Rewriting the rule book: Improving line performance in safety and environment
The energy industry’s performance has plateaued recently, but a new approach can help. Instead of limiting the accountability for safety and environmental factors to an isolated function, this model shifts the responsibility to front-line workers, and redefines the role of the advisors who interact with them.
Rewriting the rule book Improving line performance in safety and environment
Beirut Georges Chehade Partner +961-1-985-655 georges.chehade @strategyand.pwc.com Dubai David Branson Executive Advisor +971-4-390-0260 david.branson @strategyand.pwc.com Houston Juan Trebino Partner +1-713-650-4151 juan.trebino @strategyand.pwc.com
London Andrew Clark Partner +44-20-7393-3418 andrew.clark @strategyand.pwc.com Melbourne Malcolm Garrow Partner +61-3-9221-1928 malcolm.garrow @strategyand.pwc.com Milan Giorgio Biscardini Partner +39-02-72-50-92-05 giorgio.biscardini @strategyand.pwc.com
Moscow Ekaterina Kozinchenko Partner +7-495-604-41-00 ekaterina.kozinchenko @strategyand.pwc.com Paris Douwe Tideman Partner +33-1-44-34-31-27 douwe.tideman @strategyand.pwc.com São Paulo Arthur Ramos Partner +55-11-5501-6229 arthur.ramos @strategyand.pwc.com
About the authors
Andrew Clark is a partner with Strategy& based in London. He has worked extensively in the chemicals and oil and gas industries in Europe, Asia, and the Americas.
Rose Landau is a senior associate with Strategy& based in London. She has worked extensively with chemicals and oil and gas clients in Europe, Asia, and Australia.
Andrew Clark and Rose Landau, Strategy&, UK, unveil a new model to enable line performance for safety and environmental management in the oil and gas industry.
rom a safety and environmental perspective (S&E), large process industry companies have made huge strides in the last decade. More rigorous guidelines, an increasing emphasis on personal and process safety programmes, and better risk‑management practices, mean S&E is far better than it used to be. Yet the ultimate goal – ‘zero harm’ levels of performance – has remained elusive, as S&E performance has plateaued in recent years. Part of the problem is the focus on functional activities, and the benign neglect of the interface between S&E and the front line. The usual approach is to assign S&E advisers to front-line work sites, and give those advisors a broad and poorly defined mandate to ‘support day-to-day S&E activities.’ This has led to a sharp drop in injuries and fatalities in the last 10 years, but the ambiguity in this approach also leads to duplication and a ‘do it for me’ attitude, and may open the door to a sometimes confusing stream of new initiatives. Companies can take the next big step forward in their S&E performance if they clarify the role and mission of the co-located S&E advisors and make front-line workers truly accountable for day‑to‑day S&E performance. Front-line workers need to understand their new responsibility and develop the capabilities to fulfil it. Where a capability is missing, the role of S&E advisors is to help build the capability, not substitute for it. A structured approach, beginning with
The second typical problem is the wide variety of determinants of site-level resourcing. Some companies follow no discernible pattern at all, some use industry benchmarks to determine how many S&E people to deploy, and some link the number of safety advisors to the Figure 2. Changing the S&E operating model. (Source: Strategy&). hazard level (the higher the hazard, the more sizeable the onsite S&E staff). The third problem in S&E is the prescribed behaviours, and acting as a sort of on-site auditor of duplication of activities across the HSE organisation. This leads, at a S&E practices. This had clear implications for how the company minimum, to a lot of waste and unnecessary cost. But it can also backfire if allocated resources, and for the capabilities of its front-line workers, line workers feel overwhelmed by the amount of input they are getting, or S&E advisors and central S&E staff. Among other things, it meant by the flood of ideas. that there were many S&E advisors at multiple work sites, making Redefining roles and adding capabilities sure the front line was following safety practices, and correcting There is a better way. By ensuring that their front line has a high violations. The S&E advisors were not particular experts in safety – degree of internal competence in S&E, companies can avoid a lot of they just had to be familiar enough with the prescribed practices so this dysfunction – and make a step change in safety performance. they could recognise when the practices were not being followed. To reach this new model though, companies need to drive change in With the S&E advisors playing this role, the front line did not think of two areas. First, they need to be clear about accountabilities. There itself as responsible for safety. As for the corporate S&E staff, it was are three categories of employees whose new responsibilities should spending most of its time generating the policies and procedures – be spelled out: the rulebook – that its onsite advisors were enforcing. The front-line workers: those directly involved in producing the For some companies, this is not an inappropriate way to revenue-generating asset. handle S&E. Investing in compliance can help a company reach an The S&E advisors who are assigned to (and co-located at) acceptable safety level. But this is an early stage of S&E evolution and worksites. is expensive to maintain. The central S&E staff.
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In the model advocated by this article, the front-line workers alone are responsible for ensuring safety – the advisors do not play a role in this. Instead, the advisors’ job is to coach, provide guidance, and drive continuous improvement. As for the central S&E staff, their job is to stay on top of regulations and develop best practices, and be a resource for the S&E advisors to draw on. The second change, necessary for the first to work, involves building new capabilities. This means giving front-line workers (at all levels, not just management) the tools and training necessary to execute S&E activities as an integrated part of their daily work. In the function, it means developing credible, experienced, independent advisors who understand how to coach the front-line workers and how to get them to challenge their own assumptions. This takes some work. Typically, those in S&E have either spent their whole careers in the function (in which case they have only a limited knowledge of operations), or are long-tenured operations people who have been transferred to S&E at a late stage of their careers, without a lot of functional knowledge. Either way, there are gaps to fill.
2. Defining the ideal end state, based on needs and overall aspiration.
In this next step, a company maps out its ideal S&E model. Among the questions to be answered: What role should the central S&E staff and S&E advisors play? In what ways should the advisors support the front line, and in what areas should the front line operate on its own? At the oil and gas company, the answer to at least one of these high-level questions was clear. The company wanted the S&E advisors to move away from their enforcement roles and focus on continuous improvement. This would not mean pulling S&E advisors away from the front line but rather transitioning the advisors to ‘partner’ and teaching roles, and reducing the time they spent checking up on operations and on other supervisory tasks. The goal was to improve safety performance; the mechanism was shifting responsibility for day-to-day S&E activities to the front line. If this allowed the company to operate with a reduced number of S&E advisors, that was seen as a nice by-product of the change but a strictly secondary benefit.
Changing the model: a five step process
3. Translating the ideal into a revised operating model.
The next step for a company is to think about its ideal end state in the context of what is feasible – and then start pushing toward that. The calculations include who to put in which positions; which capabilities to develop; how to allocate resources; and how to structure reporting lines to support the new goals of both the front line and the central function. One oil and gas company believed it would help if both the front line and S&E function had input into the discussion. So the company held workshops with representatives from both sides. A key question was defining the role that the corporate HSE function should have. One argument called for limiting it to pure policy development, while the other called for a combination of policy development, dedicated support and an expert pool of resources. After some discussion, the company decided on the focused ‘policy and expertise’ role for the corporate function and then moved on to create the new organisation
To make the substantial changes that are involved in moving to the new model, companies need to work through a number of challenges. A step-by-step approach, illuminated by actual case examples, follows below. This article has aggregated the several companies into a single ‘oil and gas’ company, for ease of example.
1. Reviewing the current operating model, focusing on resources and capabilities.
This starts with understanding how the S&E imperative is currently being satisfied – the operating philosophy. What is the function, at a high-level, set up to do? When an oil and gas company did this assessment, it found that its approach to S&E was built around compliance – that was its ‘mental model’ – and that a lot of energy went into enforcing
| Oilfield Technology Reprinted from July 2014
model, including roles and responsibilities, reporting lines, team structures and a responsibility assignment matrix.
different sites’ safety issues and on the likelihood of achieving visible, momentum-building successes.
4. Define the enablers.
Companies do not move easily to new models; they are prone to inertia. If the S&E model is to be changed, the right enablers must be employed. The oil and gas company used several enablers, notably leadership behaviours; decision rights; capability development; knowledge networks; and line/function rotation. So for example, leadership behaviours underscored that S&E was a company-wide priority, decision rights made it easier for the central S&E function to get the right people in the right positions while capability development put the company in a position where it could start to think about S&E differently.
Benefits of a changed model
5. Implement the new model.
By its nature, shifting the responsibility for daily S&E activities to the line is not a flip-the-switch endeavour. A company with scores of work sites may have many different operating philosophies and S&E advisor ratios. This was the case at the oil and gas company. The approach to S&E was very different at one European work site compared to another in the same market, and entirely different again from the approach in Africa. As a result, the implementation plans for these sites had to be developed individually. Using what the company knew the project teams set a plan for what should happen where, when it should happen and how long it should take. The work was prioritised based on both the magnitude of
In getting the S&E operating model right, the oil and gas company has started to put itself in a position where it can not only achieve a level of safety performance on par with its industry but can begin to approach the ideal of zero injuries. It has put the onus for S&E performance on the managers who already have credibility and the trust of their staff because of their operational experience. At the same time, it is allowing the S&E function to develop its regulatory and subject-matter expertise, so that it can pursue continuous performance improvement and reduce its role as a stand-in safety officer. At best, many companies today are on track to make incremental improvements by tweaking the S&E models they already have in place. They should consider a paradigm change, moving to an entirely new model. It is a model that shifts accountability for day‑to‑day S&E performance to the front line, re-defines the role of the central S&E function and eliminates a kind of overlap that may once have been justified but has since become an obstacle to future progress. The potential of this paradigm shift will unlock significant further improvement steps again in coming decades.
International Association of Oil & Gas Producers, Safety Performance Indicators, (2012 Data).
Reprinted from July 2014 Oilfield Technology |
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