BUSINESS SENSITIVE 1

Achieving desired safety outcomes through cultural alignment

Don McConnellSenior Vice-President and Chief Operating OfficerBattelle Laboratory Operations

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BattelleThe Business of Innovation

• A charitable trust organized as a non-profit corporation in 1929

• Conduct ~$3.4 billion in annual R&D; have received a lifetime total of 141 “R&D 100” Awards

• In 2005, distributed > $17 million to our communities (strong emphasis on education)

• Manage/co-manage 7 major laboratories including 5 national labs for DOE

• Battelle is responsible for the safety of 20,000 staff

Battelle Annual Report 2005

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Deliveringinnovative solutions

to complex challenges

Efficient operationsand the protection

of workers,the public,

and theenvironment

Being a trustedand valuedcommunity/

regional asset

Excellence inScience & Technology

Excellence in Community Service

Excellence in Laboratory

Operations/ES&H

Battelle’s signature in laboratory operations is Simultaneous Excellence@

Simultaneous Excellence: Achievable and Essential

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• Bell Labs• IBM Watson Research

Center• DOE National Labs

Leading-edge technology

• 3M• GE • Intel

Moving discoveryto application

Customerengagement

Sustained scientific excellence

Consistent delivery of commercial value

• Xerox PARC• 3M• Microsoft

• Merck• Motorola• IBM

• Fraunhofer Institutes• BWXT

Safe operations• DuPont• Bechtel• Alcoa • Washington Group

Our strategy is to be “Best-in-Class” as measured against the top performers

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Battelle Aggregate DART (2005) vs. CY 2004 Industry Lost Workday Case Rates

We have made progress in safety improvement but have not yet reached our goal

In 2005 we still sustained 244 injuries to our staffIn 2005 we still sustained 244 injuries to our staffIn 2005 we still sustained 244 injuries to our staffIn 2005 we still sustained 244 injuries to our staff

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Sustaining Progress:Identify & assess gaps

Develop improvement strategies

Build on success of prior implementation

CO

NT

INU

OU

S I

MP

RO

VE

ME

NT

BEST IN CLASS

SAFETY

Safety as a Core Corporate ValueFoundation of Safety Culture

Accept Safety as a Personal Responsibility

VPP, “Believe-Know-Do”

Enhanced Hazard Identification & Work Planning

ISM (“Next Gen”), OHSAS 18001

Work ObservationSTOP Program

Safety Leadership“Felt Leadership”

Corporate Assurance

Trending, Oversight &

Strategic Investment

Human Performance Improvement“Just Culture”

Define and Communicate Vision

& Strategy

Develop and Deploy Tailored

Implementation Tools

Integrate, Evaluate, and Facilitate

Development of Next-Stage Programs

Achieving our goal requires continuous improvement to safety management skills

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Worker Involvement ( VPP , etc .)

Worker Involvement ( VPP , etc .)

Worker Involvement ( VPP , etc .)

“Best - in -Class” Third -

Party Certifications

“Best -in -Class” Third -

Party Certifications

“Best -in-Class” Third -

Party Certifications

Our safety management strategy has evolved toward our goal of an embedded culture

Corporate Leadership

Commitment to an

“Injury-Free Workplace”

Corporate Leadership

Commitment to an

“Injury-Free Workplace”

Safety Culture, Behavior-Based Safety & Human

Performance Improvement

Safety Culture, Behavior-Based Safety & Human

Performance Improvement

Regulatory Compliance via

Integrated Safety Management

“Best - in -Class” Third -

Party Certifications

Regulatory Compliance via

Integrated Safety Management

Regulatory Compliance via

Integrated Safety Management

Regulatory Compliance via

Integrated Safety Management

Regulatory Compliance via

Integrated Safety Management

2000 2002 2004 2005 2006+

Our Goal: Safety as a corporate and personal value “24/7”

Corporate Leadership

Commitment to an

“Injury-Free Workplace”

Corporate Leadership

Commitment to an

“Injury-Free Workplace”

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In 2004, we recognized that our Leaders must set the tone for safety excellence

• We established safety as an immutable Corporate core value

• We committed to the concept that all injuries can be prevented

• Leadership expectations were defined: what we must believe, know, and do

• Management work observations (derived from proven DuPont™ methods) became our standard

• Safety became a regular, consistent, and integral part of our senior managers’ conversations with each other and with staff

Corporate Leadership

Commitment to an

“Injury-Free Workplace”

Corporate Leadership

Commitment to an

“Injury-Free Workplace”

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In 2006, we are focusing on strengthening our overall Safety Culture

We must recognize that:• Our people are fallible, and even the

best make mistakes

• As we plan our work, we need to consider people as both “controls” and as “hazards”

• Physical conditions, organizational processes, individual behavior, and management behavior all contribute to human error

• “High Reliability Organizations” encourage and reward reporting, rather than looking for someone to blame

• Trust between managers and staff is the single greatest predictor of success of any improvement initiative

““Our challenge now is to Our challenge now is to develop strategies, based on a develop strategies, based on a common foundation, but common foundation, but tailored to local characteristics tailored to local characteristics and challenges, to drive safety and challenges, to drive safety culture improvement.”culture improvement.”CEO Carl Kohrt CEO Carl Kohrt

Safety Summit, May 2006Safety Summit, May 2006

““Our challenge now is to Our challenge now is to develop strategies, based on a develop strategies, based on a common foundation, but common foundation, but tailored to local characteristics tailored to local characteristics and challenges, to drive safety and challenges, to drive safety culture improvement.”culture improvement.”CEO Carl Kohrt CEO Carl Kohrt

Safety Summit, May 2006Safety Summit, May 2006

Safety Culture, Behavior-Based Safety & Human

Performance Improvement

Safety Culture, Behavior-Based Safety & Human

Performance Improvement

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We need to make some fundamental changes to our management culture

• Our goal must be that no staff member gets hurt

• Everyone must be accountable for safety

• Individual performance should be the very last barrier (rarely challenged) in place to prevent an injury

• Leadership attention to safety must be unwavering, visible, and backed up by resources

• Analysis of events must consider contributory factors as well as individual performance:– Physical conditions, – Organizational processes, – Individual behavior, and – Management behavior

As Battelle leaders, we seek to create an environment of trust and

partnership – where our staff “feel” our commitment to their safety

As Battelle leaders, we seek to create an environment of trust and

partnership – where our staff “feel” our commitment to their safety

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Achieving a strong safety culture will take time, commitment, and cooperation

• Battelle staff, leaders, and our customer (DOE) all need to collaborate, for example:– Staff need to constructively engage on conditions,

processes, and behaviors that are counter to their successJust “making do” is not good enough

– Leaders need to be receptive to the identification of issues, and accountable for their resolution“Shooting the messenger” will not engender trust

– DOE needs to incentivize the finding and fixing of the real problemsUrging quick resolution can leave the real problems unknown

and unresolved

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Our culture is intertwined with that of DOE

LaboratorySafety Culture

DOESafety Culture

DOESafety Culture

CulturalInterfaceCulturalInterface

• DOE and Lab managers are partners in risk management decision-making

• Staff getting hurt is never an acceptable “cost of doing business”

• Information on events and near-misses must flow freely, but everyone’s first priority has to be taking care of the people involved

• Corrective actions must be focused on fixing the real problems, which may take considerable time and resources

• Improvement initiatives must be prioritized, integrated, and scheduled in accordance with available resources

• We must sustain candid, constructive, and continuous two-way communication

It is essential for us to be aligned on the following:

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In summary:

• Battelle has made progress in improving safety, but we are a long way from our goal

• We must seek to improve, in an integrated and prioritized manner:– the physical conditions of our facilities,

– our organizational safety management processes,

– individual at-risk behaviors, and

– the working environment that is created by the behavior of our leaders

• Alignment with DOE is essential to the success of our effort to create a strong safety culture