Go beyond ‘management systems’ to achieve operational excellence
The concept of implementing a management system to enhance business performance is not foreign to most organizations. Many have designed and implemented a system that outlines how their operations are managed—at least on paper. It typically contains several elements, complete with standards and policies intended to guide personnel through their daily tasks.
Recently, many organizations are adopting a more integrated, overarching management system that covers the broader aspects of operations including safety, health, and environment; asset and risk management; supply chain and continuous improvement. This shift reflects the recognition that the protection of assets and the extraction and creation of value are intertwined and need to be a part of an overall management system (OMS) that enables operational excellence.
DuPont Sustainable Solutions (DSS) has seen many organizations fail to benefit from implementation of an OMS. For example, process safety incidents still occur due to poor maintenance practices even when asset reliability is a key OMS element with clearly defined expectations. Similarly, DSS has often seen inconsistencies in how operations are being managed within an organization, resulting in various operational wastes, contrary to the intent of the OMS. Most often, these developments are a reflection of weak execution discipline.
There are certain aspects of management systems and execution variables that are critical in enabling the pathway toward operational excellence.
These aspects include:
- Organizational capabilities
- Operational culture/mindset and behavior
- Leadership and managing processes.
Together, these form an integrated execution model that has been shown to be effective in delivering business results.
Find the ‘right’ system
Before discussing these three execution variables, it is worthwhile to note that there is no right or wrong OMS. Management systems provide a useful framework for how businesses operate and are, therefore, specific to each organization. The OMS needs to be appropriate for the risks that the business is attempting to manage.
Given all the elements of a management system, an organization needs to ask whether or not each one of those elements will result in risk reduction. If an organization creates an OMS that does not reduce risks, the system is more of an administrative burden than a benefit to the business.
Even when companies have a world-class system in place, if it is poorly executed, it is worthless. People drive operational excellence. To receive maximum performance, organizations need to engage, develop and focus on their personnel to crystallize a culture that enables the system to be self-improving and self-sustaining.
Because people drive performance, it is not unreasonable to say that organizational capability is a critical execution variable. Personnel need to be functionally capable of performing their tasks well. But how is this accomplished?
In regards to capability building, training usually comes to mind. There is usually a training—related element within the OMS; however, capability building is not all about training. Rather, it is about learning—and learning happens through both formal interactions and informal experiences. By focusing on learning and on improving learning effectiveness, investments in capability building will be optimized and will yield more valuable returns.
Consider an example of organizational capability in the context of operational risk management, specifically process safety. An operator new to a task is usually provided with classroom training sessions. All may be well until a few months later when the operator takes a shortcut, resulting in a near-miss event or an incident.
In this example, the organization’s reaction is typically to increase training efforts, but the solutions to preventing future occurrences may not necessarily include additional training sessions. Instead, there may be learning variables that need to be addressed including:
- The trainer’s capability
- Training contents and delivery methods
- Timing of training
- Supervisor or peer influence
- Awareness of previous incidents.
Organizations that invest in workforce capability will improve the organization’s operations. To build capability effectively, organizations have to focus on personnel learning versus simply training.
Mindset and behavior
To achieve a healthy culture that achieves positive outcomes, employees need to understand the importance of performing well and that they are performing tasks not simply because they are required to do so. Otherwise, the organization risks delivering "check the box" results, where tasks are completed as expected but inefficiencies and incidents still happen.
One way to enable a strong operational culture is to engage personnel and consider their input during the design and execution of an OMS. A two-way communication process could be established to facilitate this. While communication is a tool that has been used by many organizations in their journey toward excellence, simply establishing a communication flow is insufficient.
To achieve the next level of performance, the right kind of communication needs to flow in addition to the proper delivery method. Data and information need to be presented in a way that has an emotional impact on the employee. Reaching the hearts of the organization facilitates cultural change, resulting in more sustainable safety and, therefore, improvements in operations.
Leadership and managing processes
Leadership plays a key role in the success of a company by setting the tone for the organization, establishing expectations, monitoring performance and guiding the company toward its goal (facilitated by data-based managing processes). A leader’s primary task can be boiled down to prioritizing the use of the organization’s limited resources to invest in growth or prevent losses.
To guide these decisions and allocate resources effectively, it is important that a leader understands his or her company’s financial and operational risks. Surprisingly, while leaders are generally aware of the organization’s financial risks, they are less familiar with the operational risks. Leaders need to know what layers of protection exist to manage operational risks and ensure that these layers of protection function.
The best way for leaders to gain this understanding is to become familiar with site activities. Leaders need to spend time at sites regularly, asking and learning about the risks in a humble and open manner from front-line workers. In the process, leaders must demonstrate effective leadership, as previously discussed, and adopt a style that appeals to employees.
Managing processes also need to be established to ensure the disciplined execution of OMS, talent management, capability building and cultural strength.
An integrated OMS can be helpful for an organization as it strives to achieve operational excellence, but an OMS by itself is insufficient. To achieve optimal performance, companies need to establish a risk culture within the organization, place an emphasis on learning versus training and enable leadership to make decisions based on a clear understanding of top operational risks. In short, to achieve true, sustainable excellence, a company’s approach needs to appeal to the heads, hands and hearts of the organization.
– Alfonsius Ariawan is a global solution architect with DuPont Sustainable Solutions (DSS), specializing in operational risk management.