Keywords

6.1 Introduction

The escalating societal dependence on organizations for critical services and products brings into question, especially in the wake of major accidents, the dependability of organizations. As a result, organization capability to reliably operate risky technologies under challenging conditions remains a major topic for research, policy, and practice [1]. As used here, organizational reliability encompasses multiple distinct and related concepts such as performance consistency, service continuity, safety, recovery, and resilience [2]. It refers to the organization’s ability to continuously provide a critical set of products or services of predefined quality without disruption by intentionally managing the risks to the safety of processes and people within and without the organization. In addition, it also refers to the organizational ability to respond to and recover and learn from adverse events [3].

Researchers from multiple disciplines continue to investigate the antecedents and consequences of organizational reliability. Given the intensely local nature of the activities that constitute reliability management, much of this research has understandably focused on the immediate or local context for hazardous operations. That is, most studies have tended to focus on the characteristics of technologies and of the people and teams that operate them. In doing so, however, a key aspect of the organizational context has received relatively less attention—top management teams (TMT) or the group of influential executives at the apex of an organization, i.e., the CEO and their direct reports. By widening the focus from individual leaders to the senior leadership group, this term captures the reality that top management is typically a shared activity [4].

The limited attention to the role of TMTs in enabling organizational reliability is surprising given that several organizational studies suggest that top management can exert strong effects on the choices and actions of frontline teams and employees [5], and, hence, organizational reliability. These effects come about by the choices of top management in setting strategic agenda that in effect conveys the ordering of organizational priorities including reliability management, allocating resources including attention, designing the formal organization and incentives, and enacting the organizational culture.

6.2 Method

Drawing on my research and consulting work around patient safety with top management teams in US hospitals over the past two decades [6], I propose that “implicit theories” that top managers hold about organizational reliability have a significant impact on how frontline employees approach the task of managing reliability and, hence, on reliability-linked outcomes. Specifically, I argue that such implicit theories (“orientation” for short) can be thought of as varying along a continuum ranging from modular at one end to systemic at the other. Further, a more modular orientation leads to a stronger organizational emphasis on strict compliance whereas a more systemic orientation emphasizes local initiative by enabling employees to go “above and beyond” formal rules when appropriate. I describe the two ends of the continuum and their implications for organizational reliability (Table 6.1). I then point out recent trends that warrant a shift toward a systemic orientation across industries and discuss some initial implications for research and practice. I offer these comments as speculative hypotheses to stimulate discussion at the workshop.

Table 6.1 Features of TMT orientation toward organizational reliability
Full size table

6.2.1 TMT Organizational Reliability Orientation

My core premise is that TMT’s choices and actions profoundly shape the organizational pursuit of reliability in ways that are insufficiently understood and, therefore, warrant further research. In particular, top managers’ shared orientation toward organizational reliability (i.e., their shared understandings or mental models about what is needed for an organization to be consistently reliable) can exert strong yet invisible effects on the rule-based actions of frontline employees. This orientation, which is typically implicit, often differs from what TMT might explicitly espouse. Speaking of the TMT in her hospital, a nurse told me, “I know the senior leaders genuinely care about patient safety. I just don’t think they get it though”. She elaborated, “they keep saying the right things like safety is everyone’s responsibility. But everything they do when something goes wrong screams that they actually believe that it is the responsibility of a few people”. Therefore, organizational reliability orientation is best inferred from TMT’s observable patterns of behaviors, e.g., the metrics they attend to regularly and their response to adverse events.

6.2.2 Modular Orientation

The following are some of the key assumptions underlying what I call a modular (or subsystemic) TMT orientation toward organizational reliability. Examples in parentheses refer to corresponding observable TMT choices and actions as reported by lower-level employees.

  • Operations are highly stable and routinized (e.g., emphasis on rule making and standardization; rules and process-related and outcome-related metrics reviewed by TMT rarely undergo revisions)

  • Work can be highly complex, but it is unlikely to be highly uncertain or highly ambiguous (e.g., reliance on large set of very specific rules and SOPs to manage complexity; exceptions are treated either as a variation that can be costly or as a violation that can expose the organization to risk; employees infer this from how TMT asks only about how to prevent recurrence, and not about whether the exception was justified)

  • Interdependence can be adequately managed through formal coordination mechanisms such as schedules and protocols (e.g., absence of any visible efforts to encourage collaboration)

  • Reliability is an individual responsibility (e.g., reflexive TMT questions about “who is accountable?” whenever there is an adverse outcome that strongly suggest that they are looking for a few specific names)

  • Risks can be proactively managed through incentives and supervision (e.g., linking extrinsic rewards to meeting “safety targets”; performance evaluations discuss instances of employee non-compliance with rules)

  • Growth, profits, and innovation represent more pressing priorities than organizational reliability (e.g., responsibility for reliability-related outcomes such as safety, quality, or risk management are assigned to lower-ranked persons in the organizational chart; reliability-related metrics are monitored less frequently by TMT compared to financial metrics; less time is allocated to discussing reliability during TMT meetings).

6.2.3 Systemic Orientation

The following are some of the key assumptions underlying what I call a systemic TMT orientation toward organizational reliability:

  • Operations are dynamic, evolving, and subject to disruptions (e.g., regular review and revisions to metrics that are reported to TMT, not infrequent changes to rules and SOPs)

  • Work is not only highly complex, but can occasionally also be highly uncertain and ambiguous (e.g., exceptions are treated as inevitable features of the nature of work and used to revise rules and protocols including drop** some rules if necessary; TMT response starts with “why did the employee deviate from the rule?”)

  • Managing interdependence requires both formal coordination mechanisms as well as informal collaboration (e.g., TMT efforts to create psychologically safe environments to encourage information sharing; relying on incentives beyond extrinsic rewards to encourage employees go “above and beyond” the requirements of their formal roles and rules)

  • While many risks can be proactively managed, some risks will require improvisational response (e.g., greater autonomy to frontline employees, reliance on guidelines rather than on overspecified rules, TMT praise for employee initiative that comes to their attention)

  • The pursuit of reliability co-occurs with the pursuit of other potentially conflicting organizational goals such as growth, profits, sustainability, and innovation, and with other organizational pressures such as speed, efficiency, and costs (e.g., discussions about reliability-related issues rarely occurs in isolation nor limited only to people directly tasked with managing reliability; people at all levels discuss reliability in tandem with other objectives).

TMT orientation varies along this continuum ranging from modular to systemic. It potentially affects organizational design, performance measurement and incentives, and incident investigations in ways that can either widen or bridge the gap between how frontline employees experience work demands and how they can respond to such demands. For instance, a modular TMT orientation makes it more likely that the organizational design will tend toward the mechanistic (i.e., high formalization, standardization, and centralization), supervisors will emphasize rule-following, safety might more likely be relegated to the status of a lower-level operational concern that is monitored infrequently if at all by TMT. It is conceivable that in many settings such an orientation might not have any significant adverse effects on reliability. Indeed, in many settings a modular orientation can perhaps even enhance organizational reliability.

Several basic questions arise in the wake of this framing: Do these assumptions generally hold together as a coherent orientation as they do in our sample? How is the TMT location on this continuum related to outcomes linked to organizational reliability? What can account for why some TMTs are nearer one end of the continuum than the other? If a more systemic TMT orientation to organizational reliability is preferable as suggested by our qualitative work, how costly is it? Is TMT orientation outlined above related to the different context-specific safety models?

6.2.4 The Case for a Systemic Orientation

Based on data from a small sample of TMTs from a self-selected set of hospitals that espouse strong commitment to patient safety, I would expect a significant majority TMTs in US hospitals to cluster toward the modular end of the continuum. If that’s the case, it suggests that most hospital TMTs overemphasize compliance and constrain local initiative even when such initiative does not violate any regulatory or evidence-based guidelines but is critical for reliability.

However, several recent trends call for an increasingly initiative-driven approach to organizational reliability, i.e., an urgent shift toward a more systemic TMT orientation. First, the growing turbulence and disruptions in the post-Covid world as evidenced by sudden changes in employee work expectations and turnover shows few signs of abating or sparing any industry. Therefore, even industries that were operating in relatively stable task environments suddenly face the need to encourage their employees to adapt by improvising if necessary (“do more with less”). Second, public intolerance for organizational errors and lapses continues to intensify. Healthcare veterans talk about how simple non-harmful medication error that would have been dismissed as a normal part of delivering care even as recently as ten years ago is more likely to be viewed as unacceptable. In other words, the margin for error in shrinking. Third, the advent of social media has dramatically accelerated and amplified the costs of even small mishaps. As a result, even as the margin for error keeps shrinking, the potential costs of smaller errors keep rising.

Fourth, even as the above trends impose higher expectations about organizational reliability, organizations are being increasingly held to multiple standards rather than to a single metric such as earnings or stock value. Consider healthcare delivery. Effective care is defined as care that is at once safe, efficacious, efficient, equitable, timely, and patient-centered. The emergence of ESG is another example that now requires organizations to pursue multiple competing priorities while also operating reliably. In short, organizations are expected to become even more reliable even as they are evaluated on other priorities. Compliance-driven organizing is unlikely to meet these demands.

Finally, and especially in the US, there appears to be a rising chorus of calls for “organizational accountability” in the aftermath of major accidents. A particularly dramatic example was the deadly explosion of a gas pipeline operated by PG&E in San Bruno. NTSB’s investigation concluded that this was “an organizational accident” thereby forcing the media and the courts to ponder about what it means to causally attribute an accident to an organization. In a subsequent unrelated court ruling involving a wildfire set off by faulty PG&E equipment, the company was held criminally negligible. Such rulings, at least in the USA, portend a quick shift to assigning primary agency to organizations rather than to its individual employees. A modular TMT orientation toward organizational reliability seems difficult to defend from a legal perspective.

Given the need for a shift in TMT orientation, it is perhaps useful to briefly consider what can account for prevalence of a modular orientation. As a business school professor who has taught MBA students and executives for over two decades, I would start with how managers are taught and trained especially in business schools. Simply put, management education is essentially silent about organizational reliability. The implicit assumption seems to be that understanding organizational reliability is not critical to becoming a business leader and that organizational reliability will be managed by “non-managerial” specialists. Similarly, academic courses on organizational design focus almost exclusively on designing for efficiency, innovation, and agility. Moreover, several courses in finance and economics routinely emphasize individual agency and the primacy of incentives, formal rules, and metrics for managing coordination and performance. As a result, holding individuals accountable for adverse outcomes is almost a reflexive response even when such actions are carried out in the context of interdependent teamwork.

Another reason could be that most TMTs remain psychologically distant from the operating core, the frontlines of organizational reliability [7]. Psychological distance includes temporal distance (when something happens), spatial distance (where it happens), social distance (to whom it happens), and hypothetical distance (whether it is likely to happen). High psychological distance can cause TMTs to view reliability in abstract terms rather than in concrete terms and in ways that reinforces a modular orientation. As a result, TMTs might pay attention to the details underlying organizational reliability only when things go wrong. In other words, TMTs with a modular orientation often think about organizational reliability only in response to things going seriously wrong and that too in the context of emotion-laden and lawyer-guided discussions about costs, risks, and accountability. Behaviors with respect to pre-existing rules become the basis for analysis and the response and the learning tend to reinforce the importance of compliance.

6.2.5 Toward a Systemic Orientation

Shifting TMTs toward a more systemic orientation presents challenges and opportunities for research and practice. How can we get TMTs to revise their assumptions about the nature, significance, and the practice of organizational reliability? Foundational to addressing this question is gaining a better understanding of the roles that TMTs in the enactment of organizational reliability. Although several studies have identified the importance of “top management support” and “top management commitment” for aiding the frontline staff, much remains unknown about the conditions under which some TMTs simultaneously promote compliance as well as initiative.

Equally, there is an urgent need to develop training programs for TMTs and their boards about enabling, enacting, and enhancing organizational reliability. Additionally, organizational reliability needs to be incorporated as an essential component of general management education. Another option, which we explored in one of our studies, is to periodically reduce the psychological distance of TMTs by creating opportunities for them to first-hand observe and perhaps even experience the challenges of managing organizational reliability. Finally, it is important to figure out ways to routinely link discussions of reliability to competing priorities especially costs. For example, in healthcare, discussions of quality and safety of care typically proceed without reference to costs, the reduction of which is right at the top of the agenda of most hospital TMTs. Efforts to reframe the discussions around the notion of value (outcome per dollar spent) accompanied by other enabling interventions (e.g., integrated organizational units, more relevant metrics) show some initial promise in hel** providers to simultaneously improve quality (including patient safety) while also reducing costs. A key takeaway from these studies is that linking quality and costs can lead to a more flexible and collaborative approach to rule-following.

6.3 Conclusion

Top management teams exert important yet understudied impact on organizational reliability broadly defined. A particularly important avenue for research is examining the role of TMT orientation in positioning the pursuit of organizational reliability in reference other organizational priorities such as growth, innovation, sustainability, and profits. In other words, under what conditions does organizational reliability emerge as a strategic, not just an operational, priority?