the role of organizational factors.pdf

The Role of Organizational Factors in AchievingReliability in the Design and Manufacture ofSubsea EquipmentKatharine Parkes, Melinda Hodkiewicz, and David Morrison

University of Western Australia, Crawley, Western Australia, Australia

Abstract

Failures of equipment used in deepwater oil and gas production are potentially hazardous, difficultand costly to rectify, and damaging to the environment; a high degree of reliability over many yearsof continuous operation is therefore an essential requirement of subsea systems. Although technicalissues have been widely investigated, less is known about the organizational factors that promote highreliability in the design, manufacture, and installation of these systems. This review draws on studiesof high-reliability manufacturing and process industries to examine the roles of intraorganizationalfactors (particularly organizational culture) that may promote or detract from the achievement of highreliability in subsea systems. External factors, such as supply chain coordination, are also considered.Studies of organizational change designed to enhance the reliability of design and manufacturingprocesses are rare in the subsea industry, but relevant issues arising from change initiatives in otherorganizational settings are discussed. Finally, several areas are identified in which systematic industry-based research could contribute to identifying critical elements in the development and operation ofsubsea systems and, hence, reduce the risk of failures. C© 2011 Wiley Periodicals, Inc.

1. INTRODUCTIONIn recent years, subsea systems have played an increas-ingly important role in deepwater oil and gas produc-tion. Such systems impose complex engineering de-mands, coupled with a requirement for many years ofcontinuous, fault-free operation. These requirementshave been addressed in the development of formal stan-dards for system reliability and technical risk manage-ment (American Petroleum Institute [API], 2009), andtesting and qualification procedures have been progres-sively refined (Horan, Starkey, Lucas, & Wheeler, 2008).

Correspondence to: Katharine Parkes, School of Psychology,University of Western Australia, 35 Stirling Highway, Crawley,Western Australia 6009, Australia. Phone: +61 8 6488 3267;e-mail: [email protected]

Received: 26 November 2009; revised 13 December 2010;accepted 5 January 2011

View this article online at wileyonlinelibrary.com/journal/hfm

DOI: 10.1002/hfm.20290

More generally, modeling and simulation approachesto reliability engineering have become increasingly so-phisticated (e.g., Zio, 2009). However, achieving highreliability in complex systems also depends criticallyon the culture and environment of the organizationsin which the systems are designed and produced. Thisarticle reviews information from a wide range of lit-erature concerned with organizational characteristicsconducive to the achievement of high reliability in thedesign and manufacture of complex engineering sys-tems, with particular reference to equipment used insubsea oil and gas production.

Subsea developments continue to expose operat-ing companies to unforeseen technical demands andvery high costs, while requiring exceptional standardsof equipment reliability (Deans, 2009; Denney, 2003;Horan, Starkey, Lucas, & Wheeler, 2007). Subsea sys-tems are typically located in remote deepwater areas;thus, once deployed, repair or maintenance necessi-tated by failure of a component is likely to involve

Human Factors and Ergonomics in Manufacturing & Service Industries 22 (6) 487–505 (2012) c© 2011 Wiley Periodicals, Inc. 487

Organizational Factors, Reliability, and Subsea Engineering Parkes, Hodkiewicz,and Morrison

elaborate technical procedures, if indeed it is possibleat all. The need to avoid early-life failures is especiallycrucial, as such failures are not only difficult and costlyto rectify but also can seriously delay scheduled produc-tion, thus incurring further costs. Moreover, attemptsto remedy subsea malfunctions expose personnel to therisks of deepwater operations; potential environmentaldamage resulting from subsea failures is a further con-cern. Currently, in view of the increasing complexity ofsubsea production and process systems, and the highcosts of recovery in the event of failure, it is recognizedthat “the reliability of subsea systems has never beenmore critical” (Deans, 2009, p. 118).

Designing and implementing solutions appropriateto the remote operating environment is an essentialpart of the process of producing subsea equipment;at every stage, from initial conceptual design to even-tual deployment, reliability has to be built into thesystem. To maximize reliability, the design, manufac-turing, and deployment process requires effective co-ordination and communication between the operatingcompany and the entire supply chain of contractors,manufacturers, and specialists. At each stage in theprocess, a high level of integration across organizations(each with different characteristics, reflecting cultures,structures, and functions) is critical to system relia-bility; effective integration is particularly important asthe probability of failure at each phase of the procure-ment process has a multiplicative effect on final relia-bility. In addition, tight handover schedules can exac-erbate problems associated with transfer of ownershipand acceptance of responsibility at each stage in theprocess.

It is not surprising, therefore, that reliability im-provement has been identified as a core prerequi-site to the future selection of subsea solutions fordeepwater and marginal developments (Williams,Robertson, Haritonov, & Strutt, 2003). Noting the lackof studies that address the role of organizational char-acteristics and behavior in relation to subsea relia-bility, Busby and Strutt (2001) pointed out that “Ifan understanding of organizational shortcomings lagsunderstanding of the technical mechanisms of fail-ure, such as wear, corrosion, cracking and so on, en-gineering systems will continue to fail in ways thatthe outside world will regard as being foreseeable”(p. 1471).

However, in other organizational contexts, lessonslearned by researchers and reliability specialists offersome understanding of how organizational culture,

structure, and associated processes influence reliability.In particular, from the point of view of creating a high-reliability organizational culture, subsea engineeringhas much in common with aviation and space tech-nology, including satellite deployment and space ex-ploration (e.g., Heimann, 2005; Sadeh, 2006). In eachcase, opportunities for correcting faults that occur inservice are very limited, and postdeployment access orasset retrieval (if possible at all) requires costly technicalresources. Such systems impose exceptional demandsfor fault-free operation. Moreover, in other industries,such as automobile manufacture, software design, andcomplex medical equipment, high-product reliabilityhas become increasingly important to ensure con-tinued competitiveness in a global marketplace (e.g.,Vogus & Welbourne, 2003). In each of these settings,organizational characteristics that promote high reli-ability are essential to achieving successful outcomes;drawing on the literature in this area, this article focuseson the achievement of high reliability in subsea sys-tems. First, to set the topic in context, stages in the pro-cess of commissioning, manufacturing, and deploy-ing subsea systems are outlined, highlighting aspectsof the industry that tend to mitigate against systemreliability.

2. THE SUBSEA INDUSTRYThe subsea oil and gas industry operates worldwide,but only a limited number of organizations have the ca-pacity, skills, and physical resources to contribute. Theindustry is highly capital intensive with long lead timesbetween the initial investment and financial returns. Asshown in Figure 1, there are typically six phases in thelife cycle of oil and gas developments: 1) concept, 2)design, 3) fabrication and procurement, 4) installationand commissioning, 5) operating, and 6) decommis-sioning. The operational phase usually extends overmany years, hence the importance of long-term relia-bility.

The initial stage of development, the concept orbasis of design, is usually undertaken by the assetowner’s engineering team. In contrast, at the designstage, multiple organizations are involved, each with itsown technical expertise; designs are then tendered toother organizations for procurement and fabrication.Consequently, many parties take part in the develop-ment of a single system. For example, as illustrated inFigure 2, a manifold destined for installation in a subseamodule on, say, the North-West Shelf of Australia may

488 Human Factors and Ergonomics in Manufacturing & Service Industries DOI: 10.1002/hfm

Parkes, Hodkiewicz,and Morrison Organizational Factors, Reliability, and Subsea Engineering

Figure 1 Phases in the subsea asset life cycle.

incorporate components and processes originatingfrom all over the world. Thus, several different coun-tries, and companies with different cultures and lan-guages, are likely to be involved in the manufacture ofa single system.

Subsea oil/gas systems are typically installed in re-mote deepwater areas. The number of organizationsinvolved during installation is relatively small, as fewcompanies have the required physical infrastructure(such as lay barges) to manage the installation process;however, cost and time pressures are particularly se-vere at this stage. Following installation, the system iscommissioned and, finally, handed over to the oper-ating company. The first few months of operation arecritical as faults occurring early in the life of a subseasystem may give rise to costly failures and productiondelays. Given the scale of investment and the pres-sure for financial return, the consequences of early-lifefailure are likely to be highly detrimental to the assetowner and, potentially, for the contractors/suppliersinvolved.

To minimize the risk of early-life failures, consider-able effort is made at the design stage to ensure that thesystem meets specified reliability standards. In seek-ing to achieve the required reliability level, extensiveuse is made of engineering processes such as reliabil-ity block diagrams, failure modes and effects analysis,fault and event tree analysis, and simulation (Rausand& Høyland, 2004). Values for these models are basedon experience of previous failures, generic industrydatabases, and expertise of the team. An issue of par-ticular concern to reliability specialists is how to expressand quantify common cause system failures (i.e., fail-ure of multiple components due to a single occurrenceor condition).

Edwards and Watson (1979) classified the reasons forcommon cause failures at each phase of the life cycle,identifying inadequacies in control, operations, design,quality control, inspection, testing, procedures, super-vision, and communication. In the majority of thesecases, the behavioral characteristics of humans, and thenature, appropriateness, and timeliness of their deci-sions and actions, are potential contributory factors.However, accounting adequately for the human andorganizational characteristics that influence system re-liability remains a challenge for engineers seeking todevelop reliability models.

This challenge can be more effectively managedif the role of organizational factors, and their im-pact on the attitudes, behaviors, and decision mak-ing of organization members, is understood in rela-tion to the nature of the subsea industry (specifically,dependence on multiple companies worldwide; longsupply chains; the need to coordinate equipment,components, and documentation across countries, or-ganizations, and work groups; severe time and costpressures). In seeking to address the role of organiza-tional factors (particularly organizational culture) inthis context, particular attention is given to the rela-tively few published documents that directly addressissues of reliability in the petroleum industry; in addi-tion, the review draws widely on research carried outin other manufacturing and process industries withhigh-reliability requirements. The article also takes intoaccount our insights from inspecting subsea failurerecords and lessons learned databases, and from dis-cussions with senior petroleum industry managers re-sponsible for subsea developments.

In the following review sections, the topic of or-ganizational culture is addressed first, reflecting the

Human Factors and Ergonomics in Manufacturing & Service Industries DOI: 10.1002/hfm 489


Figure 2 Diversity of organizations and geographic locations involved in the installation of a subsea manifold.

primary importance of culture in the achievement ofhigh reliability. Thus, theoretical approaches to orga-nizational culture, their relevance to high-reliabilityenvironments, and, more specifically, the roles of lead-ership, communications, error management, and col-lective mindfulness in promoting high reliability, areconsidered in Section 3. Culture is also an importantfactor underlying effective organizational learning andknowledge management processes, which are essentialprerequisites for high reliability, as described in Sec-tion 4. Other relevant factors considered include thecontribution of human resources policies to creatinghigh-reliability organizations (Section 5), and orga-nizational structure, and its implications for the flowof reliability information and feedback across hierar-chical levels (Section 6). The use of capability matu-rity models for assessing organizational capability asapplied to the achievement of high reliability is de-scribed in Section 7. Finally, extending the material inthe previous sections, Section 8 discusses the processof organizational change designed to enhance relia-bility. Although the review draws on findings froma wide range of manufacturing and process indus-tries, the focus throughout is on identifying organi-zational factors relevant to the achievement of highreliability in the design and manufacture of subseaequipment.

3. ORGANIZATIONAL CULTURE

The meaning and interpretation of the term orga-nizational culture has been extensively debated (e.g.,Choudry, Fang, & Mohamed, 2007; Denison, 1996;Guldenmund, 2000) but, as Reiman, Oedewald, andRollenhagen (2005) point out, no clear or widely ac-cepted definition has emerged. In the present context,organizational culture can be most readily understoodas “a combination of the attitudes, experiences, beliefs,values, and norms of an organization. It develops overtime as people and the environment change, and orga-nizational processes and procedures, both explicit andtacit, evolve” (Resnick, 2007, p. 1483). More formally,Schein (2004, p. 17) defines organizational culture as “apattern of shared basic assumptions that was learned bya group as it solved its problems of external adaptationand internal integration, that has worked well enoughto be considered valid and, therefore, to be taught tonew members as the correct way to perceive, think andfeel in relation to those problems.” Schein’s model dis-tinguishes three levels of culture, ranging from artifactsthat represent the visible surface level; to norms, es-poused beliefs, and values as an intermediate level; tobasic assumptions (unconscious beliefs, perceptions,thoughts, and feelings) that represent the deepest levelof culture. In work settings, these core assumptions are



reflected in ways of structuring and organizing workprocesses and tasks.

For Reiman and Oedewald (2007), culture incorpo-rates three broad elements: 1) organizing of work, prac-tices, structures, competence of personnel, tools andhistory; 2) internal integration, climate, and norms;and 3) conceptions concerning the demands of thework, organization, safety, and effectiveness. In thissociotechnical model, organizational culture and the“organizational core task” (i.e., the shared objectiveor purpose of the organizational activity) are closelylinked in a bidirectional relationship. Thus, culture in-cludes the process of formation and reformation ofconceptions concerning the organizational core taskand the means to fulfill it, and the core task createsconstraints and requirements for activity, which im-pact on culture. We use these concepts to develop aqualitative analysis model for cultural assessment.

3.1. Organizational Culture and theAchievement of High Reliability

Organizational culture in the broad sense previouslyoutlined is widely believed to play a crucial role in pro-moting high reliability (Bierly, Kessler, & Christensen,2000; Koufteros, Nahm, Edwin Cheng, & Lai, 2007;Wilkins & Ouchi, 1983). Weick (1987) considered or-ganizational culture to be the source of high reliabil-ity, while Resnick (2007, p. 1483) observed that “theeffects of organizational culture on system reliabilitycannot be understated.” Moreover, measures of orga-nizational culture predict reliability-related outcomes,including customer satisfaction and the quality ofproducts and services (Balthazard, Cooke, & Potter,2006; Bates, Amundson, Schroeder, & Morris, 1995;Chatman & Jehn, 1994). A culture of reliability mani-fests itself in the shared beliefs of organizational mem-bers about what constitutes appropriate, competent,and reliable behavior, and in high levels of communi-cation among members. High-reliability organizationsengage in rigorous learning, continually search for im-provement, undertake systematic feedback and review,and reward the discovery of error; they reflect on prac-tice, actively seek information, and welcome new ideas(Busby, 2006).

This form of socialization allows authority and deci-sion making to be decentralized to the lowest possiblelevels of the organization with confidence that subordi-nates will have the necessary knowledge, skills, and dis-cretion to take appropriate actions. Such an approach

exemplifies one of the cornerstones of sociotechnicalsystems design, a typically flat organizational structure,in which control over processes and the authority to actare located as close as possible to potential sources ofsystem discrepancies, or “variances” (see Clegg, 2000).Thus, relative to more hierarchical structures, jobs areless specialized and more complex, necessitating tech-nically qualified, self-motivated employees. In contrastto a culture that promotes reliability, a maladaptive ordysfunctional culture has a negative impact on perfor-mance; for example, the culture at NASA (which leddecision makers to ignore key evidence and overesti-mate component reliability) has been identified as aroot cause of the Challenger and Columbia disasters(Heimann, 2005; Resnick, 2005; Sadeh, 2006; Wong,Desai, Madsen, Roberts, & Ciavarelli, 2005).

As described next, several particular attributes of or-ganizational culture (leadership, communication, er-ror management, and collective mindfulness) havebeen widely identified in the literature as critically im-portant to the creation and maintenance of a cultureconducive to the achievement of high reliability.

3.1.1. Leadership

Organizational culture is shaped by the philosophy,values, skills, and leadership qualities of the top man-agement personnel. Thus, Schein suggests that thefunction of leadership is the creation and manage-ment of culture (Schein, 1992),and that culture andleadership are two sides of the same coin (Schein,2004, p. 1). The need for senior management tomake a major commitment to reliability, and to ac-tively engage and inspire employees with this com-mitment, has frequently been identified as essentialto a high-reliability culture (e.g., Heimann, 2005;Laporte & Consolini, 1991; Roberts, 1990). In partic-ular, Ericksen and Dyer (2005, p. 917) noted the needfor managers to “embed an obsession with reliability”throughout the organization.

Strong managerial commitment to the creation of areliability culture ensures that the importance of spe-cific behaviors (in this case those that promote relia-bility) is transmitted clearly and effectively, both in-ternally through the organization and externally tocontractors and suppliers. Moreover, unless reliabil-ity is given a consistently high priority, funds maybe diverted to other company purposes, thus expos-ing the organization to the risk of a “cycle of failure”(Heimann, 2005), a process whereby continued success



in preventing failures leads to resources being progres-sively transferred to other areas until a failure occurs,when resources are again allocated to enhance reliabil-ity, and the cycle repeats.

In the petroleum industry, the need for strong lead-ership commitment to reliability is widely recognized.More specifically, in implementing reliability initia-tives, the need to engage a key corporate sponsor, or“champion,” to provide leadership and motivation forchange, and local coordinators imbued with reliability“fever,” has been identified as essential to a successfuloutcome (Holmer & Moran, 2008).

3.1.2. Communication

The importance of frequent and effective communi-cation in promoting high-reliability performance, andthe role of senior management in encouraging opencommunication, has been widely acknowledged; con-versely, breakdown of communication is a significantcontributor to major failures and accidents (Bea, 2006;Koufteros et al., 2007; Resnick, 2005; Roberts & Bea,2001). Frequent verbal interaction among operatorsfacilitates anticipation and regulation, thus allowingsystem errors and flaws to be detected and reversed, orprevented altogether (Carvalho, Vidal, & de Carvalho,2007). More generally, good communication amongemployees, both across hierarchical levels and amongwork groups at the same level, allows information tobe shared, problems to be reported, views to be ex-changed, and positive interpersonal relationships tobe maintained. However, Resnick (2007) warns againstoveruse of electronic means of communication, notingthat management–employee relationships create chal-lenges that cannot be overcome solely through com-munication technology; indeed, excessive intraorgani-zational communication may detract from reliabilityrather than facilitate it.

Weick (1987) emphasizes that face-to-face commu-nication facilitates developing trust and sharing infor-mation. He identifies lack of face-to-face communica-tion as a contributor to the flawed decision to launchthe Challenger in unusually cold conditions; this deci-sion was taken during a telephone conference call, thuseliminating nonverbal cues that might have revealedthe extent of unease among the engineers involved.Weick (1987, p. 115) also notes the stereotypical de-scription of engineers as “smart people who don’t talk,”suggesting that this characteristic could lead them todevalue direct communication, thus limiting the “in-

formation richness” needed to manage complex sys-tems successfully.

Information richness is highest when people workface to face and declines steadily from face-to-face in-teraction to interaction by telephone, by e-mail, by let-ters and memos, and by numeric computer printouts.However, the effectiveness of communication also de-pends on matching the degree of information richnessto the complexity of the topic, avoiding both the in-efficiency of overcomplication and the inaccuracy ofoversimplification. Thus, the right information mustbe conveyed to the right person at the right time to com-municate all necessary implications and consequenceswithout overloading the recipient with data (Resnick,2005).

The physical location of personnel employed on ajoint project also has important implications for com-munication; in particular, Ramanujam and Goodman(2003) note that colocated and distributed work set-tings differ in information and social contexts. Whereascolocated settings foster face-to-face communicationand information richness, distributed work settingsreduce information richness by necessitating alter-native means of communication, such as telephoneand e-mail. Moreover, time and distance tend to re-duce the perceived importance of communicationamong remote work groups engaged in joint projects.Thus, maintaining effective interactions among multi-ple companies operating in different geographical ar-eas, requires more effort than if organizations oper-ate from a single site. In these circumstances, goodinterorganizational communication and coordinationmay require special interface management and docu-ment control procedures.

These issues are particularly relevant to subsea op-erating companies and their suppliers who are widelyspread around the world, and among whom main-taining effective communication is crucial to ensuringreliable performance of core tasks as projects progressthrough successive life cycle stages, involving differentlocations, organizations, and work groups. Figure 3illustrates the complexity of subsea project manage-ment, and the challenge of ensuring effective commu-nications when several organizations participate in asingle phase of the procurement process, and, evenwithin organizations, close cooperation is requiredamong groups with different skills sets and exper-tise. Communication across these work groups maybe constrained not only by distance but also by dif-ferences in subcultures between groups with different



Figure 3 Example of different organizations involved in subsea development.

professional and technical backgrounds (Schein, 1996,cited in Choudry et al., 2007). Moreover, transitionsacross successive project stages typically involve a trans-fer of responsibility from one organization to another,thus necessitating close cooperation among companiesthat may have very different cultures.

3.1.3. Error Management

Effective communications play a vital role in managingerrors at each stage of the system life cycle and, hence, inorganizational learning. Research suggests that learn-ing from mistakes is difficult in many organizationsbecause employees often choose not to record or todisclose errors, thus creating a barrier to learning atthe group or organizational level; consequently, pre-vention of future errors is hindered (Zhao & Olivera,2006). Organizational learning may also be hinderedif work is carried out under severe time pressures andthe recording and analysis of errors is not given priorityby managers, thus limiting opportunities for reflectivelearning.

The term error management culture refers to the wayin which errors are handled in an organization. Posi-tive error management (which implies that errors are

regarded as opportunities for learning, rather than as-signing blame) has important implications for orga-nizational learning; it is also associated with organi-zational goal achievement, favorable economic per-formance, and increased profitability over time (vanDyck, Baer, Frese, & Sonnentag, 2005). Rather than at-tempting to eliminate errors altogether, positive errormanagement focuses on reducing the negative con-sequences of errors and increasing the positive con-sequences. It includes encouraging communicationabout errors and sharing error knowledge. Individualattitudes are also important in relation to an organiza-tion’s error culture; a positive error culture is charac-terized by a strong orientation on the part of individu-als and groups to learn from errors and to communi-cate, anticipate, analyze, and actively deal with errors(Rybowiak, Garst, Frese, & Batinic, 1999).

Two particular issues relating to error managementhave been identified in the subsea industry. First,Roberts, Strutt, and Eriksen (2001) suggest that fear ofa blame culture and possible damage to individual rep-utations tends to affect the honesty and transparencyof feedback information transmitted through the orga-nization and its supply chain. For suppliers, the possi-bility that any admission of fault could lead to financial



penalties further adds to such concerns. Hence, poten-tially important feedback may be suppressed and thusopportunities for organizational learning may be lost.Resnick (2007) raises similar issues of accountabilityand blame in a more general organizational context.

Second, Busby and Strutt (2001) note that subseafailures are “postponed” (that is, they do not occuruntil after installation of the equipment). These fail-ures are due to “latent errors” (Reason, 1990); sucherrors occur at earlier stages of the system life cycle(e.g., design and manufacture), but their adverse con-sequences are not apparent until much later. In subseasystems, the design stage is separated in both time andlocation from the operational stage; thus, attention toreliability analysis during the design process may bereduced, particularly if there are constraints on timeand resources. In sociotechnical terms, the separationin time and place of “variances” and the opportunity toobserve them creates a dual disadvantage; feedback isdelayed too long for learning and remediation to occur,and the chain of responsibility is broken. Under thesecircumstances, individuals must be constantly vigilantto recognize and correct errors in a timely manner,characteristics that contribute to “collective mindful-ness.”

3.1.4. Collective Mindfulness

From an organizational perspective, collective mind-fulness reflects a heightened capacity for vigilance andmonitoring and a sensitivity to possible failure thatallows people to react to even very weak signals thatsomething is not quite as it ought to be (Coutu, 2003;Weick, Sutcliffe, & Obstfeld, 1999). A mindfulnessculture encourages organizations to anticipate futureproblems, to avoid repeating earlier failures (Pettersen& Aase, 2008), and to be constantly alert for ways toimprove products (Brown & Eisenhardt, 1997).

The concept of mindfulness has been applied tooffshore drilling processes (Aase, Skjerve, & Rosness,2005), although not in the subsea industry. Nonethe-less, collective mindfulness implies that, in the orga-nization as a whole, high levels of alertness and atten-tion are directed to identifying and anticipating pos-sible problems and errors. A culture in which errorawareness and mindfulness are deeply ingrained facili-tates the achievement of high reliability; the concept ofmindfulness is therefore highly applicable to the subseaindustry. However, it is also important that the learningthat results from mindfulness is captured, shared, and

widely disseminated. As discussed next, the effective-ness of this process depends on organizational learningand knowledge management.

4. ORGANIZATIONAL LEARNINGAND KNOWLEDGE MANAGEMENTThe concept of a learning organization has attractedmuch attention as companies have become increasinglyaware of the importance of knowledge management.A learning organization is “an organization skilled atcreating, acquiring, and transferring knowledge, andat modifying its behaviour to reflect new knowledgeand insights” (Garvin, 1993, p. 80). In practical terms,learning organizations engage in activities that enablethem to develop and integrate their learning, includingsystematic problem solving, seeking and testing newknowledge, learning from mistakes, and drawing onexperience (West & Burnes, 2000). The importance ofrelying on scientific method rather than guesswork,insisting on data rather than assumptions as a basis fordecision making, and using statistical tools to organizedata and draw inferences, has also been noted (Garvin,1993).

Organizational learning is the process by whichthis development takes place; that is, “the way firmsbuild, supplement and organize knowledge and rou-tines around their activities and within their cultures,and adapt and develop organizational efficiency by im-proving the use of the broad skills of their workforces”(Dodgson, 1993, p. 377). Other authors have em-phasized that organizational learning occurs throughshared insights, knowledge and mental models, andbuilds on past knowledge and experience (e.g., Stata,1989).

Three essential processes underlie organizationallearning. First, capturing individual knowledge (e.g.,in the form of reports, presentations, lessons learnedrecords, and root-cause analyses) requires systematicstorage, organization, and continuous updating of in-formation. Second, transfer of knowledge requires thatthe information is widely disseminated, readily accessi-ble where and when it is needed, and shared among in-dividuals and groups. Third, mobilizing knowledge andexperience involves integrating information from dif-ferent sources (including information about previousfailures) to create new knowledge, to solve problems,and to prevent the recurrence of past errors. Organi-zational capabilities, including cultural and structural



factors, facilitate effective knowledge management pro-cesses, which, in turn, promote favorable company per-formance (Lee & Lee, 2007).

The transition from individual learning to organi-zational learning depends on employees’ readiness tolearn and willingness to join in shared learning effortsinside and outside the organization (Hendry, Arthur,& Jones, 1995). Cultural factors influence these socialaspects of learning. In particular, constructive culturalstyles (characterized by the value placed on achieve-ment, participation, cooperation, and good interper-sonal relationships) are associated with positive orga-nizational outcomes, including organizational learning(Balthazard et al., 2006). Thus, individuals working in aconstructive culture are more likely to share knowledgeand experience, to cooperate in the learning process,and to generate new insights.

Conversely, a dysfunctional organizational culturecan lead to deficiencies in learning; for instance, re-ferring to the need for culture change at NASA, Mayaet al. (2005, p. 23) reported that the organization hadto overcome “the notion that lessons learned are notapt, relevant, or useful.” Similarly, a review of safety-significant events at nuclear power plants identifiedfailure to learn from a previous event as a contributorycausal factor (Gertman, Parrish, Sattision, Brownson,& Tortorelli, 2001). More generally, a defensive orga-nizational culture may directly impede organizationallearning by discouraging people from sharing and dis-seminating their knowledge (Gupta, Iyer, & Aronson,2000). Several authors have suggested that more re-search is required to increase understanding of orga-nizational learning and the factors that influence it.Thus, Sagan (2004) notes that relatively little is knownabout how to use opportunities for organizations tolearn from one another’s errors, for instance, throughindustry-wide bodies. The need for a comprehensiveframework for assessing organizational learning, in-cluding surveys and behavioral observations, has alsobeen emphasized (Garvin, 1993).

Although the material outlined previously does notrelate specifically to organizational learning in the sub-sea engineering industry, the issues raised are nonethe-less relevant to subsea companies and to their con-tractors and suppliers. The need to achieve a betterunderstanding of failure causation through develop-ing “lessons learned knowledge bases” that cover thewhole supply chain, and to develop a culture and capa-bility for organizational learning, has been consistentlyemphasized by subsea specialists (Lucas, 2007; Roberts

et al., 2001; Williams et al., 2003). The importanceof organizational learning in relation to reliability isalso reflected in the criteria specified for achievementof particular levels of organizational “capability matu-rity” by companies involved in subsea engineering (seeSection 7).

5. HUMAN RESOURCES POLICIESWhile significant research effort has been directed to-ward understanding the role of organizational culturein promoting reliable performance, human resources(HR) strategies that facilitate the achievement of highreliability have been relatively neglected, although re-cruitment and hiring policies closely reflect and re-inforce the culture of the organization. The individ-ual traits and skills of personnel can also be regardedas contributing to organizational culture (Reiman &Oedewald, 2007).

Addressing HR management issues in relation tohigh-reliability performance, Ericksen and Dyer (2005)set out a model of organizational reliability, in whichreliability-enhancing HR strategies are considered toimpact on reliability through the intermediate roleof employee behaviors. The HR policies and practicesidentified as conducive to the achievement of high reli-ability include ensuring that all communications rein-force some aspect of reliability (e.g., by rewarding re-liability above productivity or efficiency); encouraginginteraction and teamwork among employees (e.g., of-fering bonuses based on group performance); selectingand promoting people on the basis of their adherence toorganizational values; and rewarding proactive behav-iors (e.g., innovations that reduce the risk of errors).Recruitment procedures that select people not only fortheir technical skills and experience but also on thebasis of relevant values, attitudes, and personal charac-teristics will also reinforce desired reliability-orientedbehaviors.

Four relevant categories of employee behaviors aredescribed by Ericksen and Dyer (2005). Diligence refersto careful, critical, conscientious, purposeful, atten-tive, and vigilant behavior; diligent employees continu-ously anticipate and detect problems (Bierly & Spender,1995), communicate extensively with co-workers, andreport failures and errors promptly. Facileness is theability to respond rapidly and appropriately to prob-lems and unexpected events. Fluidity involves respond-ing to novel or complex problems with coordinatedactions, improvising when necessary, and allowing



authority to flow to those with relevant expertise. Gen-erative individuals seek to enhance their understandingof work tasks and processes, share information openly,and facilitate the learning of others.

The task demands imposed by different phases ofsubsea design and manufacturing processes may influ-ence the extent to which specific behavioral attributesare important to achieving reliability; for instance, dili-gence may facilitate the design stage, while fluiditywould be more likely to influence responses to deploy-ment problems. However, all the attributes identifiedreflect the importance of teamwork, interaction, andcommunication, factors that also contribute to effec-tive team performance in other settings (Molleman &Slomp, 2006; O’Connor, O’Dea, Flin, & Belton, 2008).Other characteristics that promote effective teamworkinclude social skills, teamwork knowledge, and person-ality traits such as conscientiousness and extraversion(Morgeson, Reider, & Campion, 2005). Identifying in-dividuals with the ability to work effectively in teamsis an important aspect of personnel selection in high-reliability organizations.

In addition, employment conditions that encouragecontinuity of service and attachment to the organiza-tion promote engagement and a sense of stakeholderownership. Thus, employment security, favorable payrates, and flexible work/family policies all serve to re-duce employee turnover, and hence facilitate organiza-tional learning and reliable performance (Bubb, 2005;Ericksen & Dyer, 2005; Ostermann, 2005). In the sub-sea industry, continuity of service is particularly impor-tant; loss of key individuals with experience of equip-ment failure has been found to undermine reliabilityperformance (Busby & Strutt, 2001). More generally,Botros, Noel, Brookes, and Perry (2008) note that in theoil and gas industry highly skilled, but scarce, humanresources are essential to the development and applica-tion of advanced technology; implementing favorablehuman resources policies is one means by which therecruitment of suitable personnel can be encouraged.

6. RELIABILITY MANAGEMENTFRAMEWORK—A MODELAs previously noted, communication and informationflow within and across work groups, and organizationallevels are essential to the achievement of high reliabil-ity. In the context of reliability management for subseaengineering, Strutt and Brookes (2007) set out a relia-

bility management model, which depicts structural re-lationships vertically across hierarchical organizationallevels and horizontally across work teams with similarroles in different parts of the organization and supplychain. This model represents the nature and directionof four information pathways that contribute to highreliability.

Leadership and direction. Managers must be ableto set reliability goals, objectives, and visions for allparts of the organization clearly and effectively. Inthis respect, the model reflects the wider literature onthe achievement of high reliability, which stresses therole of leadership commitment in promoting reliabilitythroughout the organization.

Consistency and coherency. Consistency refers tothe vertical alignment of reliability goals, processes,and practices through all levels of the organizationand throughout its supply chain. Similarly, coherencyrefers to horizontal alignment across disciplines andacross different groups. Inconsistent/conflicting de-mands and standards may hinder the achievementof consistency, while incoherent practices may ariseif groups in different disciplines differ in standard pro-cedures.

Feedback. The maintenance of direction and focusin the organization as a whole requires information tobe communicated from lower to higher levels of thehierarchy, in the form of feedback about experience inprojects and operations that allows adjustments andcorrections to future products and processes, and con-tributes to organizational learning.

The reliability management framework outlines thenature and direction of alignment processes and infor-mation flow that underlie the achievement of reliabil-ity; as yet, however, there appear to be no empiricalassessments of the extent to which achieving high lev-els of information flow in the four directions indicatedpredicts high-reliability performance in subsea designand engineering. However, there is prima facie supportfor this model in that communication and informationtransfer are the most potent factors in promoting effec-tive organizational change (Porras & Robertson, 1992).As described next, formal communication channels areprimarily defined by organizational structure.

6.1. Organizational Structure

The structure and working practices of organizations,and their relationship to organizational culture, havebeen addressed in both theoretical (Bates et al., 1995;



Walsh, 2004) and empirical research (Koufteros et al.,2007; Nahm, Vonderembse, & Koufteros, 2003). Or-ganizational structure refers to the way responsibilityand authority are allocated within the organization,and how work tasks are distributed; formal coordina-tion mechanisms, task allocations, reporting lines, andpatterns of interaction all reflect the structure of anorganization.

Organizational characteristics, such as belief in co-operation and a facilitating (rather than controlling)management style, are empirically linked to aspectsof organizational structure, including the number ofhierarchical layers, the level at which decisions aremade, and the use of cross-functional work teams.In turn, structural variables predict use of customer-driven production methods and favorable companyperformance (Koufteros et al., 2007). These findingsare consistent with the literature on high-reliabilityorganizations, which advocates fewer hierarchical lev-els, distributing decision making to the lowest levelpossible, and encouraging open and frequent commu-nication among workers (Roberts, 1990; Weick, 1987;Wilkins & Ouchi, 1983).

6.2. Types of Work Group Organization

Different forms of work organization can be char-acterized in terms of purpose, membership, goals,and timescale (Wenger & Snyder, 2000).Conventionalproject teams are cross functional, composed of peo-ple whose combined knowledge and skills are needed toproduce the required outputs; good working relation-ships are necessary to ensure trust and open communi-cation within the team (McDermott, 1999). Membersof a project team share common goals, interdependentwork, and are jointly accountable for the results. Whenits task is complete, the team disbands. In contrast,formal “work groups” remain in place indefinitely, areresponsible for delivering products or services, and re-port to a group manager (Wenger & Snyder, 2000).

The role of informal specialist groups has gener-ated considerable interest in recent years; these “com-munities of practice” (CoPs) bring together personnelwho share specific expertise with the aim of developingcapabilities, creating and exchanging knowledge, andestablishing common practices. Membership is self-selected and voluntary and, by using electronic com-munications, may extend worldwide. To be effective inthe subsea industry, a CoP should include reliabilityspecialists from operators, contractors, and suppliers,

thus allowing individuals throughout the industry tobenefit from sharing lessons learned and other infor-mation, and generating new ideas. Such a forum wouldcontribute to meeting the requirement that “the wholesupply chain must become more proficient in the un-derstanding of reliability, in reliability analysis, and inproject risk management to control the cost of reliabil-ity achievement to acceptable sector norms” (Robertset al., 2001, p. 8).

7. ORGANIZATIONAL CAPABILITYMODELSCapability maturity models (CMM) provide a meansto evaluate the level of maturity of practices withinorganizations that contribute to safety, reliability, andeffective risk management. More formally, CMM mod-els have been defined as “tools used to assess the capa-bility of an organization to perform the key processesrequired to deliver a product or a service” (Strutt et al.,2006, p. 1096). These models allow owners to assess re-liability capability within their company and through-out their supply chains. Originally adopted in the soft-ware industry (Paulk, Curtis, Chrissis, & Weber, 1993),CMM models have subsequently been applied to themanagement of risk in the offshore oil and gas indus-try (Sharp, Strutt, Busby, & Terry, 2002; Strutt et al.,2006), maintenance activities (Energy Institute, 2007),marine construction (Ren & Yeo, 2004), and subseaequipment (Sharp, Strutt, Terry, Galbraith, & Miles,2006; Williams et al., 2003).

CMM methods focus primarily on the key manage-ment processes and practices necessary for an organi-zation to meet its strategic obligations and goals, in-cluding operational safety and reliability. Although de-tailed specification of the models varies across differentcontexts, a five-stage hierarchical model that identifiesthe organization’s “maturity level” is common to allCMM applications (e.g., MacGillivray, Sharp, Strutt,Hamilton, & Pollard, 2007; Ren & Yeo, 2004; Struttet al., 2006; Strutt & Brookes, 2007; Tiku, Azarian, &Pecht, 2007). For instance, the model described by Renand Yeo (2004) assesses five levels of maturity acrossthree key capability areas relevant to complex prod-uct systems (organization culture, risk managementprocesses, and strategic change management). A for-mal standard (IEEE P1624) has been recently proposedfor the electronics industry (Gullo, 2009) that sets outkey practices related to product reliability, describes



a method of assessment, and allows identification ofimprovement strategies.

For present purposes, the CMM model (designatedR-CMM) developed to assess the capability of orga-nizations to manage reliability in subsea engineering(Strutt & Brookes, 2007) is the most directly relevant.In this model, shown in Table 1, organizational reliabil-ity processes and practices move from ad hoc and reac-tive through proactive, “double-loop” learning, acrossfive hierarchical levels. For an organization to reach aparticular level of maturity, it must, of course, also sat-isfy all the lower levels; moreover, all groups (projectteams, specialists, contractors, and suppliers) involvedin the design, production, and deployment of a partic-ular system should attain at least this level.

Strutt and Brookes (2007) advocate the maturitylevel “Managed” (Level 4) as a minimum for organiza-tions responsible for high-risk subsea projects, that is,those involving new technology (or a new applicationof existing technology), a new environment, and/ora new project team. However, for projects involvinglower levels of technical risk, acceptable R-CMM lev-els may be less than Level 4; alternatively, the crite-ria for achieving the higher levels may be modified asappropriate to the requirements of relatively low-riskprojects.

7.1. Assessment of Capability MaturityLevels

The definitions of each of the five CMM maturitylevels form a basis for devising assessment tools, tai-

lored to the particular focus of the assessment (e.g.,safety, risk management, or reliability) (MacGillivrayet al., 2007; Ren & Yeo, 2004; Sharp et al., 2006; Strutt& Brookes, 2007). In relation to reliability, the ini-tial step is identifying the key processes associatedwith achieving reliability requirements and with re-liability assurance and improvement. For each levelof maturity, the criteria for each of the key reliabil-ity processes are then specified and a scoring systemdeveloped.

Ratings on the key process are determined by sur-vey and/or face-to-face discussion with managers andreliability specialists. Survey methods alone may notbe adequate; Williams et al. (2003) found that face-to-face discussion was necessary to ensure that sub-sea suppliers understood the CMM items. A de-tailed case study of the development of reliabil-ity capability maturity criteria for each CMM leveland the application of the assessment method inan electronics company are presented by Tiku et al.(2007).

To provide a summary of maturity-level data, a meanvalue is usually calculated across the key processes, al-though, alternatively, the overall maturity score maybe restricted to the lowest of the individual ratings(Strutt et al., 2006). Graphical presentation of the fullset of ratings of key practices provides a more com-plete picture (see Figure 4). Several of the key prac-tices shown in Figure 4 (e.g., management of changeand life cycle transitions, feedback and organizationallearning, and supply chain management) reflect or-ganizational aspects of reliability considered earlier in

TABLE 1. Reliability Capability Maturity Model

Level Maturity Description Characterized by:

1 Uncontrolled The organization has limited experience and is at alearning and development stage.

Ad hoc, reactive

2 Repeatable The organization can repeat what it has donebefore, but not necessarily define what it does.

Prescriptive

3 Defined The organization can say what it does and how itgoes about it.

Measured,open-loop

4 Managed The organization can control what it does in theway of processes. It specifies requirements andensures that these are met through feedback.

Single-looplearning

5 Optimized The organization is “best practice,” capable oflearning and adapting itself. It not only usesexperience to correct any problems but alsouses experience to change the way it operates.

Adaptiveprocesses;double-looplearning



this review. Graphical approaches can also be extendedto compare different suppliers by examining the ex-tent of overlap between customer requirements andsupplier reliability capabilities (e.g., Tiku et al., 2007).These methods provide a relatively simple way of as-sessing and interpreting CMM levels, although the useof numerical scores has been criticized (Strutt et al.,2006). Moreover, there appear to have been no psy-chometric evaluations of the reliability and validity ofCMM methods, such as would be normally used in thequantitative assessment of organizational or individualcharacteristics.

7.2. Reliability Capability MaturityLevels in the Subsea Industry

A 2003 survey of subsea equipment suppliers found av-erage CMM scores of 2.2–2.75 (Williams et al., 2003).These scores fell well short of the recommended level(4 or above) considered acceptable for high-risk subseaprojects (Strutt & Brookes, 2007); they also comparedunfavorably with levels of 4.0–4.5 estimated for the au-tomotive and aeronautical industries. The transitionfrom Level 2 to Level 3 was found to be the most dif-ficult upward progression for companies to achieve,while moving between Levels 3 and 4 was more readilyattained. In spite of the increased attention given toequipment reliability by oil and gas companies in re-cent years (e.g., Holmer & Moran, 2008; Horan et al.,2007), and the introduction of the American PetroleumInstitute 17N standard (API, 2009), the subsea indus-try as a whole has not yet fully implemented systematicreliability management practices.

Initiatives that would allow subsea suppliers operat-ing at lower capability levels to make significant stepstoward meeting at least Level 3 R-CMM criteria aredescribed by Williams et al. (2003). The initiatives in-clude supply chain management; setting and allocat-ing reliability requirements; reporting, tracking, andanalyzing performance data; and improving organi-zational learning about reliability. These suggestionsfurther highlight the role of observation and data anal-ysis in contributing to reliability improvement. From asociotechnical viewpoint, decentralizing responsibilityand authority for correcting variances in design andmanufacture to lower levels in the hierarchy could alsoserve to facilitate improvement in the reliability of coretask performance (see Section 3.1).

8. ORGANIZATIONAL CULTURE ANDRELIABILITY IMPROVEMENTThe process of culture change to enhance reliabilityand safety has been widely documented in organiza-tional settings in which errors and failures have poten-tially serious consequences, for example, health care,transport, aviation, and space exploration (e.g., Benn,Healey, & Hollnagel, 2008; Lukas et al., 2007; Mayaet al., 2005; McFadden, Henagan, & Gowen, 2009;Pollitt, 2009; Resnick, 2007; van Stralen, Calderon,Lewis, & Roberts, 2008). Drawing on principles takenfrom the operation of high-reliability organizations,these studies highlight common themes reflectingthe importance of transformational leadership, ac-tively engaging staff in problem solving, alignment ofgoals across all levels of the organization, integrationto bridge traditional intraorganizational boundaries,training and personal development initiatives, positiveerror management and avoidance of a blame culture,facilitating the flow of information throughout the or-ganization, and encouraging teamwork.

Within these general guidelines, the process of cul-ture change has to be tailored to the particular circum-stances and reliability requirements of each organiza-tion (van Stralen et al., 2008). Moreover, even whencritical elements of change required in a particular or-ganization have been identified, the change process ne-cessitates long-term commitment and effort from theentire organization, if it is to be successfully negotiatedand sustained. Thomas (2005) emphasizes the need tocreate a readiness for change within the organizationbefore the introduction of any changes; the develop-ment of readiness requires leaders to have a clear visionof what they want to achieve, to communicate this vi-sion throughout the organization, to involve people atall levels in detailed planning, and to provide trainingin the new skills required.

In describing approaches to culture change, Thomassets out eight elements of change (leadership, work pro-cess, structure, group learning, technology, commu-nications, interrelationships, and rewards), and pro-vides an assessment method for ongoing evaluation ofeach of these elements in relation to the major dimen-sions of culture. He also identifies a number of possi-ble pitfalls likely to be encountered during the changeprocess and how they can be avoided. In providingthis practical guide to organizational culture change,Thomas is primarily concerned with maintenance re-liability; however, the material is also applicable to



Figure 4 Example of graphical representation of R-CMM ratings on key practices (Adapted from Strutt & Brookes, 2007).

organizations seeking to enhance reliability in prod-uct design and manufacture. In the oil/gas industry,specifically, there is a growing awareness that creat-ing a reliability-oriented organizational culture canmake a significant contribution to the reliability ofsubsea equipment and other complex production sys-tems, and that the role of organizational culture shouldbe regarded as no less important than the technicaland procedural aspects of reliability improvement (e.g.,Holmer & Moran, 2008).

9. DISCUSSION AND CONCLUSIONSTo achieve maximum reliability in the developmentand installation of subsea systems, high levels of co-operation, coordination, and communication betweenthe owner or operating company and the entire chainof contractors, suppliers, and specialists is required.At each stage in the life cycle, close integration acrossorganizations with different structures, functions, andcultures is critical. In particular, failures of alignmentacross organizations may mean that unidentified orunmanaged errors are not recognized until the equip-ment is operational and correction is extremely costly.

Figure 5 summarizes the key internal and externalinfluences on reliability identified in the present reviewand indicates the points in the life cycle at which theyimpact on the final operational reliability achieved. Of

primary importance among internal influences is or-ganizational culture, defined as the “combination ofthe attitudes, experiences, beliefs, values, and norms ofan organization” (see Section 3). Internal influences(which also include knowledge management, workgroup structure and number of hierarchical levels, andHR policies and practices) act within organizations toinfluence each stage of the design, manufacture, instal-lation, and operation of the system. External factors(such as how progressions across the phases are man-aged, the length of the supply chain and the capabilityof the different companies involved, time and financialpressures, and location, language, and logistics) im-pact on the effectiveness of transitions across successivestages of the life cycle and, hence, on the reliability ofthe final system.

In addition, the contractual terms and conditionsthat regulate successive stages of the design and man-ufacturing process play a significant role in determin-ing the behavior and performance of the companiesconcerned (Smalley & Nilsen, 2007). This issue is im-portant as supply chains in the subsea industry typ-ically involve coordinating and monitoring multipleseparate contracts. Research into the extent to whichspecific contractual terms and conditions (e.g., natureof incentives and penalties) influence the performanceof supply chain companies would allow improved con-tract management.



Figure 5 External and internal influences at different phases of a subsea development.

More generally, research into risk and reliabilityhas been identified as one of the key practices thatcontribute to double-loop learning and the achieve-ment of higher levels of capability maturity in the sub-sea industry (Strutt & Brookes, 2007). Several aspectsof the subsea design and manufacturing process havebeen rarely investigated and would merit systematic re-search attention. For instance, little is currently knownabout the relative importance of the internal and ex-ternal factors shown in Figure 5 in achieving high re-liability in subsea systems (particularly the avoidanceof early-life failures) and their specificity in relationto the stages of equipment design, manufacture, andinstallation.

Other research that could contribute to enhancedreliability includes the identification of ways in whichdifferences in organizational culture may adversely af-fect communication and cooperation across differentorganizations in the supply chain, and thus increasethe risk of errors. Such studies would potentially allowcritical elements in the life cycle of subsea system de-velopment to be identified and addressed and, hence,the risk of operational failure reduced. In the longerterm, developing quantitative models that incorporate

organizational factors in predictng reliability in subseasystems are needed; Zio (2009) discusses some of theissues raised by such models.

The oil/gas industry faces increasing challenges indeveloping deeper fields in more hazardous locationsthan those currently in production, while ensuringlong-term, fault-free operation of equipment deployedsubsea. These technical challenges, coupled with publicconcern about potential environmental damage result-ing from equipment failures, underline the need forcontinuing reliability improvement in subsea systems.To date, efforts to improve reliability have focused pri-marily on finding technical solutions to complex en-gineering problems. In contrast, the material outlinedin this review highlights the importance of developingand supporting organizational environments that pro-mote the achievement of high reliability throughoutthe organization, within each vendor or contractinggroup, and between the various links in the supplychain. In this endeavor, organizational culture, knowl-edge management, human resource policies, and or-ganizational structure all play significant roles. Theseissues merit the attention of operating companies andtheir suppliers, and of the oil/gas industry as a whole,



to achieve the exceptionally high reliability required ofsubsea production systems.

ACKNOWLEDGMENTSWe gratefully acknowledge funding for this work fromthe Western Australian Energy Research Alliance (WA-ERA) and the award of a University of Western AustraliaGledden Visiting Fellowship to the senior author. Wewould also like to thank Margo St Quintin for herassistance in developing the figures used in this article.

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