How to achieve better HSE standards, advise Sean Wheeler, Andrew Clark, and Richard Verity, partners with Booz & Company
The Middle East’s oil and gas industry, in line with its global counterparts, has made impressive progress in reducing the rate of safety and environmental (S&E) incidents. Recordable injury and fatality rates globally have halved in the last decade.
A decade of improvement
Oil and gas companies have achieved substantial safety gains over the last decade. The total recordable injury rate in the oil and gas industry worldwide dropped from 4.00 per 100 workers in 2003 to 1.74 in 2012.
The rate of fatal accidents went down from 4.94 for every 100 million hours worked in 2003 to 2.38 in 2012. Companies have advanced thanks to substantial investment and focus in four areas.
First, guiding principles and concepts have set ambitious goals and workers are now encouraged to spot and mitigate risks. Second, safety programs and systems have supported these principles by, for example, instituting changes in behavior (demanding workers don protective gear) and processes (how potentially hazardous materials are moved).
Third, companies have enhanced S&E reporting and Key Performance Indicators (KPIs). Indicators are now more specific. They are gathered from more perspectives, such as by the nature of the asset, the business, and the geographic location.
Indicators also now delve into incidents in which accidents were narrowly averted. Fourth, companies have made tremendous strides in risk management. They have built all-encompassing risk frameworks that permeate their operations and ensure that S&E is considered as early as the work-planning phase.
The rate of S&E improvement has, however, reached a plateau since 2009 and no large advances are likely with the current framework (see Exhibit 1). As a result, the goal of “zero harm,” an important aspect of the guiding principles that have ameliorated the overall safety record, is out of reach. This is because of three typical problems that can overlap.
The first is a lack of clarity and consistency when it comes to specifying the respective roles of the health, safety, and environmental (HSE) function and those on the frontline, “at the wellhead.” This can lead to overly intricate and baffling site level organizational models or models that are not been agreed on.
One result can be that employees at work sites place responsibility for S&E on the shoulders of the HSE advisors and not on the workers at the frontline. The second frequently encountered problem is that companies use a very broad range of measures to decide S&E resources on worksites.
For some firms the level of resources is determined by industry benchmarks, for others resource levels are connects to hazard risks, with more risk meaning more on site S&E advisors.
For some firms there is no apparent pattern as to how they resource S&E “at the wellhead.” The third problem is the wasteful duplication of HSE activities that can perplex those on the frontline. Too many S&E advisors can be a bad thing if those doing the work cannot cope with the volume of often good ideas from HSE staff.
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Why the current approach has run its course
Throwing more resources at S&E, for example, won’t do the trick because this is not about one last heave. The very approach that led to the recent S&E enhancements is now holding companies back from their “zero harm” aspiration.
The difficulty is that the current model concentrates on functional activities and ignores the connection between S&E and the sharp end of the enterprise where the work is actually done. S&E advisors are often not as expert as they could be, and frontline workers are complying with procedures and regulations rather than investing in S&E themselves.
Meanwhile, the central S&E staff spend most of their time producing more guidance and more policies.
From function to frontline
Instead of repeating the previous approach, we believe that the next phase of S&E improvement should shift the concentration from functions to the frontline. Our experience with a number of companies tell us that a step-change in functional delivery at the sharp end is what is required to attain “zero harm.”
In this new paradigm, roles and responsibilities change while capabilities are added. Companies need to define the responsibilities for three sets of employees: central S&E staff, S&E advisors, and those on the frontline whose work actually produces the oil and gas.
In the new model, the responsibility of the central S&E staff is to develop best practices. They stay current with regulations and act as a specialist resource for the S&E advisors in the field. In an ideal scenario many would move out into the field, close to the wellhead.
The S&E advisors, instead of constantly stepping in and doing S&E for the frontline workers, move to an educational and training role that stresses continual improvement and coaching.
By having the S&E advisors build the capabilities of frontline workers, companies can empower these workers to push S&E improvements.
The frontline workers can thereby become solely responsible for daily S&E. Their frontline managers, with the necessary operational expertise and credibility with their teams, become accountable for S&E.
The additional capabilities of the new model allow employees to exercise these different responsibilities. For those on the frontline—and this applies to everybody, technicians and managers included—capabilities building means giving them the training and tools required to implement S&E in a manner that is integral to their daily work.
For those in S&E, whether the centrally or in the field, this means becoming advisors with the stature, track record, and independence that enables them to educate those working “at the wellhead” and to question how these workers approach S&E. Such capability building for S&E staff can be difficult. Some of those in S&E have limited exposure to operations.
Others are former operations people who have moved into S&E as they are at a mature stage of their career, which means that they often lack sufficient functional S&E knowledge.
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Five steps to change
Implementing the new model requires five sequential steps that deal with the structure of the organization and the development of human capital. We examined this process in several oil and gas companies, which we have unified into one example.
1. Review the current operating model, concentrating on resources and capabilities. The purpose is to understand the operating philosophy that allows it to fulfill its S&E imperative, so that it grasps what its current S&E function is designed to do. The oil and gas company found that its S&E function was all about compliance, an approach that can work if an organization has below par safety performance.
In this company there were many S&E advisors at work sites ensuring safety practices were followed and safety errors were corrected. These advisors, however, were not especially expert in S&E, all they needed was to know the rules and to ensure they were followed.
The effect on the frontline workers was that they did not feel that they were responsible for S&E. Meanwhile, the central S&E staff were producing policies and procedures.
2. Define the ideal end state, based on needs and overall aspiration. This step involves drafting the ideal S&E end-state for the company, specifying the roles of S&E advisors and the central S&E staff, stating how the advisors should assist the frontline, and areas of S&E autonomy for the frontline. The oil and gas company wanted to improve its S&E performance.
It therefore decided that S&E advisors should stress continual improvement over enforcement. The S&E advisors would stay at the wellhead as “partners” and “teachers.” They would spend more time educating the frontline workers to take on daily S&E responsibility and less time examining and supervising operations.
3. Translate the ideal into a revised operating model. Looking at the ideal end-state in terms of feasibility provides direction for who does what, what capabilities they need, where resources should go, and whether S&E resources should be shared or dedicated.
This step also lays out the path of reporting lines for S&E advisors and central staff to promote the new goals, and allows the company to avoid overlap between S&E and operations. The oil and gas company brought the frontline workers and the S&E function together in a dialogue.
The purpose was to define the corporate S&E function’s role. The final decision was for a mixture of policy development, dedicated support, and a pool of expert resources.
4. Define the enablers. The correct enablers are needed to implement the new model and overcome any inertia. The oil and gas company employed enablers that allowed it to rethink how it approached S&E.
The company used enablers such as leadership behaviors to underline that S&E was a firm-wide priority, and decision rights to allow the central S&E function to place the right people in the right posts.
Other enablers included capability development, knowledge networks, and job rotation between line and functions. Training, defining expectations, and specifying career paths developed capabilities and allowed the company to consider S&E from a new perspective.
The knowledge networks allowed frontline workers, whose S&E responsibilities were growing to share concerns, experiences, and best practices. Job rotation gave some S&E advisors their first taste of operations.
5. Implement the new model. A significant implementation challenge is that an oil and gas company typically has multiple assets which take different approaches to operations and do not have the same level of coverage in terms of S&E advisors.
The oil and gas company made allowance for these differences by developing individual implementation plans for each work site. Project teams then drafted plans that drew on what had been learned about each site’s existing approach to S&E.
The plans specified the duration of the implementation plan along with where, when, and how changes would occur. In particular, the plans prioritized work depending on the extent of each site’s safety challenges and how likely quick successes could be achieved to accelerate change.
Safety begins on the frontline
Oil and gas companies need a new approach, a paradigm shift that moves responsibility for S&E to where it belongs, with the frontline managers who have the operational track record to command their teams’ trust and respect.
By allowing these frontline managers and workers to own daily S&E performance, and by allowing the S&E function to own regulatory and subject-matter expertise, oil and gas companies can promote a culture of continual improvement that can lead to “zero harm.”
