I’ve previously stated quite categorically that good corporate governance in any aviation enterprise is critical for good business and safety performance.
I read with interest the press releases from the administrators of the failed airline Air Australia and note that in every release, they use the term director (singular) to refer to the Board of Air Australia. Whilst not fully understanding that airline’s situation, and not wishing to pass judgement on it, I find it very interesting that and or if, any safety regulator would permit an aviation business of any significant size and complexity to be governed by a sole director board.
I may be of the ‘old school’ but in my view, good governance can only come from among other things setting achievable goals, thoughtful high level strategy and policy development, rigorous risk management, reasonable challenge of management’s plans, and monitoring business performance towards the achievement of company goals. I find it difficult to believe that any sole director could undertake these functions effectively.
Sole directors sometimes also revert to almost totalitarian rule, and anyone whose views are inconsistent with the sole Director’s party line is either frozen out or booted out! This is of course very detrimental to the safety culture of the organization, as is the lack of the discipline of being challenged and having to explain to an independent person plans or actions, and how these may impact the whole organization.
In my experience, I have seen many types of governance arrangements – some good and some bad; but I think that IF the Strategic Airlines Group was governed by a sole director, this was not a sound business and safety governance arrangement. If this was the case, an insistence by the Safety Regulator, for a governance structure which included a Board of appropriately qualified non-Executive Directors may have also saved a lot of people, money, time and anguish.
My book, "Safety Management without the Mumbo Jumbo" deals with these type of issues. It may be purchased from my website for AUD $29.95 plus postage and handling. Click here to buy the book.
The modern trend for many aviation businesses is to outsource non-core business activities. This can be good business.
Low cost carriers, for example, may outsource their aircraft maintenance, crew training, ground handling, even flight planning services. Airports may outsource maintenance, security, planning etc., whereas, maintenance organizations may outsource engineer training, component repairs, cleaning and other things which only a couple of decades ago were the direct responsibility of the aviation permission holder.
Civil aviation safety regulators are generally conservative, and rightly so, because they are seen to hold the key to financial success and or a safety catastrophe. The regulators have acknowledged the realities of rising costs, greater competition and reduced yield for aviation operators, and have developed legislation to permit out sourcing of various aviation activities. The catch however, is the notion that whilst a business may outsource the responsibility, it retains the accountability! In my experience, every business knows this but some (large and small), do not understand it!
There is a saying which is relevant and worth remembering; “Never outsource a mess.” Successful outsourcing is serious business, requiring comprehensive contracts, planning, sound polices, rigorous procedures, multi-dimensional monitoring and good stakeholder relationship management.
This effort costs money, and often, in my experience when money gets tight or a business becomes lazy, the effort from the business doing the outsourcing drops off in the reverse order; that is, good stakeholder management goes first, followed by, monitoring, procedures, policies etc., whilst the notion of it being ultimately accountable becomes a misty memory with the passage of time.
Aviation regulators are becoming increasing aware of this emerging business trait and are insisting on tighter business controls on activities being conducted by third parties. Rather being seen as an over-kill imposed on the operation, it is nothing more than good business!
If you want a good example of what can go wrong in an outsourcing situation, have a look at the Boeing 787 development and manufacturing project. Whilst not confessing to know all of the details of their situation, it would seem that the outsourcing model applied to such a technically ambitious project was, at best, difficult to manage.
Clearly, outsourcing to specialist third parties is here to stay in the aviation industry. Businesses considering it need to think carefully about how they assure themselves that the specified service or product is being and will be supplied consistently and to an appropriate quality standard. This may be an expensive exercise but it may prevent your leading edge business model from becoming a bleeding edge business!
As I have previous stated, compliance and safety issues are often the results of poor governance. Further to this, I sometimes encounter a general lack of management skills in large and small operations. Of particular concern are the administrative and management competencies of Chief Pilots (however called).
The regulatory requirements for the qualifications and responsibilities of a Chief Pilot are technically based and out of step with contemporary safety thinking. For example, there is no overt requirement for any management experience or capabilities. Click here to read the qualifications of a Chief Pilot in the Civil Aviation Order in Section 5.
Occasionally an operation “goes off the rails” into a quagmire of regulatory difficulties and or, a serious accident; and everybody asks, “How did this happen, and why wasn’t the situation foreseen?” Often the root cause is loss of control and poor governance generally. In this context, the question may also be asked, “Was the operation ever really on the rails?”
The regulatory framework is flawed, out of date and requires thoughtful amendment.
The Civil Aviation Order should be amended to require the Chief Pilot to demonstrate management capabilities. The “tiger moth thinking” about flying hours experience being a precursor and requirement for what should be a management/flying role rather than a flying/management role, needs to be replaced with more emphasis on the candidate’s management and control capabilities.
Whilst this may cause some problems for general aviation, it may also present opportunities for mature people who have entered the aviation industry later in their careers. These people often have management and more comprehensive general life experience which can be imported into the aviation environment. This is particularly important in the general aviation context, where pilots may be young and inexperienced in business and life generally.
Finally, the Regulator needs to use people with managerial capabilities to assess the Chief Pilot candidates, rather than pilot inspectors who may or may not have managerial experience. Until the emphasis changes, loss of managerial control issues will remain the unseen and unspoken root cause of many regulatory compliance and safety issues.
I've written before about the importance of good governance. Contemporary safety science places significant importance on corporate governance within an organization.
In layman’s terms, corporate governance is how the company decides vision and strategies, and, sets policies and systems to;
• Determine where the company is going
• Tell people what to do (high level policies)
• Tell people how you expect them to do it (values)
• Monitoring what people do
• Understand risks and opportunities.
Management have a different but complementary role to play in the efficient and effective operation of the company.
Whereas a Board sets vision, strategies, high level policies and monitors achievement towards the goals of the company, the management should be concerned with;
• Planning
• Facilitating
• Allocating resources
• Controlling and
• Communicating.
This BLOG is about how the Directors and Senior Management of a business know what is going on. It seems simple enough, if you are involved in a business it seems that you must know what is occurring. This is true to a point, but in my experience, Directors of aviation businesses often only find out what is really occurring after an accident investigation or an audit by the regulator which results in unsatisfactory findings. The findings of the investigation or audit come as a shock to them - "We never realised." is a common cry - my reply is, "Did you ask the right qustions?"
A common failing is the lack of a formalized reporting regime. This is essential even for quite small businesses. The reports should ensure that standard questions are addressed; among them, questions about safety and compliance. This formal system could be complemented by internal audit reports, confidential staff resporting and informal communications with those who present and manage the everyday risk exposure to the business.
So if you are a Director or Senior Manager, be aware that in some jurisdictions, you may be responsible for monitoring what is occurring within the business and, more significantly, if found to be negligent, accountable for not knowing what is really going on.
My book, "Safety Management without the Mumbo Jumbo" can be purchased for $29.95 + $5.95 postage and handling. Click here to purchase the book.
