A comprehensive analysis of regulatory documents and investigation reports has revealed how systematic lying about safety performance became entrenched at a major US utility company, leading to significant safety risks and regulatory penalties.
The research, published in Safety Science, examined Pacific Gas and Electric’s (PG&E) locate and mark activities between 2009-2017. Researchers analysed three major regulatory documents totalling over 1000 pages, including detailed investigation reports, regulatory orders, and company responses. The study included testimony from eight PG&E employees who provided statements under oath.
“Each failure of PG&E to respond to an underground storage alert request in a timely fashion increased the risk of another catastrophic gas incident,” the California Public Utility Commission stated in their investigation, which resulted in US$110 million in penalties in January 2020.
Co-authored by professor Jan Hayes from RMIT University, professor Sarah Maslen from University of Canberra and professor emeritus Paul Schulman from the Center for Catastrophic Risk Management, University of California, the research uncovered how a combination of software issues, aggressive management practices, and poorly designed performance metrics created conditions where deception became normalised.
Initially, a software glitch meant simply opening a record would mark it as complete, masking significant performance issues. “Workers were being bullied to meet an unachievable outcome, including through physical gestures and the threat of job loss. Such threats drive a wish to avoid punishment, not achieve the intent of the requirement,” said the research paper, A case of collective lying: How deceit becomes entrenched in organizational safety behaviour.
While company procedures required workers to verify the location of underground gas infrastructure within mandated timeframes, internal documents revealed actual completion rates were around 60 per cent, despite reports showing near-perfect compliance.
“The perception was that senior management had no interest in the root cause of the late ticket issue, only getting the number of reported late tickets to zero,” the study found. “Lower-level people were left with no choice but to tell senior management what they were demanding to hear and not discuss how this was being achieved.”
An adversarial regulatory relationship compounded these issues. “It seems likely that PG&E officials would have expected, rightly or wrongly, that to inform the CPUC earlier, before the falsification of records occurred, the result would not have been a confidential session to describe the problem to Commission officials and to try with them, to figure out and assess possible solutions,” the researchers noted.
The consequences were serious. In one incident, delayed response times contributed to a gas line failure when a backhoe operator, assuming there were no gas assets present after receiving no timely response, damaged infrastructure causing over $50,000 in damage.
“If you put workers in a position where it is very difficult if not impossible to meet the target, then organisations cannot be surprised if this results in gaming,” the researchers concluded.
The study emphasised that preventing systematic deception requires fundamental changes to organisational systems and culture. “Simply removing disincentives will not necessarily change behaviours if other structural issues reinforce the status quo. Managers must be prepared for bad news to emerge if they want change to happen,” the researchers advised.
The research highlighted several critical factors for organisations to address and said the design of reward systems must address the question of the undesirable consequences that may result. “They must ensure that the desired behaviours are actively encouraged rather than just providing an incentive to hide undesired behaviours and or outcomes,” the researchers recommended.
“Reliable regulation requires relationships between regulator and regulatee that promote two-way communication and cooperative arrangements for error-correction and to promote joint learning,” they added, emphasising the importance of moving beyond adversarial regulatory relationships.
The study concluded that organisations need to create environments where safety issues can be openly discussed without fear of retribution, while ensuring performance metrics genuinely drive desired outcomes rather than incentivising deception.