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“It’s the board’s job to be interested in safety, but it’s management’s job to be interesting when they talk about safety.” In this episode, Julie Garland McLellan shares excellent insights into how the board of directors can influence safety outcomes through intentionally observing where the work is performed day-to-day. To make certain everyone remains responsible for safety, leaders must get involved and show interest. Tune in as she emphasizes the importance of making safety real for the board by having authentic conversations that go beyond statistics in the boardroom.
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Hi and welcome to The Safety Guru. Today, I’m very excited to have with me Julie Garland McLellan, who is a professional director on boards and a consultant to boards and directors. And today, we’re going to have an interesting conversation on the importance of boards and the role they play around safety and safety culture. Julie, welcome to the show.
Thank you, Eric. The pleasure to be here.
Excellent. So first, let’s talk a little bit about the role of a board in driving safety, because we’ve had many guests here talk about the role of senior leaders and how to convey it, but really want to understand how in your mind a role can a board really influence safety outcomes and safety performance and what’s their duty around it?
Hmm. It’s interesting because I’m glad you used the word influence because boards are what is known as the men’s rhea in law or the ruling mind of the corporation. And they are also very fortunately for the company and very unfortunately for the directors, the people who will be punished for very bad corporate miss behaviours. So, the really interesting thing with companies is you can inject them not to do things you can in junked them that they must do things. You can find them, you can publish things about them, but you can’t take away their liberty. So, the one of the principal things with the board of directors is that they can go to jail so they have an unlimited personal liability for certain actions of the company. So, what that does, particularly around things like culture and safety, is it gives them a very strong incentive to push for or to influence for very high standards of performance and behavior. Doesn’t always work, but that’s the general theory. And the board, if you look at the board and you say, well, if management running the company, the board is making sure it’s run properly. And they have to decide what’s proper and what’s not.
Right. And so, it becomes really important for the board to have an understanding of how safety is being overseen, different practices, the culture in different locations. And it gets to me in terms of the first question that started coming into is how do we make sure we’ve got the right composition on board, the right key people that understand what questions to ask? Because if you’re skewed towards too many laws, for example, or too many people from an insurance sector, they may not have some of the operational knowledge of that’s behind a lot of the safety culture themes. Or in theory, a board is diverse. In theory, you manage your composition to ensure that you look at your strategic plan. You say, what skills do we need around that boardroom table to govern this plan going forwards? And then you recruit directors with those skills. That’s the theory, the practices that large shareholders might nominate a director. So where, for example, you have a company in Silicon Valley, you might find venture capital funds or putting directors on the board because they own a significant piece of the equity. And then maybe the founder and a couple of the senior executives on the board, and you have a board that perhaps does not have any idea about things like harassment and bullying or discrimination, which are all aspects of your safety culture. They might not have a view on operations, particularly if they’re outsourcing manufacturing or construction. So, whilst there is the theory of composition and there’s still the duty of the directors to make sure that everything is safe in practice, a lot of boards don’t have those skills around the table, and that’s when you have to make sure that you draw on management or consultants in order to ensure that everything’s being done as it should be.
Right. So first, maybe if we go into the composition, what would be the type of skills that ideally, you’d want to get to be able to inspect on inspect or influence around how an organization’s showing up on safety? And then let’s get afterwards into some of the themes around how do you augment if you don’t have the skill sets you really need within the board?
Oh, yeah, that’s a good way of passing the issue. The first thing to do is, is I think it’s not so much a skill as an attitude. Good directors are insatiably curious, so we really want to know what’s going on and why and how and who and when and where and how often. So, if you’ve got directors with that sort of mindset, as soon as safety becomes a topic for discussion, which it should quite frequently, they’re going to start asking questions. And management never want to look bad in front of the board. So, management are going to start providing the answers. So particularly in companies where you don’t have the skills-based composition, it’s very important that you get the attitude so that you are asking the right questions and finding out about it.
But would it be beneficial to have leaders on a board that have maybe experience with other operational. Higher risk industries. For example, if you have an if you are operating within a higher risk industry. So, they maybe have a more of a hands-on understanding of safety and how it gets applied.
Yeah. Ideally, you want somebody with a hands-on understanding of safety in whatever industry or company type. You’re on the board of. So, if you’re on the board of a bank, I’d be looking to have somebody who’d spend a lot of time as an executive in the bank, both being employed and employing other people, and who understood about how bullying and coercion and things like that happen. If you were lending money to infrastructure projects, I’d expect to have somebody who understood how to contract those things so that safety became a key clause in the contract, and your contractors were therefore able to be held to account for it. If you’re running a manufacturing plant, then I’d want to see at least one person who’s run a process line who understands that sort of manufacturing because you get a feel for the things you’ve done.
Right? Absolutely. And then having that questioning attitude of trying to understand and raise questions and check in in terms of the overall process. So, what you touched on a couple of themes such as the bullying theme, which is typically outside of what we talk about from it from a safety culture standpoint. Tell me about some of the broader themes that an organization should be looking at when it comes to safety, because safety used to be predominately around employee safety, which is the topic that we discuss on this podcast. But there’s other themes that are coming up around stress, burnout, public safety. There’s physical safety, there’s a cultural dimension. So, there’s a lot of different themes that a board should be asking about. Tell me a little bit about how you balance all those themes.
Yeah, it’s it really is that question of asking those terribly difficult what if questions that nobody’s yet got a good answer to. But you look, for example, at that terrible case of a lot of airlines, think of safety in terms of passenger safety, plane safety. And then we had that terrible disaster where it looks like a a pilot who was very stressed, committed suicide with a plane full of U.S. crew. So as soon as you become aware that something is possible, asking questions about it and ideally asking questions before it’s happened, because you’re starting to be alert to the possibility. So that’s one way of teasing out the themes. The other thing is that a lot of safety reporting, it’s the board’s job to be interested in safety, but it’s management’s job to be interesting when they talk about safety. And very often you look at the safety reports and it’s, oh, well, we carried out a review of our risk register as required under clause 16 of the delegations of authority. And we discovered that everything was down here, and the poor board are just stunned into silence by this.
So, my advice is you make it real. You take the directors either as a group or as individuals out to an operation. You walk them around, you show them the health and safety equipment that people are using, hopefully are using, not the stuff they should be using but aren’t. Yeah, because that happens, and you find these things out when you walk around because right near misses are only near-misses if somebody reports them. Absolutely. Otherwise, they’re disasters that just haven’t happened yet. And the last time we chatted, we talked about Charlie Moorcroft. If somebody had seen him walking around without his PPE and said, hey, Charlie, that’s not what we do around here. And if I see you out here like that again, if somebody had seen him leaving the engine running and said, hey, Charlie, we don’t do that. The whole story would never have happened. Right. Which would be great for Charlie. Possibly a little sadder for all the people who’ve improved as a result of hearing his story.
But you only find that stuff by going out and asking. And then the other thing is when you are in your boardroom having those conversations and getting very real. So, I’ll often look at a risk mitigation and I look at that and I think, well, that’s. That doesn’t make sense. If you do that, that’s not going to change the consequence. It’s not going to change the likelihood. Right. Just words in a square on a spreadsheet or a document table or a database. It’s not going to work. And reading through most of the time as a board, you want to be at high level. But then every so often, you want to dive in and just pick something up and say, right, we’re going to go deep on this at this meeting. Let’s have a look at this risk. Let’s have a look at that risk. What are the likely failure paths in our safety management system? And what have we done to put roadblocks on all those paths so that people don’t take them?
So, one thing that is interesting, you talked a little bit about going as a board to where the work gets performed, which I think is an important theme to really understand beyond the boardroom what’s actually happening. How are people showing up? What are some of the questions that the executive that you should be asking an executive or asking an employee during a site visit to really get a sense as to what’s happening because they may be stunned if they see a board of directors’ member walking through and may not give you the full story. So, what are some of the themes that perhaps you should be probing on?
Firstly, I look. To see if this looks like a happy and purposeful environment. If people look miserable or they look like they’re a bit aimless or they’re panic stricken at the other end, those are not safe places, to be sure. So, I would ask questions, just general tidiness, and cleanliness. One of my boards a while back was an operating coal mine company, and I would not join the board without going underground and seeing the operations because it’s just too dangerous. You know, the wrong thing goes wrong. You’ve lost an entire shift and that’s a lot of people. So, there I was. And of course, I didn’t want the men to know that I was a prospective company director because they behave differently when they think it’s a direction. So right. This unannounced or this unexpected woman turned up with instructions from head office that she was to be safety inducted and taken down the mine. So fair enough. I went through my induction. Everybody was very polite. I learned for the 20,000 time how to use a rebreather and how to switch my light on and off and all that stuff, which is vitally important.
And after a three-hour safety induction, I was okay to go down the mine with an experienced operator who knew the safety hazards at that time, or at least the known ones. You never know the unknown ones, but at least get as many as you can into the known arena. And I wasn’t allowed out of line of sight with this person. So, there I was down the mine with my mind, looking around, having a chat to a few of the people. And one of the old guys looked at me and everyone ran up to the minder and said, Who’s the little fella? Because they all know everybody underground well by sight. Right? And I was a lot smaller than they were expecting and my minder wouldn’t like it. So, woman from head office and eventually an older person who was more confident said so. Why are you here on the ground? And I said, well, I just wanted to see if it was a clean and tidy site. He said, it’s a coal mine.
And I said, Yeah, but it’s a very clean and tidy coal mine. There’s no crack in the corners. There are no trip hazards in the in the walking passages. The roadways are clear. It’s well signposted. You’ve got the telltale. So, you know, if you’re going deeper or not, the fans, the ventilation, everything, everything looks good. And well, of course, that’s our job. And this is a good mine. When they see keeping that standard of operation as just. Well, that’s the way we do things. I was very happy to join the board. Fast forward a few years, the company had been doing very well. The board went on a site visit, and they knew it was the board and we came for our safety induction and the new safety manager said, Oh. You guys are all directors. You’ve all been underground before. Just find here that you’ve done the induction, and we’ll get going.
Yeah, he. He was gone very quickly. And again, that standard you accept is the standard that you’ve set for everybody else. So, when somebody does something like that and you think, well, if they let the directors under. They’ll get somebody who’s come from another mind site. They might let you get out of sight. And it is easy to get lost underground, especially if anything goes wrong when it all goes dark. So yeah, we were we were really worried by that person. And we spent a lot of time talking to management about. How did it ever be okay for someone to think they could do that? Right. What have you guys been doing that gave that guy license to do that? Hmm. And those are tough conversations to have with your senior mine manager and your technical manager. But you have to have them because you’ve got to be serious.
Can’t be allowed.
And I think that’s really important is it’s one thing to look at spreadsheets. It’s one thing to look at PowerPoint decks, but to actually experience how the work is performed. That’s where you see the nuances in terms of it. Are the safety practices and policies respected? Is complacency setting in? How is the organization really managing some of those risks? And so, the other part I know when we first connected, there’s a difference between influencing and getting hands on. Tell me a little bit about the difference in terms of how the role of the board, when is it too much, when you’re going too far versus when is it not enough in terms of the level of inspection?
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I think the first thing to mention is. In America. In some states, you have this thing called the law of depraved indifference, which is if you see somebody in a situation that’s threatening and you do nothing, you’re actually guilty of a crime yourself because you were indifferent to their suffering. We don’t have anything like that in Australia, which is where I’m based, but I travel around the world, and I like that law. I think that’s a very useful thing. So, the first thing is if you see something that is clearly unsafe. You have a duty to speak out and it doesn’t matter if it’s your job or not.
That sort of thing is everybody’s job. If you see something. And this is usually. More difficult. That could be an issue. And you want to investigate. That’s where the curiosity and the practical application of your knowledge has to kick in. So, it’s that question. I’m very keen on being efficient. So are most of the people working for us. But efficiency often comes with shortcuts and it efficient for a while until something goes wrong. So, understanding the process and just asking questions about, well, how do you handle this? How do you make sure that you’re still having your toolbox talks at 6:00 in the morning, in the middle of winter when it’s freezing cold, and everybody just wants to get going? How do you make sure they get through the full agenda and treat it seriously? And the answer is, usually somebody senior must go every so often and show interest whatever interests. The boss fascinates the workers.
Absolutely. Showing that interest, getting involved. But as a board, you shouldn’t really be doing or enforcing or even setting the rules lower down. You should be delegating to the CEO who should be delegating to the line managers who should be supported by a properly empowered and trained risk and safety manager. I don’t like saying that the risk and safety manager is responsible because they’re not everybody’s responsible. They’re responsible for reporting and having the systems and processes for training and managing. But everybody else is responsible for applying those processes. So, there’s a lot of delegation, but delegation is not the same as abdication. If you delegate, you still must check that what you delegated got done. And so, when you talk about governance, boards are all about causing stuff to happen and then controlling and making sure that it did happen. And it happened in the right way. And it happened at the right speed. So, it’s that balance of making stuff happen and then reining it in so that it happens correctly.
Yeah, absolutely. So, you touched on global businesses, multiple locations. What are some of the considerations around some of those nuances that happen from country to country? Because it’s one thing to look at a business that’s only in one country, but when you’re around the world, multiple different location, multiple different cultures. What are some of the things that that a board member should be looking for in those instances?
Yeah. Again, I think it’s so important to get out there and to understand the culture of the company and the culture of the country in which its operating. Because sometimes things that look strange. For example, we had one of my previous businesses, we had steel mills across Asia, and we had a steel mill that had a pretty good safety record and others that weren’t quite so good. And yet when we went to the steel mill with the good safety record, they had English language posters on the walls about safety. You know, keep your back straight, bend your knees. All those simple but with English. And the others had translated theirs. And I said to the person who was taking us around, I said, this is very strange. Why are the posters in English the men can’t read the English? And he called the guy over and he said, all, you know, this person speaks a bit of English. And he said, so. Can you tell this lady the story of this picture?
Sure. They are whenever a new poster came out at their toolbox talk, they would give the person in the poster a name and they would tell you the story of what they did and how they got injured and how important it was to protect yourself. And this is what you have to do. And this person wants you to do these things to be safe. And so, every poster to them was a memory of a story. And they had this lovely culture of telling stories to pass on knowledge. So, they remembered stories. In fact, people do remember stories. We love stories. So, yeah, it’s part of being human. So, this was a great way of dealing with things. I had another case with the same company. We purchased a company in Austria, in America, and their safety statistics were excellent. But when we looked at their safety maturity, it was poor. They were probably between level one and two. So, between ad hoc and emerging. And they had holes in their gangways.
They had safety rails with gaps. They had all sorts of to us ask terrible things. Right. And when I asked them about their safety, they said, you, you Australians, you’re so dangerous. You just never look where you’re going. And again, their safety was very socialized in. Watch out for this. Look out for that. Take care of each other. Whereas ours was much more systematized and process driven, and installation driven. And so, yeah, our people were a little bit lazy about looking out for themselves. And so, we then had a series of conversations with some of the senior staff about how interesting this was and that they wanted to share this story with their staff, because even in a very safe place, it’s possible to fall over and hurt yourself. It’s possible to pursue something. So, yeah, that was another good one. But there’s no substitute for governance by wandering about, particularly when it comes to safety and culture and seeing how people behave and what they do. It’s just fundamental.
And I think that’s really the core message I’m hearing from you is you must go out and see. You must observe. You have to ask questions to see where the rubber hits the road. What’s happening.
Yep. And you have to you have to get very real. You can’t just stop at statistics and theories. You have to say, well, how would this work in practice? Would I be able to do this? If that was me or my family down there working, would I feel happy? And the other thing is you do understand the business model. So, if you are, for example. Letting a contract to somebody to manufacture so many pieces of something and they’re doing it incredibly cheaply. And, you know, well, the oil price is high, the electricity price is high, their equipment’s quite new, so their capital costs and depreciation are probably quite high. How are they offering me this low price? Sure. Where did this price come from? What corners have they can’t in order to win the competitive bid? Because you usually let your business to the person who’s cheapest. Right. And very often that comes at a cost that is hidden until it comes home to roost. And as directors, we’re responsible for our global supply chains.
We’re responsible for the standards up and down those supply chains. And we’re responsible for the safety of our people.
Absolutely. So, Julie, thank you very much for coming on the podcast. Really appreciate you sharing some insights on this important topic of the role of a board in influencing safety outcomes. If somebody wanted to get in touch with you, how can they do this?
Probably the easiest way is to look for me on LinkedIn. I’m the only Julie Garland McLellan on LinkedIn, strangely enough. But I do have a website. It’s called Director’s Dilemma. So just www. Director’s dilemma.com. And I do have a free monthly newsletter which talks about real practical issues, not just safety, but across the whole gamut of things that can appear in the boardroom from the point of view of the directors to whom those issues suddenly arise.
Well, thank you very much for coming on the show.
Thank you, Eric.
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ABOUT THE GUEST
Julie Garland McLellan is one of very few women to have commenced a board career with a single not-for-profit organization and built it to a portfolio of boards, including chairing an ASX listed company. Julie has chaired boards and committees and is respected for her practical experience. A frequent speaker at conferences, Julie is also a prized reference for journalists and has featured in ABC News’ Nightly Business Report, The Business Programme, The Australian Financial Review, The Financial Times (Britain), Company Director Journal, Keeping Good Companies, and other quality publications.
Julie has also more than 20 years’ experience delivering education programs for the Australian Institute of Company Directors and has written more than 14 courses for that institute. She has also developed and delivered director education for the National Association of Corporate Directors (NACD), Director Institute, Governance Institute of Australia, College of Laws, University of Sydney, CPA Australia, The Taiwan Corporate Governance Association, The Oman Centre for Corporate Governance and Sustainability, and Better Boards Ltd.
In addition to her work developing director education Julie has continued to research and study directorship and most recently completed a course at Wharton Business School at the University of Pennsylvania. Julie is the author of several reference books for company directors including two that have been translated into Mandarin and are the global best sellers in their topic category.
Importantly, Julie is a qualified board reviewer and has conducted numerous reviews of boards, committees, and individual chairs and directors over the past 17 years. She has also won numerous awards including (twice) the Australian Institute of Company Directors Faculty award for contribution and excellence in governance education, the CPA President’s Award for Service and Excellence in Governance, The I E Business School Epic Award for Women Inspiring Women, and the Australian Business Award for Specialised Services in Board Advisory and Governance.
For more information: https://www.directorsdilemma.com/