Is Inadequate Leadership Undermining Your Process Safety Management Efforts?

In the wake of the explosion at the BP Texas City Refinery in 2005, the Chemical Safety and Hazard Identification Board (CSB) noted that leadership failures had materially contributed to the conditions that led to the disaster. Leadership at the plant had, over a period of years, distanced itself from the personnel who were in charge of chemical process safety, creating a situation in which strategic business decisions were made in the absence of process safety information.

It’s a common failing, according to a guidance document prepared by the Organisation for Economic Co-operation and Development (OECD). The OECD, which draws representatives from 34 industrialized nations around the world to work on international policy issues and problems, looked at process safety disasters from many of those nations. As a part of its “Environment, Health and Safety Chemical Accidents Program,” the OECD developed a guidance document, Corporate Governance for Process Safety: Guidance for Senior Leaders in High Hazard Industries.

The OECD found that corporate governance plays a critical role in the prevention of process safety disasters. Inadequate leadership was one of the key corporate governance ingredients that the OECD identified as common to many chemical process safety disasters.

Features of Inadequate Leadership

Features of inadequate leadership identified in the OECD guidance document that can lead to disastrous outcomes include:

Lack of competence at different levels of the organization. Without competent personnel, there will be no one to provide the information that senior leaders need in order to identify and address risks in a timely manner. A lack of competence that is pronounced enough—or in just the wrong places—can leave senior management unable to identify situations that are spiraling out of control until it is too late to prevent a disaster. For this and other reasons, effective leaders ensure that they have competent personnel in management, engineering, and operations at all levels.

Developing the necessary competence is a continuous process that involves:

• Committing resources to professional development for everyone in key positions related to process safety;
• Ensuring ongoing monitoring of regulatory developments and applicable nonregulatory guidance;
• Understanding the nature of the work that contractors and third parties do and having the ability to closely monitor it; and
• Providing the resources necessary for individuals to perform hazard and risk analyses and to develop and plan for detailed accident scenarios.

Failure to understand the risks posed by their own organization’s activities. Major accidents, like the release of methyl isocyanate in Bhopal in 1984 that led to the demise of Union Carbide or the Deepwater Horizon explosion and fire in 2010 that resulted in U.S. Congress calling the chief executive officer for BP in to testify, should make it clear that the level of risk is not negligible. In addition, the potential damage extends up and down the company’s supply chain—an organization that suffers a major disaster may lose critical suppliers, either to other customers or to business failure; it may also lose customers.

Failure to communicate. As at the BP Texas City Refinery, there is often a disconnect between senior management and the people who have essential information about chemical process safety. It is of little use to invest in developing competence at all levels of the organization if that competence goes unheard, unheeded, or is misunderstood. Senior leadership should be able to communicate with various personnel on all critical aspects of process safety, asking for information and following up on it appropriately. They must be willing to listen to the opinions of the organization’s carefully developed experts and not make the costly mistake of dismissing expert opinions and failing to defer to the expertise of their competent personnel.

Failure to prioritize process safety management (PSM). PSM is seldom given equal weight with other business decisions, like financial governance or market and investment decisions. But a poor PSM decision can be just as devastating to an organization as a poor investment decision or a mistimed marketing decision, so good senior leadership will make it a high priority.

Tomorrow we’ll take a closer look at another feature of corporate governance that the OECD identified as a contributing factor in many chemical process safety disasters: poor organizational culture.