The sharing of knowledge and case studies is an important part of our living research mandate at the Advisory Board Centre. In a rapidly evolving sector, the flexibility and agility of the advisory board function is its strength. Certified Chair™ Christopher Gibbs, shares an important case study of Safety Advisory Boards.
Christopher was Engineering Director at Cathay Pacific from 2007 to 2017 before joining HAECO, global aircraft maintenance company, as Group Director from 2017 to 2021. He is now a Senior Advisor at Navier Consulting and completed the Certified Chair Executive Program in 2022.
His direct experience of safety informing the governance board through an advisory structure is informative not only for the transportation sector, but any industry where safety is at its core.
The Case for Independently Chaired Safety Advisory Boards
Management by a business of its safety responsibility towards customers and employees is a key board responsibility. Major safety events can have business-threatening consequences, for example BP’s Deepwater Horizon or Texas City Refinery events, or Boeing’s two 737 MAX accidents. This note discusses how to manage safety well at board level, and the role of an independently chaired Board Safety Advisory Committee.
Directing to ensure safety is well managed is a very different board responsibility to the more familiar ensuring of valid strategies in the areas of business development, people, finance, marketing, and operation. The board should consider carefully whether it is resourced and equipped to manage safety well.
The initial requirement is to have some board members who are familiar with safety management systems and their application. This expertise needs to cover the two distinct important aspects of safety, product or service safety, and safety at work for staff making the product or delivering the service. Just as there is a minimum level of finance expertise and qualification needed on a board, there is also a minimum level of safety expertise.
Generally, the board will have sub-committees to oversee specific areas such as audit, remuneration, and strategy. Most sizeable businesses, especially quoted, will also require a safety committee. Even if the safety sensitivity of the service or product is low, there remains the employee safety responsibility for reducing accidents at work. This employee safety responsibility increasingly covers mental as well as physical health.
The safety committee can be a governance committee or an advisory committee. Advantages of an advisory committee are that it is more flexible. The agenda can be adjusted more easily to the highest priorities and the composition be changed so that the right skills can be deployed.
The chairmanship, composition and attendance of the safety committee are key to ensuring its responsibilities are well discharged. The safety board needs to be composed of a mix of executive directors who know what is happening in the business and then non-execs able to challenge and probe this view, and to add their own knowledge and experience. A significant non-executive membership is essential to question the status quo, to ensure no complacency, and to strive, as in other areas of the business, for continuous improvement.
The highest standard is to have a non-executive chairperson of the safety board. He or she can then provide the independence and external perspective needed and is less likely to accept, without sufficient question, current assessments and forecasts. The board should desire a non-exec chair so they themselves have gone as far as they can in challenging the current situation and future strategies. Safety needs a particularly strong testing as deficiencies may not be obvious without an accident, which clearly is to be avoided.
There are many examples of businesses which have adopted some or all of the above practices after a major accident. The imperative of course is to do what you would have done afterwards, before. This is not as hard as it seems as many of the steps companies take after look obvious, even to a quite casual observer. The reason they were not taken was not the difficulty but a lack of business will, a lack of business priority.
Safety is a high and demanding board priority and responsibility. To discharge that responsibility well companies and NGOs need to adopt the governance recommendations identified here, tailored to their industry and business model. An independently chaired board safety committee is a key element of successful governance of safety.
Airline Industry Cathay Pacific Case Study
In the transportation industries the consequences of managing safety poorly can lead to major loss of life, as well as damage to business reputation and viability. This is particularly present and visible in the airline business but also in the train, shipping and ground transport industries. This case study reviews how a major airline improved its safety governance using an independently chaired board safety committee.
Cathay Pacific is the flag carrier airline of Hong Kong, operating around two hundred and fifty mostly wide-bodied passenger and freighter aircraft, with twenty thousand employees. Pre-covid the airline was amongst the twenty largest worldwide airlines by revenue. The airline is quoted on the Hong Kong stock exchange.
Cathay Pacific has had a strong reputation for safety. This safety performance derives from a strong board interest and support for safety, from a professional, challenging safety culture in the key Flight Operations and Engineering Departments, and from an independent Corporate Safety Department.
Cathay Pacific is however constantly looking to upgrade its safety governance and safety management, to face new threats and to improve on current standards. In 2003 Cathay Pacific introduced an externally chaired board safety committee. The external chair was originally Cathay’s ex Flight Operations Director, then for many years the ex-head of the UK’s Air Accident Investigation Branch (AAIB), so truly independent.
The safety committee is a formal governance committee sitting under the main governing board, and meeting ahead of board meetings. The committee’s external composition includes non-executive main board directors in addition to the chair. The committee is attended by the heads of the key safety facing airline functions and the CEOs of each of the group airlines.
The agenda comprises a review of safety performance, and an analysis of threats and mitigations. As covered in the company’s annual Sustainable Development Report, example issues managed by the company include safe cargo carriage of lithium batteries, crew fatigue risk management, enhancements to the process of adding new airports, and a focus on reducing cabin crew injury rate.
The power of the independently chaired safety committee was demonstrated in 2011 by the proactive, ie not in response to particular issues, commissioning of a fully external review of Cathay Pacific’s safety systems by Charles Haddon-Cave, then a UK QC, now a judge, with experience in major transportation accident public enquiries.
Cathay Pacific benefitted substantially from the independent advisory board enhancement to their already well regarded safety management systems. The external challenge helped to minimise complacency, to ensure all angles of issues fully covered, to respond to new external views or questions. Of course, the results are not always obvious but this is the objective, no accidents, no staff injuries. The airline has lived by the maxim, do what you would have done after an accident before.
The Cathay Pacific case further demonstrates that a safety-informed main governing board, supported by a strong independently chaired board safety committee should be a standard in the transportation industries. The structure would also be of benefit more widely, especially in industries where staff safety is key, such as mining, construction, and manufacturing.
Author: Christopher Gibbs, Senior Advisor, Navier Consulting