Here's why horizontal and vertical silos are driving unnecessary risk in your business

“I'm delighted to report we've had a great year. New contracts won, customer satisfaction high, revenues up and profits up.”

It sounded as if this business unit had outperformed all expectations.

…Until the head of safety stuck his hand up.

“I don't want to pour cold water on your achievements. But, we’d have made more money this year if none of your staff had gone to work.”

If you’re not working as a team, you’re not getting the results

The profit driven by no small amount of hard work and determination had been wiped out by the cost of risk. More had been spent on insurance claims from third parties and the costs of injuries to staff than the operating profit that had been made through all that hard work.

This story is not unique, it happens in all kinds of businesses and across sectors.

To ensure safety and risks success in your business. You need to fix the horizontal and vertical silos that block progress and results.

All businesses are likely to have silos of some kind. Over recent years, the challenges they cause have increased due to a few trends:

·       The professionalisation of procurement has led cost-centric decision making, which can drive short sighted decisions within business unit silos to achieve P&L results but can have magnified negative effects on other areas of the business.

·       The advance of technology and increasing competition have meant that, in many sectors, middle management layers have been stripped out. When you had 30 sites to control but now have 130, it's hard to keep on top of everything that's going on. And even harder to communicate that effectively to other parts of the business.

Lack of communication, engagement and collaboration causes safety and risk blockages and failures in two ways: horizontally between different business units, but also vertically between management and the shop floor (or even the supply chain).

The cost of silos

An American Management Association study saw 83% of respondents state their business operated silos and 97% believed these silos had a negative effect.

A vertical silo example

I recently visited a nightclub on behalf of its insurance broker and discovered a vertical silo. The general manager had been there for a decade and knew that her most effective remedy to her biggest cause of accidents and claims (slips, trips and falls) was a particular spillage control mat. But, her most recent order of these was blocked by her regional manager for budget reasons. This ￡25 mat could prevent a serious injury, but also a ￡10,000 insurance claim. Yet this company – like so many others – says “safety is our number one priority”. There is often a disconnect between the board’s stated objectives and the reality of how people are empowered – or not – to make decisions to ensure risk is managed well. We're only paying lip service to safety and risk.

What should you do?

But it doesn't have to be this way. It is possible to drive better safety and risk outcomes, irrespective of vertical or horizontal silos. It's not realistic to eradicate them, but let’s improve communication and co-operation across both axes:

·       Engage and communicate across the business

·       Calculate your total cost of risk and act to reduce this

·       Use measurable actions to drive measurable outputs

For example, one study cited that a coherent and fully developed risk management programme showed a 29% higher documentation and recording to verify use of policies and procedures, versus those that did not have that in place. This will mean more claims defended. Given an average employee claim cost of ￡15k, this can save ￡100,000s.

Yes, but…

You may think it’s hard to convince the board to invest, but what would it cost them not to invest? You may think it’s hard to get your design team to choose floors based on slip safety rather than aesthetics, but have you explained the consequences of this to them fully?

Safety and risk is an easy concept for everyone to understand. Everyone can get behind it.

Line up the Swiss Cheese

We often hear about the Swiss Cheese model for an accident occurring, but let’s look at this more positively: can we get the holes to line up and across sufficiently that the messages can get through? There are enough holes that if we persevere, we should be able to get the message through somehow. It doesn’t have to be perfect, perfect is the enemy of progress in many ways; we just want to get started to see some improvements and build from there.

Remember the vertical though. Horizontal silos make sense, but the vertical silos can often be overlooked.

Get engaged

We’d love your comments and thoughts on this article. What silos can you recognise that you can start working on? How will you take this away and implement it in your business?