How to Break the Silence of Subcontractors

Abstract

Research on risk management in subcontracting networks has emphasized the analysis of abuses committed and their consequences on the health and safety of workers. In this chapter, we pay special attention to experiments that have attempted—successfully—to mitigate, or even revert said abuses. They have achieved that in a “projects industry”, as it is the case for construction, a subcontracting-intensive activity. Our goal was to find some common traits between the experiments, beyond the different contexts in which they were embedded, to obtain some general guidelines that can be applied in different contexts with identical results. The most important of these guidelines is in the title of the present text: to overcome the silence of workers and managers in contracted companies, building bonds of trust, based on a real delegation of responsibilities and on the active listening of their perspectives and recommendations.

5.1 Introduction

The first articles on the issue of organizational silence published in specialized management journals date back to the early 2000s (Morrison and Milliken 2000; Pinder and Harlos 2001). Pinder and Harlos define “organizational silence” as “…the withholding of any form of genuine expression about the individual’s behavioral, cognitive and/or affective evaluations of his or her organizational circumstances to persons who are perceived to be capable of effecting change or redress”. The term has since been applied to the study of various intra-organizational problems and, more recently, to safety management (Dekker 2007; Rocha 2014). Who are those persons capable of influencing changes in the organizational conditions of their work? To what extent can they influence those changes?

Before answering the question, it is useful to remember that, in terms of safety (but also productivity and quality), “sharp end” operators are the first and main victims of organizational problems. Our perspective in this matter is as follows: it is at the front line where the latent conditions originated in the organizational design take their toll (Reason 1997). In the case of subcontracting networks, the design refers to the boundaries between organizations (Sabel et al. 1997).¹ Secondly, the experience of frontline operators is crucial to identify and correct these flaws on time, since these operators generally act as the last barrier.²

The reasons that make listening to the operators advisable at the organizational level are also relevant at the inter-organizational level for those activities that resort to hiring people and companies. Our goal is to prove that, up to now, those voices are yet unheard and that it is crucial to do so if real and lasting changes are to be made.

We will tackle the issue at hand in two extremes of a continuum spanning from subcontracting meaning labor precarization, on one hand, and the attempts to revert the trend through the development of cooperative relationships between the different links in the subcontracting chain on the other. We will pay special attention to the reaches and limitations of the research available on the latter form.

Dominant negative trends in the fields of safety and health at work are connected, as we will observe, with the forms that outsourcing processes have historically adopted—and which, according to recent literature, they continue to adopt.³ The experiences for the improvement of work conditions at the regulatory and safety management levels in subcontracting networks will be examined in a multi-sector industry which undertakes high-risk activities and makes intensive use of subcontracting: the construction industry.⁴

Construction activities are organized as projects. In their design, management and execution, a myriad of companies of different sizes act simultaneously and sequentially. Their negative indicators in safety and health of their workers increase in inverse proportion to the size of the companies involved, and as a direct function of their location in the last ranks of the—sometimes highly informal—subcontracting networks.

We will focus on the construction industry in the UK, where the most advanced attempts to mitigate the negative aspects of subcontracting have taken place and have been the object of research. The texts cited come from a broad review of the literature on the connections between subcontracting and safety management, paying special attention to the construction industry. As we will see, we have identified literature reviews on the subject from different periods. We have paid particular attention to the rare articles based on empirical research on our topic.

5.2 The Reaction Facing the Abuses of Subcontracting

Donaghy (2009: 11) notes that “…as we emerge from a recession when the number of fatalities tends to rise […] We should aim to raise the profile of these tragedies so that a construction fatality becomes socially unacceptable”, referring to the intention to influence the acceptability of risk in the British construction industry in a time of recovery after the 2008 crisis. The quote is extracted from a report written upon The Crown’s request for the Secretary of Labor and Pensions of the UK titled One death is too many. In fact, as Walker underlines in his book about project management in the British construction industry: “The traditions and conventions of the United Kingdom have had a particularly wide significance as they have been exported to many parts of the world over the last two centuries” (Walker 2015: 3). The book describes the way in which the organization of UK construction projects has evolved and its influence on practices in other countries.

Like Shelley Marshall in her recent research (Marshall 2019) about innovative regulatory attempts to combat abuses of subcontracting in several countries with different development levels, we find it appropriate to take the British experience as a reference, given the empirical research undertaken there.

5.2.1 Advances in British Legislation

A first, brief and clear introduction of the background behind the progress made in British legislation is presented by Walker when he mentions in the book a series of valuable reports about the state of the construction industry in the UK, written after the Second World War on request of the government,⁵ that ended in 1998 with the publication of the Egan Report, titled Rethinking Construction. This report stands out among the previous ones because it “…argued for a radically changed industry with higher margins for contractors, better value for money for clients, improved welfare (particularly safety) and better training. Many of these benefits were seen to be achievable through supply chain management using long-term partnerships” (underlining by this chapter’s author).

Private initiative soon followed, in particular with the creation in 2001 of the Strategic Forum for Construction (SFfC), whose mandate was to coordinate private efforts toward achieving the Egan Report objectives: “The SFfC’s (2002) major publication was Accelerating Change, which identified progress since the Egan Report, including innovation, key performance indicators and, most importantly, demonstration projects which ‘provide the opportunity for leading edge organizations from whatever part of construction to bring forward projects that demonstrate innovation and change that can be measured and evaluated’” […] The long-term challenge is for the initiatives to percolate to all levels of the industry rather than remain with the more progressive, usually large, firms”. Walker notes (2015) this industry evolution has been accompanied by significant academic work, including the creation of a number of respected journals.

Due to the effectiveness of previous regulations and the inverse relation between outsourcing and safety, the changes in British legislation were finally reflected in the CDM 2007, briefly summarized in a diagram (Manu et al. 2009: 5),⁶ with the intention of preparing for future research about its efficiency. According to the authors, “…the underperformance of the CDM 1994 finally yielded the Construction (Design and Management) Regulations 2007 (CDM 2007) which seeks to address the shortfalls of the CDM 1994 so as to achieve improved levels of H&S in Construction”.

Before analyzing in the next section progress made in research that Walker referred to, and the changes proposed by Manu and his colleagues, we should take note of the double movement (top-down/bottom-up) that took place in the British construction industry to promote the change, following a new supplementary way (private demonstration projects that aim to implement the public mitigation measures). This is a form of co-regulation—that we will later address at its micro-level—that one author has also called collaborative governance, networked governance or new governance (Blomgren Bingham 2010). A great step forward at the macro-level that, as we will see, research is only starting to take at the micro-level. Let us also remember the long-term vision that guides the double movement of private and public actors in the UK: “supply chain management using long term partnerships”.

5.2.2 The Silence of Subcontractors

Paradoxically, in the substantial body of research that Walker refers to concerning the development of partnerships in subcontracting networks, subcontractors have rarely had a voice. And when they did (Valluru et al. 2017), it was to understand–it is the title of the article—“How and why do subcontractors experience different safety on high-risk work sites”.

In fact, Valluru and colleagues state—and we agree with them—that “Existing research on subcontractors, which focuses on the role of the prime contractor in selecting and managing subcontractors, fails to explain why subcontractors continue to experience higher rates of serious injury even where subcontractor management systems are in place”. Unfortunately, the conclusions of the article, reached through focus groups with subcontractors in the Australian construction industry, though not irrelevant, are exiguous and negative in nature. According to them, the problem is caused, “with several links”, by the form of the subcontracting, since “…extending the responsibilities of site owners and operators to cover subcontractors is insufficient to ensure equal treatment, even where safety policies and procedures appear to be written and applied uniformly”.

Accounting for the point of view of subcontractors (as happens at a higher level with the industry’s contribution to changes in regulations) is quintessential if one wants to achieve the development of effective and lasting cooperation bonds between the different members of the subcontracting networks thanks to top-down and bottom-up movements, based in the “control regulation” of the contracting parties and in the “autonomous regulation” of the contracted parties (Reynaud 1979), or, in other words, based on securité reglée et à la fois gerée⁷ (Daniellou et al. 2010).

What happened in that regard in the research on the attempts to innovate carried out by British companies interested in accelerating the changes proposed by the Egan Report? Have Manu and colleagues managed to take into practice their intention to examine such attempts to evaluate the efficacy of the new legislation?

Two years after the first article was published, Manu et al. presented work titled “Managing the adverse health and safety influence of subcontracting: findings of a qualitative inquiry” (Manu et al. 2011). How did they carry out that research? “Using semi-structured interviews⁸ with key management personnel of 6 UK contractors, the research question,—how do main contractors manage the adverse H&S influence of subcontracting, in terms of their in-house H&S practices? was investigated” (excerpt from the abstract). Once again, the main targets of such policies were not invited to take part in the research.

The main conclusion of the research is that “beyond the legal requirements, two strategic measures adopted by the investigated contractors are: restricting the layers/tiers of subcontracting on projects; and having a regular chain of subcontractors. These measures are aimed at addressing the communication, teamwork, competence, and safety culture issues that are associated with workforce fragmentation introduced by subcontracting”. As we will see, we have reached similar conclusions in research in which we have also heard the voice of subcontractors about the solid ground of such policies.

However, the most interesting research findings on significant progress in the relation with subcontractors leading to equally significant improvements in safety results were reached in the UK in the high-profile international works for the 2012 Olympic Games, a true laboratory for the “demonstration projects” promised by The Strategic Forum for Construction (SffC), created in 2001 by the elite of the British construction industry.

5.2.3 The Legacy of the Olympic Games

Through an initiative of the IOSH—the UK Association of safety professionals—a legacy learning team was formed, with researchers from the Cardiff Work Environment Research Centre. This group started a case study of the Olympic Games construction works, publishing a literature review (Walters and James 2009) then undertaking empirical research that led to preliminary findings (Wadsworth et al. 2011) then to a more comprehensive report (Walters et al. 2012), including an additional case study in a different sector. The distinctive peculiarity of this research (we will refer here to the 2011 publication⁹) is the interviews with individuals at each hierarchical level of the organizations in the contracting chain, focusing on the network managed by one of the main contractors.¹⁰

The goal of the research was “…to assess the impact of the supply chain strategies of the procurer, the Olympic Delivery Authority (ODA), on the occupational health and safety (OHS) management and performance among its contractors”. The ODA performance stood out for the spectacular results of their management of the subcontracting network in terms of safety: “The safety record on the Park was impressive and remained significantly higher than the industry average throughout the works. In February 2011 the Park achieved its 17th set of one million man hours worked without a reportable incident since 2006. The ODA’s contribution to this has been recognized by the British Safety Council (in the form of both the five-star and Sword of Honour awards)”.

As one could expect given the specificities of the case, in their conclusion the authors emphasize two “…key factors driving the effective use of supply chain strategies for health and safety management: (a) the reputational risk associated with high profile projects and; (b) pre-existing and well-developed health and safety management systems throughout the supply chain (effectively a prerequisite for those tendering to work on the Park)”¹¹. They add: “This is a narrow set of circumstances which do not generally exist on most builds or within many of the small and medium sized enterprises that make up the majority of the UK construction sector”, in spite of which “(it) seems to be that the supply chain can be used effectively to enhance health and safety performance and management”. And they conclude: “Successful impact, therefore, is dependent on the client’s on-going determination to fully exploit their influence to ensure both clarity and transparency of governance, and worker involvement and empowerment, through effective communication up and down the supply chain”.

The interviews with members of the organizations in Tier Three of the chain confirm the aforementioned (op. cit., page 6, our underlining):

…there was an emerging feeling from the Tier One contractor, for example, of a two-way relationship with the ODA in terms of the development of health and safety procedures and systems. Similarly, it was clear that contractors at all levels had had the opportunity to learn from each other; that is from contractors at their own and at both higher and lower tiers. At an individual level, there was also evidence of worker involvement in health and safety and of the empowerment of workers by giving them the ‘authority’ to report near misses, to stop unsafe work and to discuss and contribute to the development of ways of working. The key to both these levels of communication was, again, the transparency of governance as well as the physical presence and involvement of clients on suppliers’ sites.

It is also interesting to notice some of the complaints of subcontractors regarding the requirements they had to face (page 7):

…for some individuals there had been very significant increases in the levels of paperwork they were expected to complete, which was sometimes finished in workers’ own time. At both the organizational and individual levels there was also some feeling of ‘overkill’, particularly where the reasons behind specific requirements were not clear or when rules seemed to be applied without due consideration of the circumstances.

These traits of the learning legacy of the Olympic Games are also found, as we will see next, in other studies on successful experiences in the field of safety management in subcontracting networks that were not as exceptional as the Olympic Games construction site, in which a voice was also given to members of the subcontracted companies. For instance, in an inquiry we made in the Argentine branch of a multinational oil company.

5.2.4 Safety Management at the Frontier

We will now draw on one of the two cases discussed in (Walter 2017). The case chosen shows outstanding safety results—according to the yearly audits of the safety management system of the local branch—shown by the Projects Area of the company (which we will call GEAR). This area was in charge of the supervision of the local companies hired for construction works (construction of pipelines, cabling, roads between the pits and compressing plants that pump the fluids into the oil pipelines).

We will now refer to two basic issues related to the management of subcontracting networks: the type of hiring, on one side; and the use of work permits and other management tools—such as anomaly reports (already mentioned when referring to the Olympic Games construction case)—on the other.¹²

The research consisted of a survey on the safety culture involving all staff members (n = 1836), both in-company (28%) and subcontracted (72%). The inclusion of subcontractors already implies a substantial difference vis-à-vis the most frequently used methodology in this type of survey.

The high proportion of subcontractor staff was due to the outsourcing of not only operational tasks but also of maintenance management (27 and 73%, respectively) and safety management (43 and 57%, respectively). The supervision of safety issues was undertaken by in-house GEAR supervisors (30 people), in charge of a larger group (51 people) of salaried supervisors of a subcontractor (MRI). Between the two, they were in charge of supervising another 37 supervisors from subcontracted companies.

MRI’s supervisors were formally integrated to GEAR’s structure, under the hybrid category¹³ of “organic contractors”. Given their integration into the branch’s organizational chart, they received the same safety training as the branch’s permanent staff. The average “seniority” (we use this term to refer to the time the respondent had been working for GEAR¹⁴) of the permanent staff, of the staff integrated to the company’s structure and of the subcontractor staff was virtually the same, for reasons explained by the Project Area Manager: “when we change subcontractors, the newly hired firm must rehire at least 50% of the staff that worked for the previous subcontractor”.

As for the use of work permits, GEAR’s Project Area used a strict control system based in a triple-tier signature¹⁵ requirement for their approval, a form of supervision of the supervision that reinforced hierarchy. Additionally, GEAR required subcontractors to be responsible for safety in the works with their own supervision, offering in exchange permanent advisory support for the supervisors integrated in GEAR’s structure. The staff of subcontractors for construction works was encouraged (by means of symbolic rewards, such as items of merchandising—jackets, bags…—of the multinational company) to use the company’s anomaly reporting system and advanced safety management tool whose effectiveness depends—according to front line staff–on (and contributes decisively to) a change, often radical, in the common safety culture.

Summarizing: subcontracting relationships were managed using a combination of two opposing principles: on one side, using a twofold reinforcement of hierarchies, by means of the hybrid category introduced in the company’s organizational chart (whose reason was, as emerged from testimonies, to combat the bureaucratization of permanent staff) and the triple-tier signature system. On the other side, as clearly stated by the Project Area Manager and the heads, supervisors and operators from subcontractors—whose testimony is reported in the table A3 of our paper (Walter 2017: 403)—by using a type of supervision that aims to develop the autonomy of subcontractors, that is, based on nurturing trust relationships.

It is also worth mentioning that this contractor relations approach was formalized by GEAR’s Argentinean branch in order to give it continuity after the retirement of the Manager who founded the Project Area.

5.3 Conclusion

What have we learnt after this essay written with a reasoned pessimism and a cautious optimism? We will not go back to the details—except for, perhaps, the most important ones—exhibited throughout in this text nor the testimonies, two of which are cited in this footnote.¹⁶ We will follow a scheme used in organizational analysis: first, the context; then, the formal organization; and, finally, the informal one. In this way, we will try to answer the questions posed in the introduction: who are those silent subcontractors? Why could listening to them provide a relevant contribution to the safety management in subcontracting networks?

In the first place, regarding the “context”, let us say that the historic institutionalist approach that Shelley Marshall resorts to for the study of local advancements in regulation through case studies and their subsequent comparison to obtain common guidelines that go beyond differences—inspired in the methodology of grounded theory—is the same one we have used, at a different level, to establish the parallel between the legacies of the Olympic Games and of the Project Manager of the Argentine branch of the company GEAR.

It is important to know the British experience because, in the first place, it is inspired in the vision proposed by the Egan Report of moving forward with determination to the building of partnerships in subcontracting networks; in the second place, because that proposal was taken by the elite of British businessmen in the construction industry to “accelerate change” through the sponsoring of “demonstration projects”. This generated, in terms of safety, the double movement necessary for an effective fight against the abuse of outsourcing: by moving from prescriptive to autonomous regulation and to a co-regulation of safety in which public initiative works together with private initiative to obtain the desired results. Underlying this is the explicit intent, promoted by the highest authorities in the UK, of a change in risk acceptability, with a motto of “not one fewer”¹⁷ that is welcome in the very masculine construction industry.

Let us now look into the “formal organization”, which in the case of the subcontracting networks refers to the contracts between the parts. As we have seen in the GEAR case, the plural forms of coordination—conceptualized by economic sociology—allow for the reinforcement of the hierarchical principle and of the operating core of construction activities simultaneously. Literature analyzing the work processes of the construction industry is scarce, especially in terms of—according to Perrow—the interactive complexity of works, combined with the tight coupling of, for instance, persons falling from height, objects falling on people, electrocutions and structural collapses. If this combination explains the potential severity of accidents in this industry, it suggests that construction activities could apply the recommendations (articulating the strict hierarchy and formalization with a strong autonomy of the core of operations) considered valid for high reliability organizations.

Let us now analyze the most important aspect, the “informal organization” in subcontracting networks. It is the most important aspect because it refers to the least visible and more silent¹⁸ traits, which are more difficult to evidence. The two quotes in footnote 13 are the testimony of a rupture in the logics of silence and show that the difficulty does not depend on the rank of workers. If today we can talk about the legacy of a Project Manager in GEAR’s branch in Argentina, it is because those responsible for safety decided to preserve that legacy, making his accomplishments sustainable. These accomplishments were achieved by means of a “risky” approach, consisting in trusting in the professionalism of subcontractors and doing what is necessary—as shown by the testimony of the worker in footnote 13—by helping subcontractors to develop the abilities necessary to act in that manner. In order to build trust in subcontracting networks—here translating the message of the now retired Project Manager—it is necessary to begin by trusting.

These conclusions have everything in common with those listed in the preliminary report about the legacy of the Olympic Games, which in fact—unsurprisingly, due to the exceptional nature of the case—went even further in terms of the actions taken and the results obtained. Let us remember the list that we detailed when we referred to the aforementioned legacy in an abundantly underlined paragraph: two-way relationships, learn from each other, empowerment of workers by giving them the authority to report near misses, transparency in governance, physical presence and involvement of clients on supplier sites.