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Managing Global Safety: The Power of One

Why are a growing number of companies with international operations
adopting corporate-wide global health and safety management systems?

by James L. Nash

Global companies face global safety risks. That's one of the lessons learned after the 1984 disaster in Bhopal, India, affected Union Carbide's worldwide operations.

In part because of this global risk, but for a variety of other reasons as well, health and safety professionals with international experience say one of the most important recent trends sweeping through successful multinational companies is the shift to a single safety management system that applies to all their operations throughout the world. While the example of Bhopal revealed the risks of safety failures, experts emphasize that taking a global approach to safety and health isn't only about avoiding problems: It also opens up a wealth of opportunities to improve performance.

A Singular Trend

Boston-based Liberty Mutual, an insurance provider that also offers loss prevention consulting for Fortune 1,000 companies, recently held a meeting with 15 of its customers. "We wanted to understand their needs and talk about their goals," explains Jim Johnson, vice president of Liberty's national market business unit. "Out of that group, all but three have operations outside the U.S. and these other 12 were all beginning to pay more attention to a global program for managing safety and health."

Seiji Machida, coordinator of the occupational safety cluster at the International Labor Organization (ILO) in Geneva, Switzerland, confirms that there is a trend toward a single occupational safety and health management system at many organizations and that this is an appropriate way forward. "Multinationals should have a policy applicable to all operations, regardless of the site," asserts Machida. "Such global systems don't have to be detailed, but there should be a framework or a set of principles."

Johnson believes companies are shifting away from a model in which safety and health are managed independently within subsidiaries or business groups. This loss of autonomy in the move to a more centralized management structure can be an initial hurdle. "It is a challenge to get all the stakeholders to the table and reach agreement," says Johnson. Yet, the advantages of global safety management are often powerful enough to overcome these organizational obstacles.

Why Do It?

The speed of global communication is one reason why global companies face global risks, according to Kathy Seabrook, president of Global Solutions Inc., a Mendham, N.J., consulting company specializing in global health and safety management systems for multinational companies.

"If you have a health and safety disaster, a television crew can be the first ones on site, and that information can go around the world in seconds," says Seabrook. Managing risk, therefore, really involves tying environmental, health and safety risk to financial risk.

"Union Carbide is the perfect example," continues Seabrook. "After Bhopal, the company lost control of its destiny."

While events on the scale of Bhopal are rare, many companies have discovered the way they treat their workers anywhere on the planet can pose a risk to their corporate reputation.

"On an ethical basis, it doesn't make sense to do one thing in one country and something different elsewhere," says Zack Mansdorf, Ph.D., senior vice president for safety, health and environment at L'Oreal North America and Worldwide, a cosmetics company with operations in more than 200 countries that is headquartered in Paris. "We're going to do it because it's the right thing to do." Mansdorf also notes the financial savings and morale and productivity improvements that always result from safety improvements.

"In addition, the business argument is that for some companies, brand is everything." This rationale is especially powerful for consumer companies such as L'Oreal.

A global system also offers many operational efficiencies, according to James Forsman, vice president and general manager of DuPont Safety Resources, a safety consulting business unit of the global chemical company based in Wilmington, Del. "The advantages are profound: You have a single set of standards now, as opposed to multiple standards, say one for Brazil, one for China and one for the U.S."

The result is a far simpler management process. For example, it is easier to use safety observations, track leading indicators and conduct training with a single global set of standards. Also, companies often transfer safety and operations managers from country to country; having a global system reduces training costs and the confusion that can result from having to learn a new way of doing things after each move.

Getting Italians to Drive Safely

If the advantages of managing safety globally are powerful, getting there is not as easy as snapping your fingers. Many EHS professionals speak of it as an "evolutionary process" that can take years.

Seabrook makes a living helping companies through the transition. "Companies have to determine what their risk is and what their management goals are," says Seabrook. "That's the only way to get your hands around the concept." But, she adds, digging down into that manufacturing facility in China or Peru and figuring out the risks there is also the hardest thing for a company to do.

Mansdorf identifies another critical challenge in setting up a global management system. "How will you communicate your minimum performance requirements and how are you going to ensure this takes place?" asks Mansdorf. "It typically takes quite a number of years to establish a system and to educate people."

Mansdorf and other experts say the biggest challenge for a global safety program also is the crucial ingredient for success: developing a global network of safety and health professionals.

"For me, the most important challenge is to set up an efficient network of people in environment, health and safety who all speak the same language, not literally but philosophically," says Francois Colpart, deputy director, environment, health and safety at Compagnie de Saint-Gobain. With more than 180,000 employees and operations in 48 countries, Paris-based Saint-Gobain produces construction products, packaging, plastics and flat glass.

"We have the policy objectives, and then it's very important to diffuse it, to train the different people in charge of implementation, and so on," explains Colpart. This means, in part, training auditors in a specific audit method that can be used throughout the world, but that is adaptable to local conditions.

Understanding the local culture and how it affects safety is critical for success – and not always easy. "Take Italy, where drivers are known for driving too fast," says Mansdorf. "When they get in your factory and drive a forklift, you expect them to behave in a different fashion."

It can be hard to find the right people in the right places with the right skills, according to Johnson, and this sometimes requires difficult choices. What's more important: knowing the local culture and language, or safety and health expertise? "When we talk to our customers about health, they believe it's easier to teach someone the company global standards than the local mores," says Johnson.

Hazard vs. Risk

Perhaps the deepest challenge confronting companies with a global safety and health management system, says Colpart, is the tension between allowing for cultural differences and maintaining a common corporate philosophy and assessment tool. One way the balancing act between unity and diversity can play itself out is whether to use general guidelines or more concrete corporate standards (see sidebar).

To illustrate the difficulty of maintaining a common corporate philosophy, Colpart and Seabrook point to a fundamental difference between how European and American companies approach safety and health.

"In all European operations you must perform risk assessments, whereas in the U.S. for the most part you look at hazards," says Seabrook. "The concept of risk includes not only hazards, but the likelihood the hazards will occur."

The European risk approach can lead companies to address issues that American companies don't even recognize as workplace injuries or illnesses – for example, such psycho-social risks as stress at work or bullying. "The risk-hazard distinction is huge and it has lots of implications," says Seabrook.

One implication of using the risk approach is that it allows companies to prioritize where they will spend their money to improve the working environment, according to Henry Jones, director of health, safety and environment at the Saint-Gobain Corp., the holding company for the U.S. and Canadian businesses of the international organization.

Whether they use the risk or the hazard framework, more and more international organizations are deciding they want a global safety management system.

Asked if Liberty Mutual is encouraging its clients to move in this direction, Johnson replies, "Yes, we do. But that's where they're going anyway – they don't need much encouragement."

Sidebar: Guidelines or Standards: What Are the Elements of a Global OSH System?

"When some people talk about global management, they mean ILO [International Labor Organization] Guidelines; others mean a set of corporate requirements or standards," explains L'Oreal's Zack Mansdorf. While L'Oreal has opted for a set of performance requirements, Mansdorf believe most major companies use guidelines with perhaps a few absolute rules that apply worldwide.

After the successful introduction in the early 1990s of the systems approach to management by the International Organization for Standardization (ISO) through its series on Quality Management (ISO 9000 series) and Environmental Management (14000 series), there was a demand for the same approach in managing occupational safety and health at the organizational level.

In 1999, the British Standards Institution (BSI), an ISO member, began work on an assessment specification for Occupational Health and Safety Management Systems, but because this effort competed with the ILO, it provoked some opposition and the standards haven't won official ISO approval. Still, the BSI standards (OHSAS 18001 and 18002) are now available and some companies are using them. More information on the BSI standards is available online at: www.bsi-global.com/Global/OHSAS18001.xalter .

The ILO Guidelines on occupational safety and health management systems (ILO-OSH 2001) were adopted at a tripartite meeting of experts in April 2001. These guidelines are more flexible than an ISO standard, because "we have to respect existing local approaches," according to ILO safety expert Seiji Machida.

"In general, this kind of management system approach is voluntary, but some countries require it," says Machida. "We leave it up to each government how they want to use it, but we encourage national authorities to develop national guidelines based on the ILO Guidelines, because it should be part of a national strategy to improve safety and health." Some nations, such as China, have adopted the ILO Guidelines and are applying them in many companies.

Asked to name the elements of an effective global safety system, Machida mentions transparency and worker participation. He explains that one example of "transparency" is making all health and safety standards available to worker representatives and other competent authorities.

"Motivating local workers to contribute actively to safety and health is important – but a big challenge," according to Machida. The basic education of workers in many countries may be limited, as well as their understanding of safety and prevention. While many multinational organizations have safety committees, Machida points out that in some cases these committees have no worker representatives – a good sign that worker participation in safety is limited at those locations.

The ILO Guidelines can be downloaded at:

www.ilo.org/public/english/protection/safework/managmnt/guide.htm .

This article was reprinted with permission from Occupational Hazards, Copyright 2005 by Penton Media Inc., www.occupationalhazards.com.