Implementing Changes in Leadership Thinking and Behaviors to drive Operational Excellence in Oil and Gas

In this interview we take a look at the roles of leadership and behavior on the journey towards process excellence. And rather than viewing this through the eyes of the business executive, we have borrowed the analytical perspective of Laura Methot Ph.D, a degreed Organizational Psychologist and Senior Partner at CLG.

Laura holds a doctorate in Applied Behavioral Analysis and a master’s degree in industrial / organizational psychology from Western Michigan University. She earned a bachelor’s degree in psychology from Saint Mary’s University in Halifax, Nova Scotia, where she currently is an adjunct professor.

Speaker key

TH Tim Haðdar, Editor In Chief, Oil & Gas IQ

LM Laura Methot Ph.D, Senior Partner, CLG

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TH Laura, I’d like to start off with a question about the relationship between leadership behavior and culture. What is the thread that links all of them?

LM Well, if we start with the definition of culture that we use at CLG, we say that culture is really the set of behaviors and norms for behavior that are reinforced and encouraged over time by people, by systems.

So, culture really is all about behavior and our approach is to understand the most important behaviors – we call them high-impact behaviors – that need to happen regularly and well by people within the organization in order to achieve your result, maintain your culture, and overall accelerate your effectiveness.

So, we start by pinpointing those behaviors and then wrap the leadership fundamentals around that to make sure that those high-impact behaviors are supported.

TH Let’s talk about the kind of leadership - everybody has a different definition, but what – for you – makes good leadership and what is the importance of leadership within the operational excellence framework?

LM That’s a great question. We kind of think in terms of a bunch of different bottom lines in the business. So, there’s your typical bottom line that business people think about. That’s the impact on revenues, profitability - in industrial settings it’s usually around safety and environment, reliability, cost-effectiveness, production etc.

But there’s also culture as a bottom line. What do you want your culture to look like? More and more we’re hearing that people want a culture of engagement, of ownership, of accountability. So, we need to be pinpointing performer behaviors that get at producing the results in a way that is consistent with your cultural definition or what you’re shooting for.

Now, we approach leadership from a behavioral perspective as well. In our own terminology we call it Q4 leadership.

So, if you envision a matrix where on one axis you’ve got leadership values and behaviors and the impact of leadership in the organization along one axis, the other axis is your results from poor results to really superb results. If you put those two things together, where our most positive leadership impact comes together with the highest results, is in the upper right-hand quadrant of that matrix - Q4.

So, what do the leaders that live within Q4 do? It’s not about being nice. It’s not about being pleasant. In fact, if you shoot to be liked as a leader, very likely you’re going to end up in a pleasantly non-competitive situation.

There’s a set of five fundamental principles for good leadership behavior, I like to call them "core leadership behaviors": setting expectations, observing, providing feedback, removing barriers, and coaching.

Q4 leaders set clear expectations. You need to make sure that people in your organization know what’s important and what you expect of them and how those behaviors and expectations tie in to the cultural imperative in the bottom line?

Leaders who are really good at setting clear expectations enables them to get out and observe in their organization - it’s not lurking behind pillar and post playing gotcha. It’s walking the floor, being in key meetings, talking to people, watching, listening, and asking questions. Based on the expectations set, the leader is observing performance in the organization and understanding what people are doing and achieving?

So, we set expectations. We observe performance. Those two things together allow them to do the next three things that are critical. That enables us to provide feedback contingent upon what we see and what we’ve heard – positive and constructive pointers. We’re working with them on identifying and removing barriers. There’s nothing more frustrating than having capable people with clear direction that can’t get the work done because something is getting in their way.

And then finally the fifth would be around knowing when to up the dialogue into a coaching conversation. So, that could be coaching for improving performance that isn’t quite there or it could be developmental coaching - that the leader has spotted that an individual is ready to raise their game and take it to the next level.

TH So, you’ve outlined and defined the five core leadership behaviors, but, in chicken and egg terms, which needs to come first?

LM Interesting question. To me it’s a dynamic system and so it’s either the chicken or egg depending on where you enter into the system. Culture influences what people do. It’s a set of rules or norms that guide people in what they say and what they do; leaders included.

So, leaders are no different than any other performer in their organization with regards to how they make their choices, how they spend their time, and what behaviors they engage in. Many of our clients have purposely identified culture change as critical because they recognize that relationship between cultural norms and organizational success.

For instance, let’s say we enter into an organization that has a command-and-control culture, or one where over the years it has been acceptable to really try hard irrespective of results. The executive leadership team recognizes they need to change things. They need the norms to change. They need the behaviors to change and they want a culture of involvement and ownership and accountability.

So, we’d hope to find out what that looks like in the new culture? What will people be saying and doing differently that demonstrates involvement and ownership and accountability and how do we help translate that into real behavior change for both leaders from the executive level right own to boots on the ground frontline?

So, I hope that answers it. It is a dynamic system in that the rules that are there in the culture at any point in time do influence the behaviors that people engage in – what people say and do – but leaders can come in and create the conditions to change those behaviors and thus resulting in a new culture.

TH It’s not the rosiest of metaphors but is your operational excellence management program the parasite in the host which is culture?

LM That’s a cool way to think about it. Maybe a slightly more positive metaphor coming from modern medical research is how researchers are taking viruses and inserting DNA into the virus to have that virus propagate throughout a sick body and take the new DNA and make the body healthy.

I work with clients who use the term operational excellence as the culture they want to reach as an end state. You can sit back and passively allow culture to evolve because it will. New people will come in.

New leaders or opinion leaders will emerge and that can result in your culture shifting whether or not you want it. You can take that passive laissez-faire approach, or you can very purposefully shape your culture in a different direction.

They’re saying, "we are going to decide what we want our culture to be" and are very rigorous about how they’re going to get there.

In large organizations, cultures are big and they take a long, long time to move. So, envision a multi-year shaping curve where maybe you started in 2010-2011 and you said, we’re going to start building some momentum around having a continuous improvement mind-set in our organization. Alongside that we’re going to work on building our leadership capacity from the senior levels right down to the front line. That may take a year or two to do.

Now let’s make sure that we’re getting the results of that endeavor. We’re going to raise the bar on, for example, safety and environment, reliability, cost, productivity, public relations, community relations, and so maybe that’s the next part in our shaping curve is. Your endgame might be, from starting in 2010 to shift our focus into continuous improvement and leadership capacity so that by 2015 we are working on operational excellence as the definition of our culture.

TH Laura, from your experience as a doctor of behavioral psychology, how do leadership culture and behavior interface with operational excellence in oil and gas? How do you actually engineer the conditions for that to exist in a business?

LM The bottom line is, nothing changes until behavior changes. So, you’ve got your programs in place. You’re talking about operational excellence. You’ve got the vision for what this looks like, what you want your business to look like. That’s all well and good, but really the only thing that’s going to bring you there is the people in your organization behaving in a way that’s consistent with your operational excellence vision.

What brings together strategy, process, even technology implementation, and your operations excellence vision is behavior. It’s what your people say and do at work. That’s where it all comes together and behavior must be positively managed by very intentional leadership in order to make that happen.

TH You’ve said that culture can’t change without behavior changing. How do you manage the process of that change?

LM That depends on very intentionally defining of what you need people to be doing. So, in an environment of operational excellence you’ve got people very focused on using the work processes effectively and managing the work outcomes.

Make sure that the direction is clearly understood and consistent throughout your entire organization. You’ve obviously got some communication planning and deployment to do there, but you’ve also got to make sure that you have your key performance indicators (KPIs). So, you have your KPI dashboard set up so that people have their scores. We know how we’re doing against our expectation. So, if, for example, as part of our operational excellence initiatives – we’re looking to increase our equipment availability and utilization up to their target levels, but right now we’re only operating at 50%, then we need to have a dashboard of KPIs that shows us if we are making progress toward that ultimate goal.

Then we need to look at the competencies within the organization. Do people have the right knowledge, skills and abilities to engage in the things we’re asking them to do both on a technical front and on a kind of interpersonal problem-solving front?

Then on-top of that, leadership needs to look at whether they have the opportunity to do it. That means they’ve got all the resources they need, all the tools, all the equipment, level of authority for decision-making, whether they have gotten all the gunk out of the system and the barriers out of the way? Then, finally, leadership need to make sure that the motivational conditions are there for people to act on these new behaviors. So, there have to be supporting and encouraging consequences throughout the organization to support people’s change.

TH And does that come in the form of incentivization of a monetary kind, a status-based incentivization, the use of champions?

LM All of the above. Having incentives certainly doesn’t hurt. It’s really interesting; the most impactful consequences for behavior change tend to be those things that happen regularly and immediately. So, good, supportive feedback from leaders based on your KPI data system.

Some may talk in terms of tangible rewards - that works for some, but it really is making sure that the immediate consequences are lined up with incentive systems and promotion systems so your immediate and delayed consequences are all lined up to get the new behaviors.

TH There’s a lot to be said for creative imitation in the business world, using an example of a company that’s actually doing this correctly and trying to follow that example. From your perspective, who is getting the balance of leadership, culture and behavior right to actually drive to operational excellence?

LM One of our clients that really is doing it right and it’s Mosaic Potash. When I meet with clients, if there’s a whiteboard around, I draw four boxes; one after the other.

So, what we’re doing is creating a line of sight from leader behavior through performer behavior to leading results that all sum up successfully to your lagging business outcomes. That’s always what’s in my head, that line of sight. What is the leader doing that is going to impact performers that will get new results at the local level that collectively are going to add up to operational excellence or whatever else it is that you’re shooting for?

That’s the model that Mosaic uses and they go through making sure that they’ve got their KPI cascade in place, but they start with their lagging outcomes. Throughout the organization they identify at an area and team level, what are your results numbers that contribute to the outcome, and then, what are the behaviors for the people in your group they need to do to get there?

And they’ve done a terrific job. It’s a fantastic example of bringing the behavioral leadership approach into your overall operations excellence formulation.

TH If you had 30 seconds to explain to somebody the key thing that you should do to get leadership culture and behavior all working together for operational excellence, what would that be? Go!

LM I would make sure that your senior team is absolutely aligned on what operational excellence means and what that means in terms of your outcome measures. Sit down. Define what a perfect day in your organization looks like vis-á-vis operational excellence. Make sure you understand what the drivers of the perfect day are and who needs to do what in to get there and then, what’s your role in making it happen?

TH That was 20 seconds.

LM [Laughs] Was that 20? Well the notion of the perfect day is critical because operations excellence is the sum of what so many people do every day and so operations excellence is not at a given point in time. It’s the sum of many people doing the right thing day in, day out, day after day. So what does your perfect day look like? Making sure everybody goes home safe? Ensuring you don’t harm the environment? That you’ve got safe, reliable, cost-effective production? Define your perfect day and then make sure everybody in the organization knows what to do to contribute to that and that they’re reinforced for doing it.

TH Laura, that’s everything I wanted to ask. Thanks so much for your time.

LM Sure. My pleasure, Tim.

To meet Laura and learn more about the common culture hurdles and management behaviors that can hinder operational excellence – and how to overcome them – join us at the upcoming Operational Excellence in Oil and Gas Summit, taking place in Calgary June 1-3. www.opexinoilandgas.ca