Transforming health and safety in energy and utilities

Recent regulatory, economic and natural disaster disruptions have demonstrated that health, safety and wellbeing (HSW) culture in energy and utilities organisations needs to be more agile, focused, simpler and integrated into the way business is done.

In brief

• Traditional HSW approaches slow down organisations’ ability to respond with innovation and agility to the fundamental forces reshaping the sector.
• HSW has a unique opportunity to make a giant leap forward by transforming the function’s practices to be more practical and better aligned to the operations and risk profile of each organisation.
  
• Whether energy and utilities can successfully move on from old, fear-based HSW approaches to a more progressive, simple, and agile approach will depend on whether leaders are ready to embrace the change.

Health, safety and wellbeing (HSW) has always been a priority for energy and utilities. The work to generate, transmit and distribute electricity, gas, and water safely into homes and businesses comes with some significant risks, and mistakes can have terrible consequences for workers and communities.

Compounded by complex regulation, this strong aversion to risk has created a heavy burden. Traditional HSW approaches slow down organisations’ ability to respond with innovation and agility to the fundamental forces reshaping the sector – digitalisation, decarbonisation and decentralisation.

Recent disruption, including major regulatory changes, natural disasters and, of course, the COVID-19 pandemic, highlighted the inadequacy of current approaches to HSW and removed many perceived barriers to transforming it. The pandemic acted as a powerful catalyst to finally address longstanding challenges, including too much bureaucracy, an over-emphasis on compliance, and a fear-based culture. This all pointed to the need for a better path forward for HSW, centred around agility and with a focus on what is critical.

Four foundational elements of a new HSW culture

The cognitive performance of workers is fast becoming a competitive advantage and will be critical if energy and utilities are to successfully navigate the challenges of a decarbonised, decentralised and digitised operating environment. Those organisations that build a HSW framework that keeps workers healthy while empowering their innovation and creativity can capture an advantage.

EY believes the way forward is a holistic HSW strategy that considers the interaction of humans and systems. And the interviews with HSW leaders, together with EY research and experience, point to four key elements as the foundation for this shift:

• Integration: Michael Cornish, SA Power Network’s Head of Health, Safety and Environment put it well when he told us, “We all know that we need to find ways to integrate HSW in everyday business activity – in every part of the organisation – but we also need to focus on how people and systems work together”. HSW needs a seat at the table during critical strategic discussions, acting as an enabler, not a barrier to achieving organisational goals. In this way, HSW can become a change agent, helping organisations deliver objectives while improving HSW outcomes.
  
  Considerations:
  
  • How does HSW factor into organisational strategic planning and decision making (including joint ventures, subcontractor evaluation, etc.)?
  • How are roles and responsibilities balanced between people and culture and HSW professionals to holistically manage psychosocial and physical risk?
  • How is HSW incorporated into change management processes within the organisation?
• Simplicity: HSW processes in energy and utilities have become overly complicated and heavily documented in the mistaken belief that effective HSW must be complex. The evidence tells us the opposite is true – HSW processes and standards must be simplified if workers are to understand and engage with them. Encouragingly, the message is getting through, and some organisations, including TasNetworks, are seeing the results of simplified HSW systems that reduce both the administration and cognitive load for employees. TasNetwork’s Head of Health, Safety, Environment & Quality, Ed Chetcuti, explains: “The recipe for success is having good systems that are integrated, risks are controlled end-to-end and it’s truly understood, simplified, concise and clear.” The challenge for many business leaders as they manage this shift from problematic blind compliance to a value driven HSW system will be keeping simplicity front of mind.
  
  Considerations:
  
  • Is the HSW framework addressing the current needs of the organisation?
  • How are HSW audit and monitoring processes utilised to demonstrate effectiveness and opportunities to improve?
  • From an employee’s first day in the organisation to their last, how are team members equipped with the knowledge to manage HSW risks and opportunities? Is it clear what critical information they need to know if faced with an unforeseen risk?
  • How is HSW information shared throughout the organisation, including up and down the organisational structure?How do you know whether information channels are effective in communicating the intended message?
• Focus: During the COVID-19 pandemic, HSW leaders became well-practiced in delivering critical, relevant, just-in-time information to help drive important decisions. Andy Shaw, Head of Safety, Environment Quality and Training at Western Power says the COVID-19 pandemic “demanded business leaders have a great level of focus on what is most critical, meaning we were able to expedite processes which would normally be tied up in red tape.” Now, maintaining this focused and fit-for-purpose approach to HSW can move the function beyond compliance, allowing it to add innovation. Leaders will need to keep sight of what’s really important, avoiding the distraction of managing every non-critical risk, which is proven to be ineffective in advancing HSW performance. Digital technology and real-time insights can help focus on areas that add value.
  
  Considerations:
  
  • How does HSW maintain visibility over current and emerging challenges both internal and external to the organisation?
  • How do existing HSW performance metrics (i.e., lead indicators) align to strategic, tactical, and operational plans?
  • How well are digital technologies utilised to access current decision-making information?
• Agility: Agility is a must have for energy and utility companies navigating a fast-moving energy transition and a more uncertain world. The COVID-19 pandemic narrowed the time available for consultation between identifying, assessing, and controlling risks, showing businesses that it was possible to respond faster to both disruption and opportunities, without compromising safety. “Now”, says Tony Dennis, Head of Safety and Wellbeing at Water Corporation, “the challenge is to make agility our normal way of operating. Data and technology, particularly predictive analytics, can help, but should be supported by traditional communication and engagement to help workers trust in this new way of working.” At a time when attracting and retaining talent is a priority, creating an agile, empowering workplace can be a smart strategy that also drives better critical risk management.
  
  Considerations:
  
  • How are decisions made on HSW matters? What needs to change to improve the quality and cadence of decisions?
  • How are people within the organisation engaged to collaborate on the challenges of today and tomorrow? How does this feedback translate into proactive initiatives and strategic planning?
  • What mechanism is in place to evaluate the current / future state “fit” of the HSW framework?

Better business performance, compliance and licence to operate

The challenge for many energy and utility organisations is how to get started, to drive real transformation in HSW that enables improved social, legal and commercial impact. EY HSW Tx model is designed with practicality in mind and grounded in proven methods centred around seven strategic levers and four distinct action phases:

It’s a future-ready model that drives benefits across all aspects of the business:

Better business performance: Reducing people’s administrative burden and cognitive load gives them the time and mental capacity to focus on value-adding work that drives commercial advantage. Many energy and utilities are finding that a simplified approach to HSW can unlock elusive productivity gains even as operating costs soar.

Stronger compliance: A focus on managing critical risks and integrating HSW with the business increases regulatory coverage, reducing workers’ compensation liability, legal exposure and reputational damage. It gives organisations the confidence to push forward with new initiatives, such as those in hydrogen or electric vehicles, all while knowing that key risks are covered.

Enhanced licence to operate: A proactive, people-centred approach to HSW improves employee health, safety and wellbeing, giving companies an edge in the fight for talent and boosting reputation among local and broader communities.

Are energy and utilities leaders ready to change or stuck in the past?

Whether energy and utilities can successfully move on from old, fear-based HSW approaches to a more progressive, simple and agile approach will depend on whether leaders are ready to embrace the change.

We face a real risk that, across the sector, some leaders will fail to take on the lessons learned during the COVID-19 pandemic and other recent disruption, instead slipping back into less flexible habits.

At our core, humans are creatures of habit and revert to default behaviours over time. The default approach to HSW within the energy and utilities sector is characterised by restriction and rigidity (i.e., the “command and control” approach). Maintaining a nimbler approach demonstrated during the pandemic, will depend on strong, transformational leaders; leaders that inspire and promote innovation, continuous improvement and empower workers to make effective decisions, even in ambiguous circumstances. This approach is very different to traditional ideas of leadership within the sector; it will require changes not only within individual leaders, but a major shift in organisational culture.

Embracing a better way forward

It can be overwhelming to shake up the status quo in an industry as risk averse as energy and utilities. However, the world has changed. For all its challenges, the recent disruption across almost all aspects of life has also offered a glimpse into a better way of doing things, showing energy and utility organisations the benefits of a new approach to HSW. This is an opportunity to embrace, not to fear. Building an agile, simple, and flexible approach to keeping workers safe and well, while giving them the confidence and the freedom to be more innovative, can unlock productivity gains and create a positive workplace culture that is fast becoming a competitive advantage.