‘If only’ – the two most shameful words in business
Catastrophic lapses in SHEQ management by high-profile organisations such as BP (that big oil spill) and Massey Energy (the worst mine disaster in the US since the 1970s) have cost lives and had devastating environmental consequences.
They also damage reputations – and not always fairly. While food giant Nestlé was forced to pull millions of litres of contaminated baby formula from shelves in Europe, the fault was traced back to giant packaging company Tetra Pak. The contamination was caused by an ink fixative used on liquid cartons.
SHEQ failures are inevitably associated with the goal of trying to increase profit through repeated cost-cutting. Such cycles are one of five warning signs that an organisation’s SHEQ is in a state of degradation – the others being:
• Operational procedures missed or delayed
• Facilities and equipment not adequately maintained
• Reduction in training
• Elimination or outsourcing of business services.
The presence of any of the five warning signs doesn’t mean an organisation is doomed. Any company can enhance its SHEQ dramatically using a three-step process put forward by DQS South Africa, which specialises in certification of the SHERQ (Safety, Health, Environment, Risk and Quality) Management System.
The process must start with upper management’s commitment, and shouldn’t be done secretively. The company must take pride in its commitment to SHEQ and convey this to its stakeholders.
1 – Select a SHEQ system: For new or recently-merged companies, the first step is to select a SHEQ system. A company with an established system may just need to recommit to that system. The necessary elements include a coherent strategy that stresses significant improvements, a focus on incident reduction using an established methodology, strategies for the allocation of resources and communication strategy, and defined roles for individuals.
2 – Fund the SHEQ system: Funding projects and addressing the expenses of driving the programme is essential in combating one of the major corporate shortcomings: the desire to turn every cent of cost savings into bottom-line profit. A set percentage of total revenue should be committed each quarter. Companies with margins of more than 35% should allocate 0,25% of revenues to the programme, while companies below that level should allocate at least 0,1%. This funding should be allocated after a quarterly management review of all related aspects. It could go toward improvement projects, additional staff, or the upgrading of facilities.
3 – Build the system: Finally, quarterly review meetings are essential, and should be seen as an opportunity to acknowledge teams, reward their efforts, and get their input. The sessions must involve at least one member of the executive team – this is vital as it will drive home the importance of SHEQ.