EHS Management: Centralize Or Decentralize? was originally published by our partner, Enablon.

 

For organizations engaged in an EHS software selection process, there’s no doubt that a software system will help to improve EHS management, but they must also think about personnel, processes, organizational culture and other aspects that impact EHS performance.

Organizations must establish their EHS goals and determine how they will manage EHS before a software system is implemented. One important question that they need to ask is the following:

“Should there be a centralized or decentralized approach to EHS management?”

Each industry is different and each organization is unique, so the answer to the question will vary. But here’s an answer that will probably apply to most global organizations: You need a balance between centralization and decentralization. Going fully in one direction or the other is not ideal because there will be situations that will require some decentralization.

To illustrate the need for balance between centralization and decentralization, let’s look at four examples for each approach.

Examples Where Centralization Helps

Roll up of metrics: Each site, facility or business unit will track its own metrics and indicators, but they need to be rolled up so KPIs can be tracked and reported at the corporate level and communicated to relevant stakeholders. Centralizing EHS management makes it easier to measure EHS performance for the entire enterprise.

Benchmarking sites: Centralizing EHS management also makes it easier to benchmark individual sites for different metrics, and see which ones the rest of the organization should learn from, and which ones need to improve.

Sharing best practices: When everybody is on the same platform and they all see exactly the same thing, it makes it easier to share information, including best practices from the best-performing sites, which can be adopted by all other sites. This allows all sites to aim for the same standards of performance.

Promoting a uniform safety culture: You want to make sure that all workers everywhere in the organization adhere to the same values and attitudes of your global safety culture, despite cultural and linguistic differences between locations. The centralization of EHS management facilitates the promotion of the same safety culture across all sites.

Examples Where Decentralization Helps

Different business units: This is especially applicable to global conglomerates. For example, a business unit that is in the upstream oil and gas industry and another that manufactures household goods will have two very different sets of needs. Some elements may be centralized (e.g. common management system, common reporting system, etc.), but both business units will also need to do some things autonomously because they’re so different.

Cultural differences: In any global organization, there will always be a need to have things in common, such as a uniform, global safety culture. But cultural and linguistic differences can be significant, which is why it’s also necessary to give some degree of autonomy to individual locations to do things their way, even though corporate objectives must be the same.

Mergers and acquisitions: In this example, temporary decentralization may be good. Eventually all units of an organization should be on the same EHS program and adhere to the same EHS culture. But if a newly acquired unit has a mature EHS program and a strong EHS performance, it’s better to let them continue to do things their way for a while, and gradually transition their EHS program to the corporate one, rather than doing it abruptly and running the risk of harming EHS performance. As they say: “If it ain’t broke, don’t fix it”. At least not right away.

Regulatory compliance: This is a tricky one. The idea is not that compliance should be decentralized, but that some level of decentralization may be needed to allow local EHS or site managers who know local regulations better, and who may even be in contact with local authorities, to comply effectively with regulations in their own way, as long as they report the compliance status back to the rest of the organization and adhere to the global EHS culture. The idea is to take a global view, while leveraging local knowledge and expertise.

The best way to achieve a balance between centralization and decentralization of EHS management is to recognize the cases where some level of decentralization makes sense, and realize that there are different levels of decentralization, i.e. it’s not an “all or nothing” proposition. For many EHS areas, it’s possible to have a centralized approach and also some decentralization that allows people to do their jobs better.