Skin in the Game

banking-1024391__340I have just started reading Skin in the Game, the latest book by Nassim Taleb.

As with his other books, Taleb is extrapolating from his financial trading background to life in general, via a healthy helping of the mathematics and philosophy of risk. One of the (I assume) unintended consequences of this is a striking applicability to safety issues. This has already been discussed at length in safety forums, particularly for Black Swan and Anti-fragile.

I’ve no intention of providing a book review (partly as I haven’t finished it yet, but mostly because I don’t feel qualified to do so while I still have to occasionally refer to the dictionary to read it). But, again, there is an immediate and obvious link to safety. The fundamental premise is that people cannot be trusted to make good decisions when they have no skin in the game and therefore are not exposed to the risk of bad outcomes. This is hardly earth-shattering philosophy and is expanded upon in various different ways to make it a worthwhile read, but it does strike at the heart of safety management. It is the old “ivory tower” complaint we hear so often from front line workers.

In the conventional safety approach many decisions are made by the safety manager. They may engage and discuss with their teams to get better outcomes but, by and large, they remain centralised, corporate decisions. Where is the skin in the game for the safety manager? They may have some targets related to performance but, the ultimate risk exposure sits with the workers – they are the ones that get hurt if decisions are poor.

Historically, safety was left to the safety teams to manage. When there is a safety issue, bring in the safety guy to fix it. Thankfully, this has moved to an extent in many organisations so that line management has greater input. While this is definitely an improvement, there is an unintended consequence in relation to the amount of skin in the game for safety teams. In many cases, they have managed to construct for themselves the ultimate lack of exposure – they position themselves as experts and therefore input most of the technical information but also insist that safety management is a line responsibility and so are only acting in an advisory capacity without accountability.

As safety moves towards a new view, input and involvement from the workforce is becoming an ever increasing input (genuine involvement – not notional consultation). They have the skin in the game by default and are beginning to make more of the decisions as to what is likely to be an effective way forward. This is as it should be, but as this decentralisation and democratisation of safety takes place, how does the role of the corporate safety team fit in? I don’t think this question has yet been satisfactorily answered. There are certainly aspects of coaching and mentoring involved and most likely aspects of host leadership as explained by Daniel Hummerdal here. But even these, although worthy, still lack the direct exposure to bad outcomes that focuses the mind – note that this does not equate to bonuses linked to lagging indicators, which is a lazy solution. However this is resolved (and I don’t know the full answer and it will be context-specific in any event) we must find a way for decisions to be made by those with skin in the game.

 

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