A Culture of Compliance
By: Timothy Close
Senior Compliance Consultant
This article is about taking regulatory compliance to the next level, about instilling a culture that sees regulatory compliance and internal policy compliance as the way your ship does business; as the way your company does business, and not as an additional burden.
Regulations are here to stay. They’ve been here for decades. There are state regulations. There are federal regulations (USCG and EPA). There are international conventions as well, although they are normally implemented through federal regulations or incorporated in their entirety into federal regulations. There are also requirements placed on ships and ship operators from classification societies. If you don’t like any of them, stick around. They will change, although they rarely are simplified, streamlined or eliminated. They can also overlap.
Companies and mariners are welcomed and encouraged to actively participate in the regulatory process. Unions and numerous industry organizations closely monitor draft regulations, submit comments, attend public meetings, and lobby as they represent ship operators’ interests. The process is intended to encourage participation. Despite their best efforts, we know that regulators do not always get it right, or sometimes get ahead of developing technology, or don’t fully understand all the practical implication of draft regulations. Thus, industry participation is important and necessary.
Once implemented and in effect, the discussion is over and it becomes all about compliance.
A company can make regulatory compliance the responsibility of that one person who seems to know what the regulations say. They can make compliance the responsibility of the person responsible for the safety management system policies. A company can make compliance the sole responsibility of the ship masters under the belief they are smart people and can figure it out. But, all of these approaches to compliance have huge pitfalls. They don’t instill a culture and will not ensure full and consistent compliance.
Isn’t that the goal - full and consistent compliance? You want regulatory compliance that will routinely pass muster when a regulatory agency or class surveyor is onboard or conducting an audit. You want compliance that will keep you, the company, the ships and the shipboard officers out of trouble – no CG-835s, no outstanding requirements, no letters of warning, no civil penalties, no detentions, no PR17’s. When we are done complaining about the new regulations (and the existing regulations), there is little option but to roll up our sleeves and implement them. Regulatory compliance can be the smoothest and least complicated path to follow if everyone throughout the ship and company is onboard. If compliance remains the domain and responsibility of 1-2 people, then it will always be a struggle.
This article is about how to improve regulatory compliance. It’s about how to do more than being able to say that a policy exists, or someone was tasked to implement the new regulations, and therefore you are in compliance. It is about instilling a culture – an attitude, an approach, a behavior - that better ensures compliance.
The Starting Point
Senior level commitment is the beginning. Demanding regulatory compliance is easy. Putting resources toward compliance, especially when new regulations are going into effect, is essential. That doesn’t always mean money alone. When the senior leaders are asking about compliance and are asking about new regulations, they demonstrate their commitment. Briefs, status reports, and metrics related to compliance can be important in ensuring necessary priority and attention is given to implementing new requirements. When senior leaders wait for someone to tell them there is a regulatory compliance problem, it may be too late to avoid falling into “crisis mode” – that “drop everything, throw money at it, stress-inducing” situation that no one really wants.
At the shipboard level, the culture starts with shore side support and leadership. Sending a 10-page email attachment to each Master with a note saying “Here are the new regulations, please implement” does not convey any sense of importance to the Master and his/her crew. It actually says “This stuff isn’t important to me, so I’m punting it all to you to figure out…and, by the way, the USCG and/or ABS will visit the ship at some point to see that you are doing this correctly.” Ouch.
Instead, providing company policy that implements the regulations instead of lengthy, government-worded regulations shows leadership and commitment. It indicates the company has digested the requirements, sorted out what applies and does not apply and tells the ship how to implement the new requirements. It encourages compliance and creates a culture that says compliance is important.
Having a culture that values, encourages and insists on compliance can be tremendously helpful. It can be empowering. It can foster an improved sense of coordinated action throughout the company and throughout each ship. It can also keep you out of trouble.
The Concept of a Culture of Regulatory Compliance
When the culture of regulatory compliance at a company and onboard a ship is good, there is alignment throughout the organization. A mutual sense of importance and the application of sufficient resources (time, money, equipment, training and intellectual as appropriate) will exist to better ensure compliance.
In a regulatory compliance culture, senior leaders don’t bad mouth new requirements. Masters don’t feel like they are stuck deciphering pages and pages of regulations. There is good communication and mutual respect between the ships and shore side support regarding how best to implement new requirements and how best to ensure existing requirements are met. Implementation, especially involving new equipment or hardware, is well-coordinated between the ship and ALL of the various shore side support components (engineering, operations, communications, etc.). Training, where necessary, is discussed and planned for in advance.
A good culture of compliance exists when compliance is not viewed as sometimes being in conflict with accomplishing the business of the company, or something that can be set aside temporarily because it is inconvenient. If no one at the company would ever intentionally ignore requirements designed to prevent oil spills, why would they do it when it comes to rest/work requirements, or weekly drill requirements, or lifeboat testing requirements, or onboard storage of hazardous chemicals?
The desired end state also exists when the master knows about new requirements and doesn’t have to deflect a question from a class surveyor or a USCG inspector to someone shore side regarding a newer requirement that just went into effect.
Further, instances of non-compliance are each investigated and root causes are identified to ensure that future con-compliances are eliminated – not investigated to lay blame, but investigated to prevent it from happening again. A culture of compliance recognizes that intentional non-compliance is rare and that 80% of all problems are management problems.
Creating or Making Improvements to your Culture
So, how do you build or improve your culture of regulatory compliance?
1. The attitude of senior leaders will make all the difference. Senior leadership at the company and onboard the ship will set the tone for compliance. Adopt an attitude of “We will meet the requirements as part of how we do business.” Try to change the attitude that meeting the requirements is “one more thing that has to be done that gets in the way of our business.” That attitude is understandable and common, but is sort of like complaining that navigational Rules of the Road get in the way of your goal of getting from one port to another. That would be ludicrous. Complying with the Rules of the Road ensures predictability to the flow of ships, prevents collisions and groundings, prevents spills, etc. No prudent mariner would ignore the Rules of the Road. Take that same approach with all regulations.
Senior leaders should periodically remind everyone that most regulations are reactionary and were developed following incidents or injuries or equipment failures or large spills or new studies on pollution, etc. While we may not all agree that every new requirement is necessary, we have to recognize that regulatory agencies will enforce each new requirement. Therefore, move beyond complaining about them and focus on implementing them fully with an attitude that conveys commitment.
2. Engage middle management/leadership. At the company, this should include general managers, directors, supervisors, senior port engineers, vessel superintendents, etc. Onboard the ships, this should include the Chief Engineer, First Assistant Engineer, Chief Mate, Bosun, and whoever else regularly manages/leads mariners. The people that are in the middle of the organizational hierarchy are critical to establishing or improving a culture of regulatory compliance primarily because they are the people who complete the day-to-day work. They sweat the details. They convey the message and tasking to the unlicensed and rotary personnel. They provide the data that constitutes the metrics used further up the chain. More importantly, they convey attitude throughout the work force. That attitude can support regulatory compliance as the right thing to do, or conversely can convey a message of compliance as a burden and extra work. Bring middle managers/leaders onboard by clearly communicating senior management expectations. Expect them to be in compliance. Expect them to set the right example. Expect them to be supportive. Expect them to empower their subordinates and co-workers to be in full compliance with the regulations and with company policies.
3. What you will be doing is raising the bar, so view this change in that light. If you are concerned about implying the company has somehow not been in compliance, then approach this more subtly. You don’t need to announce this as a new initiative or new program. Simply start by communicating your expectations for compliance. When someone asks why now, or what happened that is initiating this new emphasis, tell them. Maybe you read an article, or have been thinking about this for a while, or, you feel that compliance can be better. You are allowed to be smarter than you used to be. You can use results from audits to support the effort as needed. Any immediate pushback will be about the extra work involved. Welcome that comment because it will give you a chance to address it right up front. Compliance with the regulations has to be a part of the work since it is not optional. It is not “extra” work. Since compliance is required, establish the expectation that you want it to be planned for. You want to encourage questions or concerns about compliance to be raised and addressed. You want to encourage your support staff to read through the regulations, get answers to any confusing parts, and then translate them into your safety management system or compliance policies. If you stay the course, you will raise the bar and instill your culture of regulatory compliance.
4. In some instances, that will mean putting your money where your mouth is. It might require the purchase of new equipment, or modification of an existing system. It might require the review of and update to some existing policies, or development of new policy. It might require use of a consultant initially. Be willing to spend some money in this regard. Demonstrate that an improvement in culture is worth the commitment of funds where appropriate.
5. Make improvements to your regulatory compliance culture permanent. This means updating policies and requirements in your SMS to incorporate new requirements – and doing that in a timely way. It means soliciting feedback from those impacted by the new requirements to ensure that the implementation is clear and workable. This also means adding preventive maintenance requirements for any new equipment or systems resulting from new regulations. Most importantly, ensure that new policies, new maintenance requirements, etc., are considered with every new requirement. Ensure the need for new policies, new maintenance requirements, etc. is needed is taken into account and discussed for every new requirement.
6. Document the new requirements in your safety management system or company policies. Document the training that needs to be done to implement the new requirements throughout the company and fleet. Document suggestions to improve or ensure compliance. Document questions about compliance and then document how the questions were resolved. Use your existing mechanisms for this documentation in lieu of creating new spreadsheets or mechanisms. If you create new tracking mechanisms, then compliance is a separate thing and not integrated into your business. In other words, it will be contrary to your effort to instill or improve a compliance culture. Use your safety management system. Use your existing tool that tracks training. Use your existing corrective action system (by whatever name) to track suggestions or issues and their resolution. All of this takes time and effort but is necessary to verify compliance and demonstrate how serious senior leaders are about expecting to be in compliance, actually being in compliance, and knowing they are in compliance.
7. The ability of senior leaders to communicate their expectations regarding regulatory compliance will determine the extent the culture improves. By establishing expectations early and reinforcing them often, senior leaders and middle managers/leaders create the atmosphere of permanence and establish the impression that changes in the culture are here to stay. Instead of asking whether you are in compliance, try asking how we know we are in compliance. Ask about the status of projects to implement new regulations. Ensure that all necessary support elements are appropriately coordinating their efforts. If necessary, hold a quick meeting (as painful as that may sound) to ensure coordination and progress towards implementation are sufficient. As a senior leader, review results of internal and external ISM audits and visits by regulatory agencies. Acknowledge that no ship or facility or company can have everything right all of the time, but require each identified issue and nonconformance to be investigated to determine the root cause. Don’t settle for correction of the immediate issue. Insist that a root cause be determined that can be addressed to prevent re-occurrence or prevent the same issue from happening on another ship or at another facility. This speaks directly to expecting regulatory compliance across the company and fleet.
After creating the expectation of compliance, empower your shore side support staff, your masters and your crews to own compliance. Listen to their challenges and concerns and address them. Related to the masters and crews specifically, adopt the approach that compliance directly impacts their safety and well-being the most. Therefore, they should be empowered to be in compliance and should be given the tools to be in compliance. This can be a powerful approach that engages the crews, encourages innovation and supports doing the right thing at all times.
Then, make regulatory compliance a common discussion at senior level meetings (not just SOX compliance). Insist that compliance be discussed at senior officer meetings. Consider metrics that reflect compliance. Start with performance at internal and external audits. Track the number of major and minor nonconformities. Track corrective actions. Discuss those metrics and require reports on those metrics no different from how you would track on-time arrivals and departures, or fuel burn. The adage is true that “if it matters, it is measured.”
8. Lastly, there has to be some accountability. While the attitudes of people may be hard to gage, what they do and what they convey to others can be a pretty good indication of whether or not they are onboard. Track the extent to which corrective actions related to compliance are rectified – investigated, documented, and resolved in such a way as to prevent it from happening again across the company and/or across the fleet. You should expect performance at audits to improve or at least hold steady with a low number of nonconformities, so hold people accountable for that. You should expect to never be detained in a port or be the recipient of a PR17 from a classification society. Hold people accountable if that happens, then ensure that corrections are made that would prevent that from happening again across the fleet.
The Next Step(s)
Whether you take the next step is entirely up to you. It will take time and effort, but it doesn’t have to happen all at once. It can be an evolutionary process where you start changing minds and attitudes slowly and consistently. It doesn’t have to be handled as a major course correction. In fact, treating it that way is probably ill-advised since most companies and ships likely do not need a major course correction. Everyone may just need consistent reminders that compliance is what the company wants. They might also need the message reinforced that compliance should not be seen as the goal only at times when it is convenient and doesn’t impact business.
What’s the upside? Besides the ability to successfully pass audits, flag state inspections, port state inspections, vetting inspections, SOX audits, etc.? There are several. Having a system in place that ensures regulatory compliance and ensures that everyone is confident that the company and ships are in compliance is stress-reducing. It’s about being and feeling on top of your game. That also means you are much less likely to get caught by surprise and have to scramble to implement a requirement in the days before (or days after) it goes into effect. Those avoidable crises are painful and expensive and never happen during a lull in other activity. Those crises are also morale killers. Additionally, instilling or improving a culture of regulatory compliance requires planning between different organizational components. That drives toward an improved team approach and breaks down stove pipes within the company and ship. Finally, the notion of “doing the right thing” can be very contagious and very empowering. It also is a trait of companies that people want to work for.
The regulatory environment in which we live and operate is not going away. Creating or improving the culture of regulatory compliance helps ensure compliance across the company and fleet and also helps senior leaders know that they are in compliance. This cultural improvement requires senior level commitment. It also requires consistent delivery of the message that being in compliance is not optional, but is necessary even when it is not convenient. The reinforcement of that message tells all employees that cutting a corner with regulations because they think it may be beneficial to the company or help the bottom line is, in fact, not what the company wants.
To get there, address the attitude regarding compliance and engage middle management/leadership. Raising the bar will also create tests for senior leaders who have to be willing to commit some resources as necessary to demonstrate their seriousness about being in compliance and planning for compliance with new requirements. Consider how to make permanent the improvements in compliance by focusing on the process for gaining and maintaining compliance. Documentation is important, but so is the communication from senior leaders, especially regarding their expectations for regulatory compliance and their approach to accountability.
The contagious aspect of “doing the right thing” can empower employees across the company and crews across the fleet to improve compliance and work to eliminate stove pipes. Cultural changes will never be immediate, but consistent reinforcement of the message will have positive results. Those results will ripple through the company and fleet and create a culture of regulatory compliance that best serves the company in the long run.