IMPLEMENTING OKR FRAMEWORK IN SOLVING SAFEY CULTURE AND SAFETY PROGRAM ISSUES TO ELEVATE SAFETY PERFORMANCE OF PT. XY WHILST PRESERVE THE ESG RATING OF PT.X

• Main Author: Rainier, John
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/86635
• Institution: Institut Teknologi Bandung

The oil & gas business is still an attractive business for many investors today. What has changed is that in making investment decisions today, investors do not only look carefully at business indicators such as ROA, ROI, Profitability. A new and important indicator taken into account for making investment decisions is the company’s Environmental, Social and Governance (ESG) Risk Rating. This number indicates the business sustainability of a company. Agency theory and stakeholder theory explain the relationship between E, S, and G to the business performance. PT.X, as a developing national energy company with a vision of becoming world class, currently still uses fossil energy as the backbone of its business. However, to answer the global need for green energy, PT. X is also expanding its business into the field of environmentally friendly energy such as geothermal, solar, etc. This strategy is in line with the Indonesian government's program towards Net Zero Emissions 2060. To finance its operations and share the risks, PT. X opens up opportunities for investors to invest by selling shares on the stock exchange. To attract investors, apart from improving business performance, PT. X is also pursuing a good ESG rating. Currently PT. X's ESG score is 20.7 (Morningstar Sustainalytics). With this score, PT. X is ranked 1st out of 61 oil & gas companies in the world (2023). PT. X's ambition is to maintain and to improve its ESG score. Several goals have been set by PT. X for this purpose, one of which is the default safety performance goal for the social aspect of ESG, namely Total Recordable Injury Rate / TRIR. Every year the TRIR goal gets smaller, which means the number of recordable incidents per total acceptable working hours gets smaller. This year PT.X's TRIR is 0.19, much lower than the average for IOGP members, namely 0.7. When setting this target, PT. X did not involve the company's subsidiaries. Based on a study conducted by a team of experts at Harvard University, stretch goals are like two sides of a coin. It has positive and negative effects. The positive effect of stretch goals is improving the performance of workers/business units. The negative effects are: promoting cheating behavior, shifting risk attitude, etc. Therefore, stretch goals must be set-up carefully like a doctor dispensing medicine. If not, the stretch goal can go wild. The research team made 10 self-check questions to diagnose quickly your stretch goal, would it go wild or not. This TRIR goal applies to all subsidiaries in PT. X Upstream division including PT. XY. Its operation is in biggest O&G block located in East Kalimantan. Initially this block was operated by one of O&G major company in the world from 1970 to 2017 then continued by PT. XY from 2018 until now. PT. XY’s ultimate challenge is to maintain oil and gas production of mature fields where wells production naturally continues to decline. For that PT. XY have planned massive work programs such as drilling ± 100 wells/year, ± 4000 wells intervention, and also 4 offshore platforms construction & installation projects. These activities involve many workers and carry high risks. Workers’ safety culture is very important to support the achievement of this goal. Unfortunately, the results of surveys conducted several times by one of reputable university in Indonesia, PT. XY safety culture level has decreased from the Proactive to Calculative. To improve organization safety performance, PT. XY shall start by solving organization’s safety cultures’ issues. PT. XY’s safety team believed the company should focus on improving existing safety programs rather than introducing new safety initiatives. This is necessary and urgent to do because resources in the field are limited for carrying out all safety programs. Moreover, new safety programs often confuse the front liners. When we are focusing our efforts on correct safety programs the safety performance will follow. To select which safety program to focus on, an FGD was held in February’24. Participants were asked to assess the relative importance of 6 root causes of recordable incidents (RI) & high-potential incidents (HIPO). After they compared 6 HSSE programs based on their effectiveness to tackle the 6 root causes. Analytical Hierarchy Process (AHP) method was used in this process. Data used are incidents records in 2014 – 2022. Out of the 6 safety programs examined, TEMAN was finally selected to be our focus. A survey of TEMAN in April’24 revealed some issues that make it is not effective yet. Objective and Key Results (OKR) framework is used to manage these because it has superior principles and similarity with PT.X core value AKHLAK, i.e: align and connect team work, focus and commit to priorities, track for accountability. OKR method is successful helping big companies such as Intel, Google, IBM to achieve their stretch goals with minimal side effects / no side effects at all. When TEMAN and Safety Culture objectives are successfully achieved using the OKR framework, the same method can be replicated to other stretch goals.