Making operational risk personal

Having worked in in the risk and safety management area of the oil and gas industry I have seen, and in small part helped, some of the leading operators work hard on improving their safety culture.  The realisation in the industry has been that layers of processes and controls can only go so far. Front line staff need to remain aware of the risks they face and not become complacent such that they do not spot those small indicators that something is out of place.   So creating a culture that counters this tendency toward complacency, or risk normalisation, has been a focus for oil and gas operators.

The oil and gas industry is not the only one that faces risks that could lead to catastrophic losses and the removal of the licence to operate. Financial institutions have faced such losses through failures in processes and controls around rogue trading, mis-selling of products and failures in anti-money laundering controls.  The Basel Committee on Banking Stability (BCBS) as well as requiring banks to have sufficient capital to cover their market and credit risks also required banks make provision for potential losses from operational risks.  Reducing these operational risks, which include internal and external fraud, mis-selling, market conduct, physical damage to assets, business disruption and procedural errors, can be tackled using approaches used successfully in the oil and gas industry: a mix of policies, procedures and controls as well as a fostering a culture that from the boardroom to the frontline is aware of their role in managing the risks the organisation faces.

However, experience has shown that the cultural shift required in an organisation is easier to achieve in the oil and gas industry because it is much easier to personalise the consequences of failure.  Frontline staff are literally in the line of fire but even for non-plant based staff and senior management, the personal consequences of dealing with the death or injury of colleagues is relatable and in most oil and gas sites and facilities there will be people who have experienced that low point.

In banking, it has been harder to personalise the consequences of operational risk failures because, in the most part, the losses are "just money".  In taking some of the risk culture improvement approaches from oil and gas into banking, that ability to personalise risks has been a missing ingredient.

The threat posed by certain aspects of Financial Crime, however, can be used as a call to action for genuine cultural change in banking.  The consequences for banks caught allowing criminals to use them for laundering proceeds of crime or being a conduit for the financing of terrorist activity are beyond tolerance levels.  Making sure the bank does not get used for these activities can also be a way to personalise operational risks for the entire workforce.  Everyone is aware of the social ills caused by crimes like drug dealing and would want to do all they can to stop it.  Similarly, no bank employee would wish to inadvertently assist the financing of a terrorist act that led to the death and injury of innocent people.

As a rising tide raises all boats, mobilising a banking workforce to be aware of their role in preventing their bank being used for serious crime, will also help prevent other operational risks.  Increased focus on areas like Know Your Customer (KYC) processes and unusual transaction identification will help tackle internal and external fraud as well stop the bank being used for drug money laundering or terrorist financing.

In any programme to improve operational risk management, banks should use the threat posed by serious crime to engage and mobilise the whole organisation in the change.

Change is coming to Change Management

For over 20 years I have been delivering workshops as part of delivering change in my role as a transformational change specialist.  These workshops have been designed to deliver a number of different outcomes all with a central theme of engaging the participants in the design and change itself, essential to deliver successful change management.  One thing these workshops have had in common is that they have always been in person with participants coming together to share their insight in the physical presence of each other.  At these workshops we have often supported behavioural change, a key outcome but with the changes in working practices due to CoVid -19 of working from home and social distancing how will we change our art to still deliver change management.

 

For those interventions that need participants input maybe we need to re-think the tools we have to engage people in a wider context not just replacing in-person with online, particularly with larger groups.   We will indeed need to adopt digital tools, some, like Teams, Webex and Zoom, offer video conferencing so why can’t we just take our old-style workshop designs and try and deliver over video?  Well, I believe, while video is great for communicating and sure sometimes, we are just pushing a message, it just has its limitations in building engagement where we require a two-way conversation.  It is just too easy for participants to “turn off” their level of concentration and as a consequence their involvement in the conversations.  Based on my experience and those shared by colleagues, what are the new design principles for remote workshops and digital tools that can help?

 

We must make the best use of time for self-working vs collaborative working, think Synchronous vs. Asynchronous participation.  Ensure that pre-work is sent out with clear instructions and collated for discussion, this is where the value of the time spent together will be.  Build accountability into the workshop too, so that any actions are followed through.

 

Most importantly is that we must design our sessions for the outcomes we desire, if we want participants to remain engaged, we need to build sessions that allow them to input their voice, either literally or using a common chat function.  We could also ask open ended questions or run “idea” sessions that others in the workshop can build on, keeping participants involved and sharing.  Tools like Howspace.com, Miro.com and Mural.co which can run alongside your video conferencing tools can support you as a change manager deliver this new style of remote collaborative workshop ensuring it is “all change” for your change management engagement.

 

However, our biggest challenge is “reading” the room, a core skill of experienced facilitators.  When running a virtual workshop this is much harder and will require us to develop, test and refine new skills like those used in card games; poker for picking up “tells” for when a participant wants to contribute and bridge for remembering who has played what card in the session already.  Here it will also be essential to have a specialist who can get the most out of the full functionality of the digital platforms and synthesise the non-verbal feedback from the surveys as well as content and tone from the chatrooms.

 

These are new and exciting times for those facilitating remote change workshops, and as we explore what works and what does not, please share your experiences in making change work in the world of change management.

 

The three questions driving Sustainable Change & why so many organisations fail to address them all

To bring about radical improvements in how teams operate, it is important to ask the right questions at the outset.  Too often organisations only focus on one or two of these questions, believing that the other questions and their answers are self-evident.  Unfortunately, evidence shows this is not the case and probably contributes to the 75% of failed change efforts that are the norm.  It's like the proverbial iceberg, so much more is under the surface that needs to be understood and respected if you want to navigate it successfully. 

The three questions cover the gambit of the conception of the change, the reason it was needed and how the organisation will adapt to accommodate it.  Taking them in turn:

What are we Changing?

Most change efforts when they are set in motion focus almost exclusively on what is changing.  What parts of the organisations will change? What new systems will we be using? What new targets will we work to?

For a moment, imagine yourself as a worker on the shop floor who has followed the same routine for years.  When they are asked to change from their way of working, how do they make sense of it without context.  Even more importantly, why would they change, if they believe that the old way of doing things is just fine thank you very much.

The question of what we are changing needs to be addressed, but it needs a couple of other questions to be in the mix and communicated to everyone, to minimize resistance to the change.

How are we going to make the change happen?

When you are deep in the design phase of change, you need to know how things are going to change. Not just in blue sky terms, but in actual everyday operations terms.  How will technology be used? How will teams be organised? How will the structure of the company adapt?

The details of the how are crucial in organising resources, people and technology to ensure that the benefits of the change are realised.  One of the reasons that so many change efforts fail, is that too little attention has been placed on the how of things.

Planning the fine detail of the change and communicating it widely ensures that everyone understands and is ready for action when required. focus equally on what they are doing and how they are doing it.  Focusing purely on behaviour, without linking it to business process and performance leads to poorly focused development.  Focusing on processes and systems without considering behaviours leads to unsustainable or poorly realised improvements.    To get the most out of your change efforts, you need to ensure that people are supported in adopting the new processes and the new behaviours that underpin the change. This is what is defined in the how stage.

Why are we changing?

It might seem obvious to senior leader’s in the organisation why you are making changes to the business, but the further you are from the leadership perspective, the less clear those reason’s will be.  All change should start with the why.  Why do we need to change? Why is it important to change right now? Why do we believe that the change will be the making or breaking of this company / brand/ business unit? Why do we as leaders need to change as part of the process? 

If there is one area that undermines realising the benefits of change, it is not enough attention on the why.  You see we are hard wired to find reasons for our actions. In fact, there’s a ton of research that shows that if we don’t know the why for an action, we simply make one up.  The larger your employee base, the wider the spread of understanding of that why. If you have 10,000 employees, you don’t have one why for the change you have 10,000 whys.  Most of them competing, quite a few that are cynical and many that are just downright wrong. 

Unless the leaders spend time on the why – digging deep and understanding the real reasons for the change, the change efforts will be diluted or lost in the process. You will also be allowing resistance to be hard wired into your change efforts, as the why’s that some of your employees will come up with will be coloured by their experience of previous change efforts, previous leaders and previous ways of working. 

Resolving your why questions won’t make change a walk in the park, but it will allow for a consistent story and reason for the change to emerge.  It will diminish the possibility of competing stories and motives to emerge.  Perhaps most importantly, it will allow your people to have more trust in you as leaders, because they will perceive that you are telling it like it is.  Now that it something that most people will be prepared to follow.

If you are on the verge of making a big change in your organisation and are looking for some free impartial advice, book a free 15-minute spotlight session with one of our team here.

My retail therapy

I am not one who usually enjoys shopping.  When I need to buy something I like to do it with a quick surgical strike

1. Know what you want before entering store | 2. Locate item once inside store | 3. Purchase item | 4. Exit store.  No browsing, no chit chat with shop staff, no impulse purchases.

Spending time in shops that aren’t selling food or drink for on-site consumption isn’t really my thing.  Professionally as well, despite working in many industries, retail has not featured strongly in my CV.  However, recently I was fortunate to get involved in a change project with a very large retail organisation with thousands of stores across the United States.

As well as learning about some of the key processes in retail and meeting a variety of great people working in stores across the US, I got a first hand exposure to some of the forces currently impacting retailers.  There are new technologies are being introduced principally to increase efficiency and improve customer experience.  Items like headset comms links, tablets for floor staff to deal with customer queries, better systems to manage store shelf replenishment and then of course till-less check-out.  There is also the threat from on-line retail which for a store chain committed to being convenient and available in communities across the US requires a smart response.  What I saw were efforts to make better use of store space by simplifying the range of goods available and adding services, often in partnership with a 3^rd party, that would draw customers into the stores, as well as providing higher and/or more profitable income.  Parcel sending and pick-up is a good example of one such service that takes advantage of the growth of on line but will bring people into a community based store.

What this means for stores is that a lot of change is coming their way.  The challenge for retailers is how to get a workforce of mostly hourly paid store staff engaged and ready to make these changes successful.   What do leaders need to do with their teams to get them to view their time at work in the store not as a punch-card prison, where their real life is on hold until they can punch out, but as a place where they can make a positive difference to the lives of their customers and colleagues? How can that be achieved in a way that is authentic and grounded in the reality of the store’s day to day challenges?  How do you overcome cynicism and avoid a program being viewed as some kind of hand-holding group therapy? Meeting these challenges was a large part of my recent project in which I had to spend a lot of time in stores working with some great people. 

Whilst shopping still isn’t my favourite activity, the retail therapy this recent project provided me was a greater appreciation of the art and science that goes into running a store and probably most importantly a dose of empathy with store staff and their day to day challenges.