The EFMD business magazine

The EFMD business magazine

Error management: Not just a wing and a prayer

Jan Hagen suggests that the aviation industry’s open approach to identifying and resolving errors could be applied to many other sectors.

The financial markets crisis began in 2007 and unfolded with increasing severity. At the time, we were dumbfounded that big-name banks had taken such disproportionately high risks with their structured securities.

Many of us saw the investment banking sector’s remuneration system and the associated asymmetric risk distribution as the main causes of the crisis. We asked how things could have spiralled so far out of control, especially as even before the crisis some parties within the banks had urged caution.

The question is why these warnings went unheard. Were they overlooked? Underestimated? What mistakes were made? How did they come about? Who failed to pick them up? And how were they allowed to trigger a series of further errors that ultimately had such dramatic consequences?

However, banking is by no means an exception. There have been mistakes, errors, poor decision-making, infringements, affairs and scandals in any and every industry and organisation you care to mention.

None of them appears to have had any effective controls in place that allowed them to intervene in time to prevent things going awry. Instead, those involved could only watch as fate ran its course.

Let us take a look at normal day-to-day operations in a company.

What happens if someone makes a mistake or takes the wrong decision? The issue here is not intentional misconduct, fraudulent behaviour, gross negligence or large-scale mismanagement. I am referring to the little mistakes, errors and poor decisions that occur every single day. (This is described in greater detail by Reason, J (1990) Human Error New York; Cambridge University Press.)

Often we are not even aware of these blunders, though in complex environments, research shows we make errors every four minutes. (See Ruffell Smith, H P (1979) “A Simulator Study of the Interaction of Pilot Workload with Errors, Vigilance, and Decisions,” NASA TM 748482. Moffett Field, CA: NASA-Ames Research Center, pp. 14-21.).

Mostly, errors are the result of momentary blackouts, a temporary short circuit in the brain, false impressions, deceptive memories, dots wrongly joined, fragments of conversation that we interpret incorrectly, prejudices, momentary feelings of mental imbalance, disorientation, stress and other disturbances.

For the full article, you can view the PDF.

Error management: Not just a wing and a prayer

See more articles from Vol.08 Issue 02 – ’14.

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