Article originally published in the Philadelphia Business Journal on April 18, 2016
The CEO has the ultimate responsibility for employee safety in the workplace. The board’s role is to hold the CEO accountable not only for the safety of the company’s employees, but also for workplace health hazards and company environmental performance. These should be included in the metrics the board uses to evaluate CEO performance.
On April 6, Donald Blankenship, the former CEO of Massey Energy, was sentenced to prison for 12 months after being found guilty in December 2015 of conspiring to violate federal mine safety standards. On April 5, 2010, an explosion in the Upper Big Branch (UBB) mine of Performance Coal Company (PCC), a subsidiary of Massey Energy, resulted in the deaths of 29 miners.
In May 2011, an independent investigative report commissioned by the governor of West Virginia titled, “Upper Big Branch – The April 5, 2010 explosion: A failure of basic coal mine safety practices” was published. The report documented instance after instance of safety violations, and showed that production of coal had a higher priority than the safety of the miners.
The U.S. Department of Labor’s Mine Safety and Health Administration (MSHA) imposed a fine of $10.8 million on Massey Energy. A MSHA report on the explosion states, “Massey’s corporate culture was the root cause of the tragedy. MSHA has issued Massey and PCC 369 citations and orders … for an unprecedented 21 flagrant violations, which carry the most serious civil penalties available under the law.”
MSHA Assistant Secretary Joseph A. Main stated, “Every time Massey sent miners into the UBB Mine, Massey put those miners’ lives at risk. Massey management created a culture of fear and intimidation in their miners to hide their reckless practices. Today’s report brings to light the tragic consequences of a corporate culture that values production over people.”
So, how did the Massey board assess Blankenship’s stewardship of employee safety? Bobby Ray Inman, a well-respected leader who has served as an admiral in the U.S. Navy, director of the National Security Agency, deputy director of the CIA, interim dean at the LBJ School of Public Affairs at the University of Texas and a long-term director at Massey Energy, offered his views.
In an April 27, 2010 article by Reeve Hamilton in The Texas Tribune, Inman is quoted as saying, “Blankenship … [is] the best coal miner in West Virginia.” In the article, Hamilton writes, “As Inman sees it, much of the backlash against Blankenship stems from the ripple effect of a [prior] political incident.” Really? The backlash wasn’t due to the 29 deaths at Upper Big Branch mine, and a cavalier culture by Massey Energy regarding safety?
In his article, Hamilton writes, “The Upper Big Branch mine had 19 times the national rate of violations according to a recent MSHA report. … Determining the cause of the explosion will take weeks, and in the meantime, Blankenship has the board’s – and Inman’s full support.” Quoting Inman, “This I learned through my military career: As angry as you may be with somebody, you do not shake the structure in the middle of a crisis. You work your way through the crisis, and then you hold accountability and responsibility. Those words are not carelessly chosen.”
I would respectfully disagree with Inman. Blankenship retired from Massey nearly nine months after the explosion in December 2010. So for those nine months, an opportunity was lost to improve the safety culture at Massey, during which employees continued to be exposed to unsafe conditions.
Was the Massey board ever concerned about Blankenship’s poor history of compliance with federal mine safety standards and a corporate culture not focused on safety? The company had a history of safety issues. Why wasn’t Blankenship held accountable to a higher standard of performance by his board prior to the explosion?
I have served on the boards of a number of companies where, due to the nature of their operations, there were inherent risks to the safety and health of employees as well as to the environment. In many of these companies, management did not report to the board their safety, health, or environmental incidents, and what management was doing to improve performance in these areas. They do now, after I brought this important discipline to the board.
As CEO of PQ Corporation, I took the issue of employee safety very seriously. Our safety, health and environmental performance was presented and discussed as the first topic at every board meeting, before discussion of financial performance. If plant employees were about to perform a task that they felt was unsafe, or they felt that an established procedure was unsafe, they raised the issue with the plant’s management. Hazardous conditions were addressed, to avoid future accidents.
At conferences with plant managers and hourly employees who led plant safety committees, I would state that the safety of our employees came before production. Hazards were promptly addressed. A sense of ownership was instilled in employees for their personal safety and that of their colleagues. Our OSHA recordable accident rate improved, and we achieved first quartile performance within the chemical industry.
Directors, hold your CEOs accountable for more than just financial performance. Hold them accountable for their tone at the top and the culture they nurture within their organization. The world is changing, driven by a focus on reputation, and where millennials, the future leaders of your company, want to work. Companies that do the right thing will be the ones that produce the best returns for investors.
Stanley W. Silverman is the founder and CEO of Silverman Leadership. He is a writer and speaker, advising C-suite executives about issues and on cultivating a leadership culture within their organizations. Stan is Vice Chairman of the Board of Drexel University and a director of Friends Select School and Faith in the Future. He is the former President and CEO of PQ Corporation. Follow: @StanSilverman. Connect: Stan@SilvermanLeadership.com. Website: www.SilvermanLeadership.com
