Organisational Change in Major Hazard Industries – Some Common Problems

Introduction

Whether because of the UK’s changing relationship with Europe, rising gas prices or the small matter of a global pandemic, the HSE are seeing a lot of organisational change in UK businesses at the moment. Change is not only inevitable, it is necessary – if businesses fail to adapt they cease to exist. Nevertheless, organisational change can have a profound impact on human performance and well-being, so it’s important that businesses manage change well. This is particularly important in major hazard industries where organisational change, and associated changes to workload, capability and morale, is a powerful Performance Influencing Factor (aka Performance Shaping Factor) on critical tasks. Myself and my HF Specialist Inspector colleagues have been doing quite a bit of regulatory work in this area and we’ve come across some common problems.

Common Problems in Major Hazard Industries

1 Management of Organisational Change starts after the change has been decided.

This is quite a common one, and it presents itself in a number of different ways. The rarest but also most damaging manifestation of this practise is where the Board of Directors tell an establishments in major hazard industries to cut staffing by 20% (or similar). This instruction comes without a corresponding, ‘and do 20% less’. The implication is that 20% of their workforce are not contributing to the business. But where is this Petrochemical site where 1/5 of the workforce are doing nothing (and do you have any jobs going?) Yes, this still happens despite the lessons learned at Texas City in 2005 (see the excellent USA Chemical Safety Board video here). More frequently though, the site management decide a smaller scale reorganisation is needed and don’t start managing the change until issues emerge or are raised by staff. This is not good practise. It is very hard to reverse a decision once it’s been made, and the more difficult the decision, the harder it is to reverse. Companies should have a policy and associated procedure for Managing Organisational Change that sets out how the benefits and risks associated with different options are evaluated. The level of detail should be proportionate to the change. If companies don’t do this, they run the risk of selecting an option that may have the most cost-saving potential but introduces more hazards or increases risk.

2 There will be time to do any necessary analysis once we’ve decided to change.

It’s surprising that this one still has teeth. You would have thought the sudden unplanned changes necessitated by the Pandemic would have taught us a thing or two! I am talking here about the management systems that should be in place withiin major hazard industries and kept up to date that make Organisational Changes run much more smoothly. I am constantly surprised by how little companies know about what their management, engineering and technical staff do. The time to be constructing task inventories and working out what proportion of an individual’s time they take is not when you’ve just announced redundancies, or when you have lost half your team to sickness absence. You should know already what work can be set aside to allow these professionals to focus on business critical tasks when there is less resource available. On the whole companies are much better at understanding what their front-line operatives do, but even there, many companies struggled to explain to the COMAH Competent Authority how they arrived at minimum safe staffing levels when asked.

3 Organisational Change which is not planned, does not need to be managed.

We can’t always see change coming. The sudden temporary loss of staff due to sickness absence has been very much in our minds with the pandemic, but could equally be caused by food poisoning from a shared meal or other infectious disease. Sometimes key people can leave a company at very short notice. All these changes need to be managed proportionately.

4 The Regulator won’t be interested / regulations don’t apply to Organisational Change in back office functions.

Employers have a general duty under the Health and Safety at Work etc Act to look after the health of their employees; and change is a known risk factor in work-related stress and associated ill health. So any change should be managed from that perspective. However, this belief has been presented to us several times in the last year, along the lines of “Why are you interested if we off-shore our Human Resources Team or cut the accounts department – it doesn’t impact on our control of major accident hazards?” But it does matter for two reasons. 

Firstly, redundancies and staff moves affect everyone in the organisation to a greater or lesser extent. You may be cutting people only from the Human Resources department, but every employee is going to be thinking that this is not a good sign and who is next.  People tend to react in a couple of ways – either they worry and do nothing, which means they are distracted and likely to experience more fatigue; or if they are more confident in their abilities, they start looking for other opportunities. Change in one part of the business can lead to unplanned change and a reduction in performance standards elsewhere if it is not managed. 

Secondly, are you really sure that back office functions have no impact on the Control of Major Accident Hazards? For example, Human Resources are generally responsible for recruitment and selection of personnel, a key part of any Competence Management System – and if they’re not doing it, who is? Is this task going to fall on the shoulders of operational managers? What effect will this have on their workload and their ability to manage and supervise safety critical operations? [There may be some bitterness arising from personal experience creeping in here!] It is important to spend some time thinking through the implications of cuts to back office staff on the rest of the work force.

5 Effective challenge can be provided by people involved in the project or in the same line management chain.

A very important part of management of organisational change is to have an effective challenge function – someone with the authority and experience to ask probing questions about proposed changes to make sure that difficulties are not underestimated and hazards are not over-looked. This is because of our old friends ‘risky shift’ and ‘escalation of commitment’. Risky shift describes the tendency for groups of people to unconsciously take more risks than an individual would. Escalation of commitment describes a decision-making bias where people who have already committed to a course of action, continue to invest resources into that pathway, even if there are clear indications that things are not going well.  Effective challenge requires independence to avoid these human tendencies, and authority to ensure that the challenge is not dismissed. It’s rare to find this function effectively employed by a company and certainly, I have not seen any challenge function at all at Board level. Companies in major hazard industries often site technical authorities as the people who will provide the challenge as part of their management of change process. However, a technical authority can rarely over-rule a decision made by the Board of Directors. So looking for an external challenge function is an important consideration. Where the change affects only one establishment, challenge might be provided by a senior manager from another site. Where the change is made at Board level, consideration should be given to appointing a Non-Executive Director with knowledge and experience in your industry sector, with the specific purpose of providing that challenge.

There’s no question that Organisational Change can be difficult to manage, and that no matter how well it is managed, there are likely to be effects on the workforce. Still, I believe we can do better. Best of luck to anyone who is faced with having to make changes to their business in these difficult days.