning people – is what drives safety excellence.

Tom Peters and Bob Waterman spent a decade In Search of Excellence, attempt- ing to discover what lies at the core of op- erational excellence. After years of re- search, they summarized their findings in a simple, yet powerful message to Ameri- can management: “Figure out your values system!” Values lie at the core of an orga- nization’s culture, and are the predictors of, and ultimate determinants of, all oper- ational outcomes ... safety included.

Stephen Covey warns: “If we always do what we’ve always done, we’ll al- ways get what we’ve always got.” Hence, the obvious question is: “What do we do, and what have we got?”

Research by the National Institute for Occupational Safety and Health

the differentiating variable that separates world-class performance (the best) from the vast majority who struggle to maintain mediocrity (the rest)?

THE X FACTOR

T he answer to these questions in specific, and clarification of the X Factor (excellence differentia-

tor) in general, was provided by Profes- sor Richard Wokutch in 1992. In his book, Worker Protection, Japanese Style, two important insights emerged. The first was a comparison of United States vs. Japan injury frequency trends, which indeed visualized the X Factor. The sec- ond was his observation that in spite of the vast difference in results, Japanese safety programs were very much the same as those employed by U.S. firms, suggesting that safety programs weren’t the differentiating factor – culture was.

“Concern for safety and health is inte- grated into the production system: It supports efforts to promote quality, and productivity. Accidents would severely disrupt production, and therefore must be avoided at all costs. Individual work- ers and line managers take primary re- sponsibility for ensuring the workplace is safe and healthy. They don’t rely as much on safety managers, or govern- mental regulators as is often the case in the United States,” Wokutch wrote.

44 Occupational Hazards / May 2005 www.occupationalhazards.com

(NIOSH) initiated in the late 1970s has documented the limited effectiveness of traditional safety approaches in mini- mizing loss outcomes. When safety ef- fectiveness ratings of a studied popula- tion of companies were compared to loss outcomes produced, no significant correlation of effort to results was found. However, when the same population of companies was studied a second time comparing management competencies to loss outcomes, a clear correlation of management effectiveness to low inci- dent rate outcomes was revealed.

A more recent study (safety budget vs. loss incurred) at selected sites within the Department of Energy also resulted in unexpected findings ... the more sig- nificant being (Crites):

1. “Increased investment in a formal safety program did not produce im- proved safety performance.” Distribution of results indicated an inverse relation- ship, i.e., the greater the safety invest- ment, the higher the level of loss, and

2. Factors having minimal impact were: • A shift in safety emphasis; • Size of the safety budget; • Degree of hazard; • Safety rules (quantity or quality);

and • Safety committees.

These and other similar studies con- ducted over the past 10 years confirm that management (more than pro- grams) is the major controlling influ- ence in achieving safety excellence, and that overall maximally effective safety programs in industry will depend on those practices that can successfully deal with people variables. Dan Pe- tersen, who concurs with such findings,

FIGURE 1

FIGURE 2

cellence – the “C”– Culture and “O” – Or- ganization of the business.

When conceived 10 years ago, the safety excellence continuum model pro- posed to define and diagnose culture im- provement opportunities consisted of only three levels and two requisite “step- changes.” It is now evident that a fourth high-end performance level and a third mindset change is requisite to attaining true world-class distinction. The revised excellence model now consists of four step-change performance levels: SWAMP

– NORM – EXCELLENCE and WORLD- CLASS. For those familiar with the origi- nal work, this revision will reinforce origi- nal concepts. For those more recently entering the profession, this model serves as a strategy beacon to guide efforts to- ward world-class results. In Good to Great, Jim Collins and his research team concluded: “The first step of Leadership is not visioning, but rather confronting the brutal facts.” Following are the pat- terned management practices and pre- dominant cultural beliefs that define the current reality of safety, and which must be confronted at each level of the step- change journey to world-class safety in an organization.

STAGE I – THE S.W.A.M.P. (SAFETY WITHOUT ANY

MANAGEMENT PROCESS) Safety is ‘Unmanaged’ –

Safety is Ignored! COSTS ARE THE PROBLEM!

www.occupationalhazards.com May 2005 / Occupational Hazards 45

has concluded: “We believe probably that there’s something having to do with the culture and the climate of the organ- ization that makes the whole safety pro- gram work. What works in one organiza- tion, may not work in another.” (Sheridan). And similarly, D. A. Weaver, a thought leader of the profession 50 years ahead of his time, observed: “Ex- cellent organizations frequently achieve exceptional safety results in the absence of any visible safety program, and excel- lent safety performance cannot be at- tained in a generally poor organization.” His bottom line: “Safety is nothing more than a byproduct of doing things right.”

THE SAFETY EXCELLENCE EQUATION

M ore recent Gallup Organization research on high-performance companies also identifies val-

ues and leadership as key differentiating factors. In First Break All the Rules, lead researcher and author Marcus Bucking- ham summarized the key findings of that study: “Excellence is not the oppo- site of mediocrity ... Excellence is differ- ent.” Excellence is not generated by more of the same, only faster, quicker, harder; but rather by re-focusing on the drivers of high performance – culture (values) and leadership (practices). Relative to safety, this would suggest that traditional safety elements (pro- grams), although valid and necessary, are, alone, not sufficient to achieve safety excellence in an organization. These elements need be empowered by the culture of the organization. There is a Safety Excellence equation that ap- plies to all organizations, and it is:

SAFETY EXCELLENCE = CEOu Where: C = the CULTURE of the organization

(Values) E = the ELEMENTS of the safety

(Program) O = the ORGANIZATION’S safety

performance (Systems) u = the LEADERSHIP (Actions of

Executives and Champions) The Safety profession has spent more

than 50 years perfecting the “E” – Ele- ments of safety. It’s now time to move forward and focus on the enablers of ex-

Organizations mired in the SWAMP are frequently managed by the Tyrant-a- Saurus Wrecks, a management species that has evaded extinction in many or- ganizations. These companies reject re- sponsibility and perceive safety as a task with no productive value, a burden placed upon them by regulators, the in- surance industry or labor. They accept accidents as an unavoidable cost of do- ing business, are autocratic and have a heavy production focus, with safety fre- quently compromised to quota and/or

delivery schedules. People are viewed as expendable resources. Their plan- ning is short-term and reactive; commu- nications are one-way (down) and founded in mandates of fear. They em- ploy “make-do” solutions to equipment and facilities problems, often leaving them unsafe. Minimal employee in- volvement is allowed in the process and labor/management relations often are at odds concerning safety and adversar- ial on most everything else. It’s always a case of them versus us!

These companies have high insur- ance costs driven by both frequency and severity. Their Experience Modifica- tion typically exceeds 1.25 (25 percent debit surcharge). They populate the high-risk pools, and adversely affect the insurance rates for their industry classifi- cation. These companies operate in statutory ignorance, often in violation of recognized codes and regulations. Em- ployee complaints and whistleblowing

FIGURE 3

mise them in their own day-to-day be- havior, sending a clear message to em- ployees: “Read my lips ... ” Efforts are cy- clical as they follow blood cycles – injuries occur, pressure applied; injuries reduced, pressure removed.

Activities focus on inspecting out haz- ards and observing and disciplining out unsafe work practices. This process fails to identify core problems, and only ad- dresses surface symptoms. Line managers “do” safety but don’t “buy into” safety. In- surance costs in these organizations show some improvement, but plateau at or about industry norms. Experience Modifi- cations hover around 1.00 plus or minus 25 percent. This varies year to year.

The NORM is where many companies exist, and where most will remain. For an organization to advance onward to Stage III ... EXCELLENCE, they must un- dergo a “Radical Organizational Change” (ROC), discarding traditional beliefs and approaches, and adopting a more progressive mindset on systemic cause and correction. These become the excellence companies.

STAGE III – EXCELLENCE (SAFETY EXCELS TO THE TOP QUARTILE) Safety is ‘Managed’ – Safety is Integrated. PROCESS IS THE OPPORTUNITY

In excellence companies, safety is less scheduled and more systemic. Efforts are dedicated to building collaborative systems and cooperative partnerships that integrate safety into core business processes. There are few, if any, safety rules, safety meetings, safety audits, safety training, safety metrics and, least of all, safety committees. The objectives of such activities are integrated into op- erational procedures. In place of sepa- rate safety activities, there are:

☛ Normally held operations meetings (that include, and often start with, safety);

☛ Standard operating procedures and training (that include safety);

occur frequently. They are targets of labor lawsuits and workplace litigation emanat- ing from injuries, which frequently make national headlines.

Companies mired in the SWAMP re- main there until a Significant Financial Crisis (SFC) occurs, which can be either a single catastrophic event or a cumulative increase in loss costs so significant as to impact profits, and threaten the CFO’s or CEO’s position, hence forcing senior man- glement (not a typo) to acknowledge a problem and declare: “We need a safety program!” It is with this impetus that evolu- tion to Stage II, the “N.O.R.M.,” begins.

STAGE II – THE N.O.R.M. (NATURALLY OCCURRING REACTIVE MANAGEMENT) Safety is ‘Mismanaged’ –

Safety is a Program! PEOPLE ARE THE PROBLEM!

Because the decision to act was driven by cost and ignorance rather than an understanding of real causes, the NORM is typically christened with the kiss of death – the hiring of a safety director! This is a typical move as man- agement believes people are the prob- lem, hence the natural answer is to hire someone to fix them, not us!

At this stage, companies implement safety programs without having an ade- quate understanding of the problems or the actions necessary to resolve them. They implement programs patterned after what others have done, i.e., create com- mittees, establish rules, implement train- ing and enforce progressive disciplinary policies. None of these proves effective, as they are answers that do not address the problem – the management problem.

Line managers typically excuse away accidents as employee carelessness. They are in conflict with the safety officer who they perceive to be a nitpicker im- peding their real job – to get product out the door! Line supervisors do not accept responsibility for the safety and health of the people assigned to their units, and embrace “quick fix” programs that have minimal impact, as employees see through the ploys and blow them off.

Safety campaigns have high visibility, with slogans, contest, gimmicks and in- centive programs. Managers issue rules and more rules, but frequently compro-

46 Occupational Hazards / May 2005 www.occupationalhazards.com

☛ Problem seeing and solving ses- sions (that address safety); and

☛ Manager meetings to address on- going performance improvement op- portunities (that include safety).

These organizations are well-

schooled in TQM concepts, progressive management principles and modern leadership practices. Accidents are rare events. When they occur, they are ad- dressed quickly and effectively at their root-cause level. Labor relations is healthy with many of these companies listed on recognized business lists, i.e., “Best 100 Companies to Work For” and/or publicized in business trades, B- school case studies and management journals. Accident costs are low, and Ex- perience Modifications evidence a downward (credit) trend to 0.75 or bet- ter (at least 25-percent better than indus- try average). For these companies, safety pays dividends and adds to the bottom line. Many in this group have transformed their safety function from a cost center to a profit center in recogni- tion of its ability to make margin contri- bution and create shareholder value. Excellence companies face one addi- tional mind shift on the journey to be- coming a true world-class safety organi- zation. This final step-change involves a Critical Thinking Shift (CTS) wherein safety is no longer perceived as a techni- cal and/or managerial issue, but as a core value critical to business success. Safety in world-class organizations is cultural, an issue of leadership values – “Safe is how business is done.”

STAGE IV – WORLD-CLASS (SAFETY AT THE TOP)

Safety is ‘Non-Managed’... Safety is Led!

CULTURE IS THE SOLUTION! In a short but powerful statement, Pe-

ter Drucker summed up the cumulative insight of his 5-decade career as this planet’s most influential thinker on management practice: “With 50 years of hard evidence at hand, it’s awful hard to

One of the most distinguishing features of world-class safety

organizations is that “shared ownership” by all replaces

“forced accountability” by a few.

come a reality in an organization when all managers – executive, operations, line and staff – fully integrate safety into the organization’s mainstream value sys- tem, policies and practices. This will not result from safety programs superim- posed upon the organization, but only when safety is fully accepted as integral to the organization’s mission, and as a strategy critical to the success of busi- ness objectives.

For those organizations willing to com- mit proactive leadership and willing to re- focus efforts (it doesn’t cost any more money), world-class safety is attainable, now. Peter Drucker’s observation, how- ever, on the requisites of business success applies in all organizations: “All theory de- generates into work.” Given an opportu- nity to pursue transformational change (in mindset and strategy), an unfortunate real- ity is, most defer to Coderre’s (Paul) Law of Least Resistance: “Given the opportunity to do nothing, most will.” They prefer to employ L.A.M.E. (Lazy – Antiquated – Mediocre – Externally focused) excuses for substandard performance. To these or- ganizations, the soft, warm ooze of the SWAMP is too comfortable (numbing), and the status quo of the NORM too famil- iar (easy). They opt for the more common alternatives(and costs) of mediocrity:

☛ Increase the annual workers’ com- pensation premium budget.

☛ Add legal and claim administra- tion staff.

☛ Blame the government, the union, El Nino and their useless brother-in-law.

☛ Set higher production quotes to off- set loss costs.

☛ Lower the bar on margin projec- tions!

World-class safety is a journey avail- able to all, taken by some and com- pleted by an elite few.

“Watch that first step. It’s a big one – and potentially a very profitable one!

REFERENCES

Arthur D. Little Survey, “Green Wall Be- tween Environmental and Business Staffs Blocks Successful Environmental Manage- ment,” Professional Safety, August 1996.

Cohen, Alexander. “Factors in Success- ful Occupational Safety Programs,” Jour- nal of Safety Research, December 1977.

Cohen, Harvey H. and Cleveland, Robert J. “Safety Program Practices in

www.occupationalhazards.com May 2005 / Occupational Hazards 47

OH

‘slough off’ the truth ... It’s all about PEO- PLE!” (Drucker) One of the most distin- guishing features of world-class safety organizations is that “shared ownership” by all replaces “forced accountability” by a few. Line managers accept primary responsibility for leading safe opera- tions, and employees actively con- tribute to and cooperate with the process because it is founded upon shared values, not imposed rules.

Senior managers place a high value on the health and well-being of people, believe that accidents are unnecessary, intolerable and preventable and let those thoughts be known throughout the organization. In world-class organi- zations, safety is a measure of opera- tional effectiveness – a key metric of strategic business success or failure. The decisions managers make are time-con- suming and planning is formal and strategic. Responsibilities for both line and staff managers are clearly defined and aligned with collaborative partner- ships replacing inter-function conflict.

These companies shun quick fixes, knowing quite well they won’t work. Their employee relations policies and manager practices are employee-cen- tered and humanistic. Employees are empowered and rewarded, often through gain-sharing arrangements. Communications are open and informal. Feedback is encouraged, and the grapevine is more constructive than de- structive. Methods to produce safety are built into job briefs and standard operat- ing procedures. Results are closely meas- ured and monitored. Causes for varia- tions are identified and rectified, and there is a predominance of reinforce- ment over discipline in this process.

There are no flag-waving campaigns, stump speeches or bells and whistles; there are simply “good business” prac- tices that produce superior results. In- surance costs and retained losses are low relative to the size and scope of op- erations. Experience Modifications are among the best in class, and hover his- torically below 0.50 (50-percent credit) or better than the industry.

In these organizations, safety loses its identity; there are no “safety programs.” There are few, if any, accidents. There is simply excellent leadership. As Peter Senge asserts: “Mastery is invisible.”

World-class performance only will be-

Record-Holding Plants,” Professional Safety, March 1983.

Collins, Jim. Good to Great, Harper Business Books, New York, 2001.

Crites, Thomas, R. “Reconsidering the Costs and Benefits of a Formal Safety Program,” Professional Safety, Decem- ber 1995.

Buckingham, Marcus and Coffman, Curt. First Break All the Rules, Simon and Schuster, New York, 1999.

Eckenfelder, Donald J. Values-Driven Safety , Government Institutes Inc., Rockville, Md., 1996.

Eckenfelder, Donald J. “Getting the Culture Right,” OCCUPATIONAL HAZARDS, October 2003.

Hansen, Larry L. “Safety Management: A Call for Revolution,” Professional Safety, March 1993.

Minter, Stephen G. “Creating the Safety Culture,” OCCUPATIONAL HAZARDS, August 1991.

NOVA Documentary, “Peter Drucker – An Intellectual Journey,” WGBH TV, Boston, June 2004.

Peters, Tom and Waterman, Robert. In Search of Excellence.

Planek, Thomas W. and Fearn, Kevin T. “Reevaluating Occupational Safety Priorities: 1966 to 1992,” Professional Safety, October 1993.

Sarkis, Hank. “What Really Causes Ac- cidents,” Presentation at Wausau Insur- ance Safety Management Seminar, Canandaigua, N.Y., June 1990.

Sheridan, Peter J. “The Essential Ele- ments of Safety,” OCCUPATIONAL HAZARDS, February 1991.

Veltri, Anthony. “Transforming Safety Strategy and Structure,” OCCUPATIONAL HAZARDS, September 1991.

Wokutch, Richard E. Worker Protection, Japanese Style; Occupational Safety and Health in the Auto Industry, ILR Press, Cor- nell University, Ithaca, N.Y., 1992.

Wokutch, Richard E. “Myths of the Japanese Factory,” Journal of Com- merce, Aug. 26, 1992.

Larry Hansen, CSP, ARM, is principal of L2H Speaking of Safety Inc., a safety ex- cellence facilitation company. He resides

in Syracuse, N.Y., and can be reached at (315) 383- 3801, via e-mail at LLHSOS@dreamscape .com and online at http://www.L2Hsos.com.