Getting Below Zero - The Leader's Role in Driving World Class Operational Excellence

By Rhonda Zygocki, Former Vice President, Health, Environment and Safety
ChevronTexaco Corporation

International Health, Safety and Environment Conference

Calgary, Canada, March 30, 2004

It's always great to come home to Canada, and in particular Calgary, where I started my career 24 years ago with Chevron Canada Resources. And for me, the timing of this panel couldn't be better.

Last week, ChevronTexaco leaders and Health, Environment and Safety (HES) professionals from all over the world attended our annual Operational Excellence (OE) Forum. The theme of that event was "Building OE Leadership Capability." And I am pleased to be able to share with you today how we are doing just that.

Three years ago, ChevronTexaco put a clear stake in the ground – to deliver operational excellence. To us that means achieving world class performance through the systematic management of safety, health, environment, reliability and efficiency. A tall order. A step change from where we were in results, in processes and in culture.

At the time I was in charge of our upstream operations in Australia. We were getting ready to celebrate our first official day as a new company – ChevronTexaco. Instead, we observed that first day with a moment of silence.

Six hours before the official start of the new company, one of our contractor companies experienced a fatality. It was one of the saddest days I have ever experienced as a leader. The seriousness of our new OE commitment became all too real.

And after 20 years in the business, I knew my journey – and in some respects the company's journey – to true operational excellence was just beginning. It was clear we needed to think and act differently and could not just stay the course.

It has been three years since our OE journey was launched and it is far from over. In three years we have seen pockets of excellence emerge across our world and best practice sharing between units rise to unprecedented levels. In three years we have improved work force safety by 40 percent, improved spills by 25 percent and in 2003 recognized 26 units for operating incident free. And in three years we have seen units think beyond the goal of world class to the goal of zero – and leaders understand that to get to zero one must think and act below zero. So what changed?

At ChevronTexaco, OE is not merely something we do in our business – it is our business. And we firmly believe strong business performance starts with strong HES performance.

Our "4+1" strategies define for us the critical drivers of business success. You can see that we have Operational Excellence, Cost Reduction and Capital Stewardship as the foundation for the fourth strategy, Profitable Growth. Underlying them all is our "Plus 1" strategy – Organizational Capability, which focuses on building capability to deliver top performance in each of the four areas.

OE is the first 4+1 strategy and this is not by accident. Its importance precedes all others. And this helps answer the commonly asked question "What takes priority – production, cost or safety?"

But setting goals to be world class is the easy part. Building the capability to achieve the goal is where the real work begins.

Under 4+1 we define organizational capability as the combination of people, process and culture. So how does this work for OE?

  • We have a process for the systematic management of OE called the Operational Excellence Management System (OEMS). Business unit champions and corporate consultants support the implementation.
  • We build skill in OE by certifying leaders and employees through mandated training and we formally assess leaders and their units as to how well they doing.
  • We promote learning and sharing through a number OE networks and forums. Web based tools provide 24/7 collaboration and repositories for alerts and best practices. The best of the best practices are shared monthly with the CEO and his reports right down through the entire organization.
  • Recognition and accountability are highly visible. We recognized 26 different units last year for incident free operations. As for accountability, HES performance represents up to 30 percent of operating unit-based employee bonuses – and is key in senior management incentive.
  • We extend expectations we have of ourselves to our partners and contractors.

We believe capability will not be built unless all six elements are working and working together. You can't build capability with process alone. Capability is simply not training – you must have a great process, dynamic leadership, competent workforce, learning systems and clear accountability – all aligned.

Let's dig deeper into areas that define leadership accountability.

The process at the heart of our OE strategy is our OEMS. On the surface it looks quite traditional: a classic management system approach focused around three elements – leadership accountability, a Management System Process and a number of HES and reliability areas – each element having required expectations; each fully audited. But what sets this system apart is the way we built in leadership accountability.

To define leadership accountability, we explored theories, engaged experts, examined various cultural assessments and studied the existing pockets of excellence within the company. And we boiled it all down to the four things we would hold leaders accountable for:

  • Delivering a compelling OE vision, objectives and results.
  • Personally leading the Management System Process.
  • Visible, credible and competent commitment.
  • Demonstrating care and concern through personal engagement of 100 percent of the workforce.

These expectations cover vision, process, behaviors and performance. When leaders do these four things consistently, sincerely and frequently, we believe a world class culture can emerge. They focus leaders on leading indicators, getting ahead of at-risk situations in their operations and effectively focusing on "getting below the zero incident line."

Today throughout our company these four expectations are redefining what leaders are expected to do to drive operational excellence. To support them we are:

  • Continuously seeking and sharing internal best practices in leadership action.
  • Certifying leaders through mandatory training in OE.
  • Providing on-demand personal coaching of leaders in everything from conducting site visits to doing safety observations to methods for showing genuine care.
  • Assessing and rating leader performance in OE and identifying gaps in role and behaviors.

We will audit the strength of a leader's vision, their frequency and quality of site visits and their leadership of the MSP. And we will do this with the same intensity and seriousness as a lock-out tag-out or maintenance and inspection process.

When we do all of these things right, they will build on each other to achieve our ultimate objective – zero incidents. Let me illustrate.

Vision and Accountability. This was not always the case, but it is now common place to see targets of zero and hear leaders communicate with conviction the possibility and expectation of zero incidents. And there is clear accountability to deliver results towards that zero goal.

An example of a simple yet compelling vision comes from our refinery in El Segundo, near Los Angeles, California, where they have just surpassed 1.5 million hours injury free. They embraced a vision of "0-0-88.5-100". That means zero injuries, zero environmental incidents, world class refinery utilization and 100 percent employee engagement. But they did not just set a vision; every leader and employee lived that vision, otherwise if setting a vision is all you do, you will not get far. Leaders need to do more.

The second expectation of leaders is to personally lead the MSP. All of our leaders are accountable for following our MSP. Granted, our process is not unique, but it's a necessary and proven component of achieving incident-free operations and must be done well.

Our management system requires building OE into the annual business plans. This means:

  • Gap assessments are conducted, and actions to close the gaps and are incorporated into business plans.
  • Progress is regularly reviewed locally and at the corporation.

But of course there is more leaders must do to operate with excellence. The third expectation is VISIBLE leadership – the single biggest influence on incident-free performance and culture. Under visibility, our expectations for leaders include:

  • Frequent visits to their operations to reinforce OE objectives and test effectiveness of the processes.
  • Personally spot workplace hazards and conduct observations.
  • Active follow-through on incident investigations.

They say leadership starts at the top and in our company nobody is more visible on OE than our CEO. Dave O'Reilly is a frequent visitor to our operations and is quite adept at spotting at-risk situations. He has been known to probe a confined space permit and check inspection records for safety equipment. His monthly letter to employees always reinforces safety and he expects all executives to be certified in OE.

All fatalities result in a face to face review between the unit head and our CEO. He sets the example for every leader in our company. But while leadership starts at the top, it cannot end at the top. As we move through the organization, we expect the frequency and depth of visibility to increase, with the highest frequency of visible leadership coming from first line supervisors.

I often ask first line supervisors their expectations of visible leadership from their senior management. Whatever they answer, I suggest they should be doing 3 to 4 times as much.

The reason I use the simple example is to illustrate that to get on top in this game you must act "over the top," go above and beyond what seems normal and necessary. So as companies we must challenge leaders to think and act over the top, or below zero; whichever way you look at it. There is no way around it. Four times the visibility means:

  • Four times the site visits of the average leader.
  • Four times the recognition of positive safety behaviours.
  • Four times the participation in behaviour-based safety programs.
  • Four times the reinforcement of use of safe work procedures.
  • And to dig four times deeper to the root causes of incidents and do four times the follow-up to ensure unsafe conditions are eliminated.

It is only then that leadership becomes truly and unmistakably visible. But we are not done. There is one more role showing sincere care and concern and engaging 100 percent of employees.

This is all about making safety personal. It is about reaching everyone and showing care and concern that is so deep and sincere that it is felt by the organization. This happens when we:

  • Ask employees to examine for themselves why it is important to work safe.
  • Ask questions that express care and concern.
  • Take employee concerns seriously and follow up with action.
  • Stop work and reinforce employee authority to stop work.
  • Set an expectation for every employee to be involved in OE.

At our company, this approach has been tested in our major capital projects group and with convincing results. We have used this approach on 17 projects and we have achieved total recordable incident rates ranging from 0.06 to 0.09 in over 26 million hours. This approach puts safety ahead of all other priorities and focuses on people not statistics, requiring leaders to show genuine commitment for the safety of all workers.

It is our objective to build the capability to fire on all four cylinders in all operations worldwide. Only then will true OE emerge. None of the four can achieve this alone. No partial combination. Only all four together.

Extraordinary goals – like operating incident free – takes extraordinary effort and to do this we must create extraordinary people. In ChevronTexaco we are recognizing the power of leadership and around the world are retooling leaders in everything from the basics in safety to how to truly lead an incident free culture.

We are proud of our progress, but not satisfied. Any incident, no matter how small, is not acceptable. So we continue on our OE journey and raise the bar on HES everywhere we work.

Thank you.

Updated: March 2004