Nicholas Davidson

Who can you rely on, and who can rely on you?

Nicholas talked about the fact that in business, we place a huge amount of reliance on people to do their jobs properly, and they rely on us to do the same thing. But how often is that trust and reliance misplaced? How can we know who we can reply on?

At Pike River, two of the three planks that people rely on to support good workplace safety – unions and regulators – were effectively missing, he says.

There was a union operating at the mine. But its influence had been severely undermined by New Zealand’s industrial legislation and the antagonistic attitude of the company’s management. The union was weak and only acted once to take the men out of the mine – despite the obvious danger.

The second plank that offered no real support was the legislative environment and the regulator, he says. Over two decades New Zealand’s mines inspectorate service had become so run down it was effectively neutralised by the time of the accident. As a result, the “umbrella of protection” people might expect the regulator to provide simply didn’t exist.

That meant the only plank left supporting safety at the mine was the company, and as events showed the company couldn’t be relied on either.

Who was up to the job?

By the time of the accident Pike River was well behind on its production targets and was under considerable financial pressure. And for a variety of reasons there were a number of people working at the mine that really weren’t up to the job.

For example, at the time of the explosion, the person running the hydro-mining operation at Pike River was George Mason. Mr Mason had never been a hydro-miner and was not properly qualified to run this potentially dangerous process. He had been out of the mining industry for 12 years, and had previously been criticised in reports into two separate mining disasters at Australia’s Moura mine in 1986 and 1994.

Nicholas Davidson Talking At Seminar

Mr Mason should never have been in this position, Nicholas says. He shouldn’t have been appointed to it by Pike River’s management. And the company’s directors shouldn’t have accepted assurances Mr Mason was “qualified” for this pivotal job without probing further to confirm he really was up to the task.

“World-class” safety systems never properly used

Nicholas says that in his view one of the things that stood out about Pike River was that on paper its safety systems were world-class. It also had a well-qualified health and safety manager. No doubt this would have been reassuring for the board and the management team.

Trouble was, these safety systems were never properly used. For example, there were more than 1000 incidents reported at the mine – some of them serious and including gas issues. However, only five investigation reports were ever completed. The vast majority of incident reports were closed off uninvestigated.

The company’s Health and Safety Manager Neville Rockhouse didn’t have the support he needed from management to do his job properly. In fact, Mr Rockhouse was so over-worked that one of his colleagues told the Royal Commission she used to worry that he might have a heart-attack any day.

Reliance on “form” over substance

Nicholas says the company’s focus on forms and form-filing masked the fact that action wasn’t being taken about the serious problems written about in the forms. This reliance on form over substance meant the company’s safety systems were of no real comfort to the board of directors at all.

Hazards at the mine were never properly assessed. Management never identified a major explosion as a potential risk. The worst case scenario was one they never thought about – let alone prepared for.

"Management never identified a major explosion as a potential risk."

Warning signs were not treated seriously enough. In a report to the board weeks before the explosion, Mine Manager Doug White described gas spikes as more of a nuisance than a risk.

The role of directors

Nicholas says Pike River’s directors argued that the role of a board is to engage the right people to run the company, then to let those people get on with the job. They likened this arrangement to the political separation seen in most western countries between Church and State.

But the board charter of most companies requires directors to actively work to ensure management is doing its job, he says. The Royal Commission was also clear that directors can’t take a position that once they’ve hired suitably qualified people they have no further responsibilities. “They remain in the game,” Nicholas says.

The directors said workers and managers had opportunities to talk to board members about their concerns at social events, but never took up this opportunity. However, Nicholas says it’s not enough for directors to rely on people to bring problems to them. Boards need to be hunting out the issues themselves, to be critically assessing the situation and to seek independent advice where needed.

Directors need to get down into the “pit”

Nicholas says that for boards to be able to get to grips with the issues, some directors must have operational knowledge. This is particularly important in highly technical and risky environments like underground mines. However, none of Pike River’s directors had experience working in or managing an underground mine. That meant they did not know the questions to ask or how to assess the information on safety that they were receiving.

Being a director is about leadership, Nicholas says. And leadership requires directors to “get down into the pit” – to question and probe, and get independent advice where necessary so they can be sure they really know what’s going on.

The Pike River directors never did this in an effective way – which is why they never saw the accident coming.

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