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September 8, 2019

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Building a Culture of Risk Management

January 2, 2018

In January, 2018 I will be giving a keynote speech at the Washington Recreation and Parks Association Risk Management School, entitled "Tying the Strongest Knots:  Building A Culture of Risk Management." It is an honor to be asked to address this group of committed parks staff focused on enhancing their risk management expertise.  

 

My talk will start with historical overview of safety theory through the ages, focusing down on the authors and researchers who primarily developed the concept of a "Safety Culture," which I prefer to refer to as a risk management culture. This has become a special interest of mine as I have read books, listened to podcasts, done research of my own, and given presentations at conferences around practical steps one can take to cultivate an intentional organizational culture.  One of my presentations at the 2017 Wilderness Risk Management Conference focused on creating organizational culture aimed at risk management.  

 

No discussion of organizational risk management culture should overlook the vital role that Paul O'Neill played when he took over at ALCOA, back in 1987. He took over a company with an above-average safety record (measured in terms of employee injuries and lost days), but one which was financially struggling. His audacious decision to make worker safety the company's highest priority was met with shock and dismay from the stakeholders, many of whom immediately began to sell off their shares in the company based on assumptions that things could only go downhill from there. Little did they know that O'Neill's emphasis on safety would create habits, efficiencies, and new directions for ALCOA that would lead the company not only to improve its safety practices, but to quintuple it's annual revenue at the same time.  

 

Stepping to the podium to address the assembled crowd his first day on the job as ALCOA's new CEO, O'Neill drew confused looks when he made the following announcement: 

“I want to talk to you about worker safety,” he said. “Every year, numerous Alcoa workers are injured so badly that they miss a day of work. I intend to make Alcoa the safest company in America. I intend to go for zero injuries." 

 

We now know that there can be unintended consequences that come from fixating on zero injuries as a safety goal (most notably, it may have the effect of suppressing actual incident reporting) but in O'Neill's case, it was just part of a much larger, sweeping reform of organizational culture and habits.  After O'Neill's unusual opening remarks, one of the key investors in the room attempted to turn his attention back to the bottom line, profit margins and new business opportunities in the aerospace industry.  O'Neill simply wasn't having it.  

 

“I’m not certain you heard me,” O’Neill said. “If you want to understand how Alcoa is doing, you need to look at our workplace safe-ty figures. If we bring our injury rates down, it won’t be because of cheerleading or the nonsense you sometimes hear from other CEOs. It will be because the individuals at this company have agreed to be-come part of something important: They’ve devoted themselves to creating a habit of excellence. Safety will be an indicator that we’re making progress in changing our habits across the entire institution. That’s how we should be judged.”

 

O'Neill had spent some time working for the federal government, and he was a keen observer of organizational routines, which he saw as the organizational equivalent of habits for individual people.  "We were basically ceding decision making to a process that occurred without actually thinking," he said. At the same time, he believed that organizational routines could be replaced by more effective routines, which he called "Keystone Habits" driven by his emphasis on safety.  Incredibly, by focusing on safety, what he really led ALCOA to do was to focus on communication, problem solving, innovation, and breaking down the hierarchies that led to a lot of accidents taking place. By becoming a more safety-conscious company, ALCOA became a team, and a very efficient, successful business as a result.  

 

One concrete example where keystone habits all came together occurred when O'Neill was notified about some safety issues going on in one of ALCOA's factories in Mexico. There had been some workers there who grew sick due to fumes, and the incident was never reported to headquarters. It was addressed locally, but never reported -- a cover-up. Upon learning of the cover-up, which violated one of O'Neill's fundamental principles (incident reporting within 24 hours), the well respected senior plant manager was immediately fired, much to the shock of others in the organization.  “It might have been hard at another company to fire someone who had been there so long,” O’Neill told me. “It wasn’t hard for me. It was clear what our values dictated. He got fired because he didn’t report the incident, and so no one else had the opportunity to learn from it. Not sharing an opportunity to learn is a cardinal sin.” 

 

Incident data from studies show that O'Neill is right about that. Failing to report incidents creates blind spots for management, and takes away opportunities to correct the issues that are causing the incidents to occur. Even worse, failing to report near-misses creates even more missed opportunities, as some studies have shown over 300 near misses occur for every critical incident. So focusing on near-miss reporting is one great way that you can start to build a culture of risk management, in an easily-understood and accessible way, in your outdoor program.   

 

My talk at the WRPA Risk Management School will talk in detail about the theory and practices of creating organizational culture, with an emphasis on risk management.  I will also discuss my "Cheat Sheet for Creating a Culture of Risk Management," to be covered in an upcoming blog post.  Meanwhile, I hope you have been inspired by Paul O'Neill's visionary leadership and ability to create effective routines and habits, one of the cornerstones of organizational culture.  

 

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