The Baker Panel Report - ABSA

The metrics and milestones in a refinery plant manager’s performance contract cascade down to the other performance contracts within thatrefinery. The Panel has not been provided information concerning any performance contracts through 2005 that contain process safety-relatedmetrics.BP’s corporate program for rewarding performance generally, including safety performance, is the variable pay program (VPP). Whileperformance contracts typically cascade only one or two levels beneath the refinery plant manager, all refinery workers participate in the VPP.Each refinery has an annual VPP containing a suite of metrics, milestones, and targets relating to financial, availability, and safety objectivesfor that refinery for that year. Although VPPs contain some milestones unique to each refinery, all VPPs mirror a broad framework set byleadership of the Refining and Marketing segment.Historically, the safety-related metrics in VPPs in U.S. refineries tended to be OSHA recordables, such as recordable injury frequency and daysaway from work case frequency. While these are widely tracked safety-output metrics, they provide little if any underlying information on thestate of process safety or process safety performance in a refinery. Moreover, linking compensation to safety output metrics such as these cancreate a disincentive for the workforce to report injuries or other “negative outputs” that the VPP covers. 15 As the Mogford Report notes, thiscould have negative implications for ongoing process safety at the refineries:While the Investigation Team did not find any direct evidence of deliberate under-reporting of incidents, the rewardsystem employed within this site appears misaligned. The system rewarded employees for having fewer incidents, and itis possible that this incentive could drive reporting tendency downwards. 16Other targets and milestones in the U.S. refining VPP, while not specifically safety-related, may also have negative consequences for processsafety. For example, some refineries have included a VPP milestone for meeting a turnaround schedule. Providing refinery workers with afinancial incentive to keep pace on a turnaround schedule may well encourage them to take process safety risks.In 2005, Texas City changed the safety-related metrics in its VPP to “Great Days” and process safety management action item completion. As of2006, all of BP’s U.S. refineries used Great Days as an HSSE metric in their VPPs. While the definition of a “Great Day” is not completelyconsistent across the refineries, most of them define it as a day in which no safety incident, environmental incident, or community impactincident occurs. A “safety incident” in this context means any injury that is recordable under OSHA. Accordingly, while Great Days is a blend ofenvironmental, regulatory, community, and safety metrics, it is still far more aligned with personal safety than process safety because it reliesupon the personal safety metric of OSHA recordables. The Panel therefore does not regard Great Days as an effective process safety indicator ormetric. The Panel believes that process safety management audit action item completion included by Texas City and Cherry Point as a VPPmetric in 2005 and later adopted as a VPP metric by the remaining U.S. refineries in 2006, and percentage action item closure, which Texas Cityincluded as a VPP metric in 2006, are both leading indicators that are better aligned with process safety.This same focus on personal safety performance is reflected in each U.S. refinery’s site-specific business plan. Each refinery prepares andreviews with corporate refining management a business plan outlining a site’s strategic and financial aspirations. Each plan containshistorical and targeted key performance indicators for the refinery. Through 2005, the only safety-related key performance indicators inU.S. site-specific business plans were days away from work case frequency and recordable injury frequency. The reports that BP used routinelyto monitor the performance of the U.S. refineries likewise focused on personal safety, not process safety. See Section VI.C for a more detaileddiscussion of reporting and monitoring of personal safety and process safety performance information.Consistent with the lack of an effective focus on process safety performance, BP management did not establish appropriate operationalexpectations regarding process safety performance at its U.S. refineries. Through its performance contracts, site-specific business plans, andVPPs, BP in many ways established specific operational expectations regarding financial performance, environmental performance, and personalsafety performance. With respect to all three of these areas of performance, BP management specified key performance indicators, targets, andCorporate Safety Culture C 70