Shareholders Need to Pound Sand

In a recent series of columns, I provided a brief outline of the development and implementation of an electrical maintenance program, and explained the cost benefits of various maintenance management philosophies.  Unfortunately, cost is upfront, real and apparent, whereas the benefits are not.

Several years ago, I wrote an article describing the challenge that Hicks Waldron – then CEO of Avon – had every three months when his major shareholder, an industrial investor from Colorado, phoned with one question: What’s the dividend?

There was no concern about anything other than money.  I have experienced a number of instances where international investors have owned Canadian plants with no other intent than to fleece them.  They drained every penny out of them that they could, with little or no reinvestment, then dumped the facility back onto the market.

As training consultants, we know it’s a waste of time talking to the people in these facilities.  They lack budgets, they are under a tremendous amount of stress to perform and produce, and they live with the continuous fear they are going to be out on the street, and all the personal losses that would ensue.

We have evolved a system of professional financial managers who operate facilities with the skills, ability and intent to maximize the return on shareholder investment.  And no matter how well they do in one quarter, they are expected to meet or exceed it in every subsequent quarter.

This demand for return exists in most of us.  Any person who moves their savings from one institution to another to gain a quarter of a percent, or who moves their RRSP from one mutual fund to another, is equally part of the problem.

We are in the midst of a sea of change in electrical safety and maintenance that started slowly 10 years ago in Canada with the early adopters of NFPA 70E.  This progressed into the passing into law of Bill C-45 and the advent of CSA Z462.  Our current development of CSA Z463, Guideline on Maintenance of Electrical Systems, is going to become the next phase of this sea of change.

Bill C-45 is federal legislation that amended the Canadian Criminal Code and became law on March 31, 2004.  It established new legal duties for workplace health and safety, and imposed serious penalties for violations that result in injuries or death.  The bill provided new rules for attributing criminal liability to organizations, including corporations, their representatives and those who direct the work of others.

NFPA 70E and CSA Z462 have raised the reality of electrical danger to the executive levels of most companies, and they have responded accordingly; at the same time that we are seeing these real improvements in human safety performance, our facilities continue to age.

There is a real and impending danger in the lack of electrical maintenance, and I believe that managers and executives of companies taking short-term measures to appease evermore demanding shareholders will be putting themselves personally at risk. Some time in the next 10 years, an explosion is going to happen; should someone get seriously injured, a judicious safety investigator is going to find a paper trail of warnings leading back through the executive chain.

When this is measured against the intent of Bill C-45, there’s going to be hell to pay.

We all want to keep our jobs and support our families.  No matter where we are on the ladder, we want to maintain that level and, usually, improve our circumstances.  It’s a natural human desire, but when someone on the ladder is dancing to satisfy shareholders, then they put both themselves and the people who operate their facilities in jeopardy.

Developing safety programs that will give workers policies, procedures, practices, tools and PPE (personal protective equipment) is a very visible and concrete response to the new electrical safety standards.  Requiring a multi-million dollar budget to replace an aging switchgear lineup is a subjective situation, open to debate and easily delayed year after year.  Eventually, an event will occur and a senior manager will have a difficult time explaining why the required money was not made available for what, in hindsight, would appear to be a necessary investment when viewed through the lens of CSA Z463.

In the next decade, these changes are going to reverberate all the way up the chain, and all the shareholders – small, medium, large and institutional – are going to have to pound sand.  Shareholders have the right to a great return on their investment, but no one should have to spill their blood to ensure they get one.

Until next time, be ready, be careful and be safe.