In commoditized industries where competition is based largely on who can offer the lowest price, there is an intense pressure to squeeze every penny out of the cost of operations. This presents a strong temptation to take shortcuts in areas such as safety, especially when the organization sees safety as a cost of doing business rather than a potentially value-adding activity.
The energy sector finds itself in this very situation. Bloomberg Business Week presents the example of Massey Coal1, which had contracts to sell coal at a price 50 percent below the benchmark contract. That put added pressure on the company to prioritize cost and productivity over safety. Bloomberg illustrates this pressure through a telling memo from CEO Blankenship, who was quoted as saying, “If any of you have been asked by your group presidents, your supervisors, engineers, or anyone else to do anything other than run coal, you need to ignore them and run coal. This memo is necessary only because we seem not to understand that coal pays the bills.”