Organisational change

What are organisational changes?

Organisational changes include all personnel, process and system-related changes with the potential to either directly or indirectly affect the control of significant health and safety risks. This includes changes to roles and responsibilities, organisational structures, reporting relationships, staffing levels and staff location; outsourcing; contractorisation; delayering;  downsizing; and centralisation/decentralisation of functions. This may include a combination of changes to office-based and site-based personnel.

Most companies are familiar with the risks of technical changes and may have processes in place to manage these risks. However, it’s not always recognised that organisational changes can have a major impact on safety and other outcomes.

Why is organisational change an issue?

“Reorganisation can, however, be a major source of stress. It has also been identified as a factor contributing to a number of major accidents involving multiple fatalities” (HSE, Successful health and safety management, Second Edition, 1997).

In recent years there has been a drive to reduce costs, increase productivity and improve efficiency – which has understandably led many companies to consider changing organisational structures and key systems or processes. Safety critical industries have a greater potential for disastrous consequences and higher costs in terms of lives and money, and so must aim for much higher reliability than is normally necessary in business decision making.

Without proper planning, organisational change may result in inadvertent lack of emphasis on safety management, the loss of established formal and informal safety processes and deterioration of performance. The impacts of change can be direct or indirect, and may not be immediately apparent. For example, a reduction in supervision may gradually lead to a change in working practices, which will be passed through training and observation to the next generation of personnel.

As well as safety outcomes, rapid or continuous change can also have a detrimental effect on health – and poorly managed organisational change can increase the workforce’s experience of stress.

The impacts of organisational change include:

  • changes of responsibility without adequate arrangements to ensure capability or competence;
  • reduction in supervision;
  • team-working deficiencies;
  • conflicting priorities;
  • loss of key skills or knowledge;
  • overwork leading to inefficiency and lack of appropriate control;
  • lack of clarity about, or complete loss of, important functions and responsibilities;
  • change of priority away from safety related tasks;
  • reduction in available resources for maintenance;
  • inadequate staffing for handling upsets, crises, or peak workloads;
  • reduction in morale, motivation and organisational “citizenship behaviours”.

The above impacts of change will have consequences for any safety-critical or complex organisation. For example, in the oil, gas and chemical industries, these will lead to inadequate control of major accident hazards/events. Inadequacies in these controls will increase the likelihood of a major incident – or reduce the ability of people to manage an incident. In risk assessment language, inadequate management of organisational change will impact on both the left and right-hand sides of bowties. In relation to the Reason ‘Swiss Cheese’ model, poorly managed change will create holes in the barriers put in place by organisations.

Organisational change and major accidents

Hickson and Welch, 1992
Hickson and Welch (HSE, 1994)

Lessons from major events, across a range of industries, clearly illustrate the links between organisational change and disaster. The UK HSE report into the fires at Hickson & Welch in September 1992 discusses restructuring. This is the earliest reference to organisational change and major incidents that I’m aware of. The fires, killing 5 employees, occurred when a vessel containing potentially unstable sludge was heated for cleaning. The recent reorganisation was an indirect cause, leading to inexperienced and overworked staff. The HSE report stated that:

Companies should assess … the workload and other implications of restructuring … to ensure that key personnel have adequate resources, including time and cover, to discharge their responsibilities” (The Fire at Hickson & Welch Ltd, HSE, 1994).

In 1996, the Challenger Shuttle exploded minutes after take-off, due to failure of an O-ring inside the rocket booster, allowing hot gases to escape. NASA had long known about recurrent damage to these O-rings, and increasing levels of O-ring damage had been tolerated over time. The investigation (known as the Roger’s Commission, which included Neil Armstrong) reports how safety staff were reduced over the years (there’s a chapter on the “silent safety program”).

It also discusses how changes to the organisation led to ineffective oversight. Years of workforce reductions and outsourcing had culled from NASA’s workforce the layers of experience and hands-on systems knowledge that once provided a capacity for safety oversight”.

In February 2003, the Columbia Shuttle exploded 16 minutes before landing, killing all 7 astronauts and destroying a US$4 billion spacecraft. The Columbia Accident Investigation Board (CAIB, 2003) was highly critical of NASA, whom it said as an organisation, did not learn from its previous mistakes. The CAIB  discusses organisational change in some detail. It stated that:

Changes in organizational structure should be made only with careful consideration of their effect on the system and their possible unintended consequences”, (CAIB, 2003).

The Nimrod disaster from 2006 provides further evidence that a failure to manage organisational change can be catastrophic. RAF Nimrod XV230, a reconnaissance aircraft, was on a routine mission over Southern Afghanistan when a catastrophic mid-air fire led to the total loss of the aircraft, killing all 14 all on board.

The Hon. Mr Justice Haddon-Cave - The Nimrod ReviewThe Review led by Sir Charles Haddon-Cave was clear: organisational causes, including huge organisational changes, played a major role in this incident. The MOD (Ministry of Defence) suffered a sustained period of deep organisational trauma over a long period, including as a result of a review in 1998 that led to a “tsunami” of cuts and change, creating a focus on financial targets and a distraction from safety.

There are many relevant statements in the Nimrod Review (subtitled “A failure of leadership, culture and priorities”) – which considered the wider issues surrounding the loss of this particular Nimrod aircraft – but I think that the following paragraph sums up many of the concerns:

“Change is a good thing… but can be seriously inimical to safety… unless properly planned, resourced & managed. It can lead to the organisational dilution of safety structures. It can lead to a diversion of resources from safety matters. It can distract attention from safety issues. It can lead to a shift in priorities. It can change the culture. In this case, it did”, (Nimrod Review, Charles Haddon-Cave QC, 2009).

The tragedy during start-up operations at the BP Texas City refinery in March 2005 took 15 lives and injured 180 others. This catastrophe highlights the drastic effects of corporate cost-cutting and should be cautionary tale to every oil, gas and chemical company – the issues arising from this investigation are not unique to BP. Like all such events, there was a multitude of causes; however, poorly managed mergers, leadership and organisational changes played a significant role, as reported by the US Chemical Safety Board (CSB):

“After the Amoco merger, Texas City underwent a complex series of leadership and organizational changes that were only informally assessed for their impact on safety and health.  BP Texas City did not effectively assess changes involving people, policies, or the organization that could impact process safety”, (CSB, 2007).

The Longford Royal Commission was appointed to investigate the causes of an explosion and fires that occurred at the Longford gas plant in September 1998, killing two employees and injuring eight. The Commission reported that reorganisation and demanning deprived operators of:

  1. access to experienced engineers (relocated from Longford to Melbourne in 1992); 
  2. supervision (restructuring in 1993 involved operators assuming greater responsibility for operations and relieved supervisors of the ‘leading hand’ role. Numbers of supervisors were reduced and they were not expected to be on plant as often. The Shift Supervisor role becomes largely administrative); and
  3. managers (there was a failure to fill vacancies). 

A key issue in the Commission report is that these changes were implemented without the risk assessment required by Esso’s safety management system. In relation to the failure to conduct a management of change risk assessment, the Longford Royal Commission states that:

“Though the existence of a link between this failure and the occurrence of the accident is hard to evaluate, appropriate management of change risk assessment may have exposed important and relevant weaknesses in the level of operator knowledge, in training programmes, in communication systems, in operating procedures and in other aspects of Esso’s management system” (Longford Royal Commission, 1999).

As a Specialist Inspector (Human Factors) with the UK HSE, organisational change was the most frequent topic on which I was asked to provide support in the 2000’s. We provided extensive advice and support for major organisational changes and in several cases served Improvement and Prohibition Notices on this topic. In the early 2000’s I provided support for an extensive investigation of organisational change offshore, and so this is an area for which the HSE Human Factors Team developed much expertise over a long period.

What do organisations need to do?

The impact of organisational changes on health, safety, the environment, quality, or other relevant outcomes must be considered. This need not be an overly bureaucratic process and significant guidance is available. Risks can arise from both the process of change and the outcome, and so organisations need to assess the impacts during the change (the transition) as well as impacts of the future organisational state. The adverse impacts of organisational changes depend on how well the organisation assesses the implications (where you want to be) and plans the changes (how you will get there).

I find the following two questions useful in discussions with senior leaders about specific organisational changes:

  1. If you failed to managed this change effectively, what would be the safety implications?
  2. If you did get it wrong, how would you know this before a major incident occurs?

Summary

  • Organisational change needs the same rigorous management approach as that traditionally taken to engineering or technical changes;
  • There are tools, methods and guidance widely available – this isn’t a new topic;
  • This is an increasingly important topic for safety-critical and major hazard industries as the pace and amount of change accelerate.

More information on organisational change

HSE Inspector’s Toolkit – Organisational change and transition management. Short extract from a toolkit produced by HSE’s Human Factors Team for use by non-specialist Inspectors. Includes a Question Set used by HSE Inspectors on major hazard installations.

HSE Guidance – Organisational change and major accident hazards – CHIS7.  Information sheet published on the HSE website in July 2003. This is core guidance for major hazard sites and highly relevant to any large company planning an organisational change.

Management of safety and health during organizational change: A resource and toolkit for organizations facing change. Published by The Chemical Manufacturers Association (now American Chemistry Council) (2011). Based on the HSE’s CHIS7 Information Sheet, it provides a process that may be used to manage safety and health during organizational change, and provides sample worksheets and checklists. Although directed specifically to safety and health at the plant level, the concepts may also be adaptable to related areas such as environmental protection, quality assurance, occupational health etc.

Assessing the safety of staffing arrangements for process operations in the chemical and allied industries (2001). HSE Contract Research Report 348/2001. This is essential guidance to assist organisations in assessing staffing levels before and after organisational change. It was published when I worked as a Specialist Inspector (Human Factors) for HSE. The Human Factors Team observed that a number of chemical sites were reducing staffing levels in operating teams and expressed concern that such reductions could impact the ability of a site to control abnormal and emergency conditions and may also have a negative effect on human performance through an impact on workload, fatigue, etc.  The need for a practical method for organisations to assess their required staffing levels was addressed by this Research Report. The guidance also enabled HSE inspectors to apply consistent standards on staffing levels.

Business re-engineering and health and safety management best practice model. Contract Research Report 1996/123. Provides practical advice to directors, managers and health and safety professionals involved in the conception, planning, assessment and implementation of changes in business organisation and management which have the potential to impact health and safety. Useful guidance for significant or major organisational changes.

ONR Licence Condition 36 – Organisational capability. Licence Condition 36 requires changes to the licensee’s organisational structure or resources to be assessed.  The licensee may have to justify the safety of any proposed change.