How Do You Change to a Culture of Compliance?

Thursday, August 23, 2012

Thomas Fox

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As a compliance practitioner, how often have your heard something along the lines of “But we’ve always done it that way” or [my favorite] “That’s the way those people do business”?

As a recovering trial lawyer, I spent the first 18 years of my career largely defending companies which were sued for catastrophic injury claims.

From this vantage point, I saw the cost to corporations in the form of jury awards and insurance premiums that they paid for commercial general insurance coverage. A large part of it was due to the fact that safety was not mission critical to most of the companies that I represented.

However, this began to change in the late 1980s/early 1990s. Companies began to make clear, in a very public manner that safety was the No. 1 priority for them. One of the most public changes was at Exxon after the Exxon Valdez oil spill, where senior management made it clear that as closely as Exxon’s management watched costs, it also made clear to every worker that the one cardinal sin was skimping on safety.

I recently saw an article, from a completely unrelated industry which made the same type of change, published in the online journal Slate, entitled “How tragedy on the set of the 1983 feature-length adaptation of The Twilight Zone changed the way movies are made”, where author Robert Weintraub reviewed the changes in movie-making safety after a horrific accident, on the set of the movie The Twilight Zone, led to the death of three actors.

The deaths occurred in a scene where the actor Vic Morrow was carrying two child actors to safety from a bombing raid. With cameras rolling, the helicopter which was bombing the children’s village was engulfed in fireballs forcing it down into a river where the actors waded. As a hundred or so people looked on, the right skid of the aircraft crushed 6-year-old actor Renee Chen. The helicopter then toppled over, and its main blade sliced through Morrow and 7-year-old actor Myca Dinh.

There were civil suits against the studio and the film’s director John Landis, which were all settled. However, Landis and three others were criminally charged for involuntary manslaughter where they were all found not guilty by a Los Angeles jury in 1985. As horrible as all of this was Weintraub found that “some good did come of it.” The movie making culture was changed in three significant ways in the industries approach to safety.

Movie Industry Response

The first change noted by Weintraub was in the industry’s attitude and approach to safety. At Warner Bros., Vice President John Silvia “convened a committee that created standards for every aspect of filmmaking, from gunfire to fixed-wing aircraft to smoke and pyrotechnics.”

All the unions and guilds in the business were represented. The committee’s codicils were collected into a group of standards called Safety Bulletins. The studios then issued a manual to their employees based on the bulletins, known as the Injury and Illness Prevention Program. Every time there was a serious accident on a movie site, a New Safety Bulletin was issued.

Insurance Industry Response

The insurance industry made sure that safety provisions stuck, though the reason the insurance industry did so was market based. Weintraub noted that before disaster on The Twilight Zone movie set, insurance companies did not view the movie business as a source of profit. Because of the low level of safety on film sets, the likelihood of an accident and payout was just too high for carriers to make money.

However, after the incident, the movie industry’s commitment to improving safety, along with increasing budgets, made Hollywood a better risk and therefore allowed greater profits to be made by insurers. With more affordable insurance rates to underwrite movie shoots, such liability insurance became a basic part of the movie-making business. But this meant that, in large part, the movie industry had to dance “to the insurance industry’s tune.

The insurance companies want to know everything. They want your resume, the resumes of everyone participating. They want to see your licensing, a list of materials, the number of people working on each shot, the distance they will each be from the explosive, the number of fire extinguishers available on set. Then the fire department comes out to look at what you’re doing, and they have a long list of safety criteria to meet, too. It’s a pain in the butt, sure, but that’s the way it is.”

Risk Management

The Twilight Zone disaster also led to the creation of a Risk Management position for movie making. Weintraub quoted Chris Palmer, a risk management consultant who was a part of the original committee which created the safety standards, who said “The Twilight Zone accident created my job. It was a sea change in the movie industry. No one in risk management was ever on set before then.” Unlike the insurance industry, which helps companies manage risks through financial instruments, risk management attempts to avoid or at least control risk.

Risk managers like Palmer become involved in a film long before principal photography begins, scanning scripts for issues, starting with the location. Weintraub quoted Palmer again for the following, “If you want to shoot in the Caribbean during hurricane season,” Palmer says, “you’ve got a problem, unless you have a specific plan in place to protect the production.”

Additionally, a risk manager such as Palmer can act as a safety valve, similar to an anonymous reporting line in a compliance program. One of Palmer’s jobs on a movie set is to step in when crew members want to play it safe but feel their careers would be in jeopardy if they spoke up. Palmer was quoted as saying “I can’t be terminated by the director or producer… That takes the pressure off the crew because it can be intimidating to be the one to stand up and say ‘hold on.’”

I found the major point of the article to be that a company can change the way it does business. I personally observed the energy industry become more conscious about safety and introduce it into every level of a company’s DNA. Weintraub’s article made it clear that the movie industry also made a sea change of culture when it came to safety.

So the next time you hear the mindless prattle of “but we’ve always done it that way”, point them to the changes in safety over the past 20 years. And the next thing you should consider is going to the head of your company’s Safety Group to sit down and get some ideas on how to change your company’s compliance culture.

This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at tfox@tfoxlaw.com.

Cross-posted from Tom Fox Law

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