Complexity and Change: Antecedents of occupational injuries

This study explored the links between complexity (operational, supply chain and market) and change on occupational injuries.

They sought to answer the following question using secondary data from global companies listed in the US:

·???????? Do the absolute level of complexity and changes in the level of complexity exert a negative effect on a company’s safety performance?”

This is a larger summary.

Providing background:

·???????? They say it’s difficult for companies to keep workers safe while making operational changes when operational decisions driven by economics increases system complexity

·???????? Supply chains are “inherently complex because of the interconnections between numerous independent organizations spread across multiple locations”

·???????? This inherent complexity makes supply chains harder to manage (compared to operational complexity), and may potentially harm operational performance

·???????? Supply chain complexity has also been linked to innovation and financial performance, and hence is inevitable but sometimes beneficial

·???????? Endogenous complexity emanates from a company’s own operations

·???????? Exogenous complexity emanates from the environment or market which the business operates

·???????? Other authors have conceptualised complexity into operational complexity – being the complexity of a company’s internal operations and its labour intensity, and supply chain complexity – being the complexity of the exogenous supply chain

·???????? Other research has explored the implications of exogenous, environmental or market complexity. Enviro complexity is the degree of heterogeneity in a firm’s industry, where “complex environments make it more difficult to identify, diagnose and respond to problems”

·???????? “interorganizational complexity can hinder safety management and increase the risk of organizational accidents”; for instance, from the Normal Accident Theory (NAT) perspective, complexity is a key factor in the genesis of major accidents

·???????? Much safety research has focused on the internal complexity of operations in a project; this is understandable since “there are mutual interdependences between operational decisions and safety performance”

·???????? Having decreasing levels of operational slack may improve operations performance but subsequently harm safety

·???????? Higher complexity may increase the risk of accidents via disruptions, which are more likely due to the larger number of elements in complex systems, and multiple small negative events interacting and combining to increase the unpredictable nature of systems

·???????? More complex systems are also harder to manage, where “management loses the ability to detect and prevent disruptive events before they occur”

·???????? Operational complexity is said to be the “most immediate dimension of complexity that may affect workers’ safety”

·???????? Based on NAT, this includes interactive complexity and tight coupling

·???????? A trade-off with keeping workers safe but maintaining productivity may become more tightly coupled, and therefore more susceptible to accidents

·???????? Others have argued that “the complexity of an operation is driven by the level of variability of interactions, number of diverse processes and/or jobs, and the level of specialization of these jobs”

·???????? The diversification of products and markets also “directly causes operational complexity through processes, jobs, and interactions” and is also affected by geographical complexity

·???????? Increases in process complexity have also been linked to negative effects on job performance, job satisfaction, job security and process performance, and increases worker job anxiety

·???????? The structural complexity of a supply chain may affect injuries and health – and has been conceptualised as horizontal and spatial complexity

·???????? Horizontal complexity is the number of suppliers in each tier, and indicative of increased specialisation of skills and capabilities; it also includes receiving more goods and materials from more suppliers

·???????? Spatial complexity is the geographical spread of the supply chain, as more dispersion could increase uncertainty and variability

·???????? Market complexity is also argued to be relevant for worker safety, as higher environmental uncertainty leading to higher operational complexity “amplifies the pressure of a tightly coupled operation, leading to more safety violations”

·???????? Moreover, these dimensions of complexity are interrelated and a change in one dimension may trigger a change in another

·???????? Finally, they discuss the influence of change on safety; change may eat up necessary resources, and lead to other changes in the operational context increasing coupling and variability

?Results

They found:

·???????? Accidents, as a form of disruption “are strongly affected by multiple forms of complexity that are detached from the immediate operations of a firm”

·???????? The link between complexity and injuries aren’t limited to the internal operational complexity, but influenced by exogenous factors, like markets

·???????? Hence, their research “conceptually and empirically [confirms] that supply chain and market complexity have negative implications for occupational safety

·???????? Changes that increase the amount of complexity “lead to an increase in the number of occupational injuries but, conversely, that decreasing the level of complexity does not significantly reduce injuries”

·???????? the “core takeaway from this research is that increased complexity, regardless of whether that complexity is exogenous (e.g. supply chain or market complexity) to a company’s own operations, is bound to create spillovers in the form of harder-to-coordinate chains and more disruptions, including accidents”.

While firms can manage safety and operational outcomes simultaneously (to varying degrees), “many do not do this successfully”. One explanation for the lack of success is that “managers do not link many decisions to their potential human costs”.

While this shouldn’t put firms off from changing/restructuring in order to meet changing market demands, it suggests that the firm needs to be made with consideration for the resultant disruptions, including how to avoid harming workers.

They argue that the link between the safety of a firm’s operational workforce and the complexity of its internal operations may be intuitive. However, the links between safety and the supply chain structure, firm diversification or market conditions aren’t intuitive.

Problematically, as this study found, “management decisions that are not linked directly to the daily operations can affect a company’s internal safety performance”.

Managers can’t ignore market realities, but they can “monitor and control their operations and processes more carefully in response to complexity”.

They suggest that to make “inevitable changes in complexity safer” that instead of considering a change in complexity as part of the normal safety review process, they could treat the resulting change as like an emergency situation since the firm may experience unknown risks.

Hence, “Changes in complexity are special events and safety should be part of the agenda when planning for the change”

Moreover, policymakers, regulators and auditors should also “pay greater attention to companies that have complex operations, supply chains, and markets”.

?Authors: Chen, Y., Wiengarten, F., Fan, D., & Pagell, M. (2024). Complexity and Change: Antecedents of occupational injuries.?Safety Science,?176, 106560.