23 Sep 2009Working Paper Summaries

Operational Failures and Problem Solving: An Empirical Study of Incident Reporting

by Julia Adler-Milstein, Sara J. Singer and Michael W. Toffel

Operational failures occur within organizations across all industries, with consequences ranging from minor inconveniences to major catastrophes. How can managers encourage frontline workers to solve problems in response to operational failures? In the health-care industry, the setting for this study, operational failures occur often, and some are reported to voluntary incident reporting systems that are meant to help organizations learn from experience. Using data on nearly 7,500 reported incidents from a single hospital, the researchers found that problem-solving in response to operational failures is influenced by both the risk posed by the incident and the extent to which management demonstrates a commitment to problem-solving. Findings can be used by organizations to increase the contribution of incident reporting systems to operational performance improvement. Key concepts include:

Operational failures that trigger more financial and liability risks are associated with more frontline worker problem-solving.
By communicating the importance of problem-solving and engaging in problem-solving themselves, line managers can stimulate increased problem-solving among frontline workers.
Even without managers' regular engagement in problem-solving, communication about its importance can promote more problem-solving among frontline workers.
By explaining some of the variation in responsiveness to operational failures, this study empowers managers to adjust their approach to stimulate more problem-solving among frontline workers.

Author Abstract

Operational failures occur in all industries with consequences that range from minor inconveniences to major catastrophes. Many organizations have implemented incident reporting systems to highlight actual and potential operational failures in order to encourage problem solving and prevent subsequent failures. Our study is among the first to develop and empirically test theory regarding which reported operational failures are likely to spur problem solving. We hypothesize that problem solving activities are especially likely to follow reported operational failures that provoke financial and legal liability risks. We also hypothesize that management commitment to problem solving, enacted through managers' communication and engagement practices, can encourage frontline workers to conduct problem solving. We test our hypotheses in the health care context, in which the use of incident reporting systems to highlight operational failures is widespread. Using data on nearly 7,500 reported incidents from a single hospital, we find support for our hypotheses. Our findings suggest that frontline workers' participation in problem solving is motivated by some inherent characteristics of the problems as well as by particular management practices. 43 pages.