The standard you walk past is the standard you accept

From Z Energy’s investment statement and prospectus:

As part of Z’s commitment to the “Zero Harm Workplaces” programme I have pledged to take personal responsibility for health and safety as a vital part of my business.

That’s Z Energy Chief Executive Mike Bennetts. This stuff really does start at the top, and from that statement it seems that Z Energy gets it. The Chairman, Peter Griffiths, reinforces the message in his letter:

The safety of people, the protection of our environment and the safe operation of our company assets is at the forefront of our business.

It shows up on the forecourt, and I commend Z Energy for the switch to Hi Viz (and the quality of the photograph below.)

I worked for Mobil Oil in the first four years of my post-university career. When I was a territory manager (or Resale Marketing Representative) my job was to visit service stations in my region (the top third of the South Island) and advice businesses on how to improve things. When things got busy, and the deal wasn’t available, I’d join the team on the forecourt pumping gasoline and cleaning windscreens. It was pretty fun to see people react to a random guy in a suit cleaning their windscreen, but it send the primary message that service was everything and the customers come first.

That primary message has now changed, and in a similar situation I’d be asking myself whether I was inducted for the job (I was not), wearing the appropriate personal protective equipment (A suit is not hi viz) or made my self known to the others working on the site.

It sounds really quite ridiculous, but my own safety standards were cemented in the heart of several BHP Billiton plants, one of which was run by the GM who won the company-wide safety award while I was there.

There is a phrase that the safety industry has over-used: “The standard you walk past is the standard you accept“, but I realise now that this is what drives me to comment not only on safety matters, but also on businesses.

So if I don’t think something is acceptable in my role as a director, investor, employee, consultant, customer or just as a member of the public then I will generally call it out. We all should.

So here we go:

The standard I accept is that this man should be wearing gloves. He is in a plant, performing physical work, and damage to hands and fingers is one of the most common reasons for injury. Moreover the right gloves will give hime more grip and hence leverage, lowering the amount of force he is required to apply.

This man should be wearing gloves, and actually holding the handrail. Every site should have rules about stairs and handrails – you hold the handrail when on stairs. Now this chap is not on the stairs part, but the hand-hovering is perhaps a sign of compliance rather than belief. But the big giveaway again is the lack of gloves. Where handrail holding (not hovering) is the norm people wear gloves, as the handrails can be dirty, and you don’t want to collect the residue on your hands.

I note that these two photos may be of Refinery employees and not Z Energy employees – it’s not clear.

I’ve just been (note the past tense I hope) through the process of wriitng a prospectus. It’s ridiculously intense – every word, sentence and paragraph is scrutinised several times by a wide range of people. The people who sign the document (the executive and board) are exposing themselves to serious liabilities if things are wrong, and are also trying to sell the story as well as they can. Every photo gets looked at in the same way, and releases obtained for each.

On a journey

So it’s clear that the risks I identified are not seen as such within Z Energy. To be fair that is perfectly normal for this stage of their safety journey. It’s a journey as it is very hard to get people to change behaviour, and wearing gloves for tasks gets high resistance. It’s also hard because the leaders who set the standards need to be constantly improving their own personal standards.

How do you improve your standards?

1: Respond to a wake-up call

The worst way to improve safety standards is to go through what Fonterra is experiencing – a major health safety incident. The botulism scare is a near miss to a human catastrophe, and has created very real major economic and reputation damage.

However for Fonterra this is not the first time.

  • In 2008 a company that they owned 43% of in China, Sanlut, recalled over 10,000 tonnes of baby food after discovering dairy suppliers were adding a poison to milk – making an estimated 300,000 babies sick, and 6 fatalities. to    disaster and for that they need contact with other industries but I expect to see improvement over the years.

That should have been the wake up call.

  • In September 2012 “traces of 2-Cyanoguanidine” were found in some milk samples – apparently harmless.

That should have been the wake up call.

  • And recently a contaminated pipe was switched into a process potentially producing product that could spread botulism.

That should have been the wake up call.

The wake up calls need to be heard by The Board (all of them), CE and Management Team.

They should consider food safety at Fonterra as flight safety at an airline, and that food safety (along with farm safety and environmental outcomes) should be their number one priority, second to none.

It means being seen as visible leaders in safety, fronting up to the media, staff and suppliers as well as customers. It means accepting that safety is not just the responsibility of individuals, but of ensuring that systems and processes ensure that unsafe acts may not occur.

It means understanding the Organisational Factors, Task or Environmental Conditions , Individual or Team Actions, and Failed or Absent Defences. There is a reason those are capitalised as they come from one method to conduct the rot cause analysis work. Once the factors are identified, and there are always multiple factors in my experience, then the team needs to create and complete actions to ensure the risk is designed out.

2: Search for standards from other firms and industries

The second, and far better approach to lifting standards is to bring in people from other companies and industries. (If the government is telling you your standards are too low then you are a vast distance away from acceptable.) At more than one BHP Plant the General Manager bought in a Du Pont trained safety expert. Du Pont became safety leaders after their own wake up calls, though their Wikipedia article alleges they are still major polluters.

Bringing people with higher standards on to a site is an eye opener for the GM. If the GM’s standards improve, then when she goes on her walks then her managers standards will improve, and so forth. This is best communicated face to face and through modelling behaviour, and backed up by the more formal communications.

I’ve been new on to site quite a few times, and I see part of my job is to help people I am with to see the hazards, just as I rely heavily on them to do the same for me.  That goes from politely insisting people wear seatbelts (and explaining why), even if driving only a few hundred meters, to identifying potential fatal hazards and following them up the chain until they are dealt with. A good company will have an attitude that anyone can stop work, and a great one will stop a plant if they cannot perform acts safely.

3: Change the management team

This is the fastest and most effective approach to change a safety culture, and I’ve seen BHP Billiton use it very well. When things are heading in the wrong direction they will appoint a new GM. often very rapidly, and then help that person change the management team.

The new team resets the mandate for the plant to be safety first, and, yes, generally at the expense of production and short term shareholder value. However safety comes before production, as running an unsafe plant risks losing the license to operate. In Fonterra’s case the license to operate is access to markets like China and Russia for their products, consumer confidence worldwide and ultimately government stepping in to ensure safety.

The magical thing is that focussing on getting the safety systems and processes right ultimately results in increased production.

4: Be told what to do by the Government

This is a last resort, and signs of a business out of control.

The Government is helping the cause, with the release of the Workplace Health and Safety Reform work, part of which will increase director responsibility (though not enough to my mind). But as I said in passing above, the Government standards are a baseline only, and should be well below your own acceptable standards for health, safety and the environment.

Create a habit

At Mobil I was taught to pick up rubbish when I saw it on the forecourt (and sure, earlier on in life too). I found myself doing this again yesterday as I walked with the other board members of a company across a public area in front of their office. Now I don’t go around picking up rubbish every day, but it’s evidence that good habits stick around, and the more we can create better safety habits in our companies, the better the outcomes across society.

So I encourage the leaders of Fonterra, and indeed all companies, to call their peers at Z Energy, Air New Zealand and other companies who are ahead on the safety journey.

I encourage all leaders to install a blame-free culture, to systematically identify and fix hazards, and to empower everyone in the firm to place safety ahead of production and short term financial returns. Let’s make sure that each person gets home safely each night, can fly safely, eat safe food and improve the environment while they are at it.

Published by Lance Wiggs


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