Due Diligence Is Not Just Ticking Boxes!
We hear people saying (and rightly so) that we have to demonstrate due diligence. But when we hear this we are usually drawn to a six point checklist, which someone has extrapolated from The Act, and we hear them say that by checking off the points on this list you will be able to demonstrate due diligence.
That approach is challenged by some. Greg Smith (in his “Risky Conversations” collaboration with Dr. Rob Long and Craig Ashhurst has this to say:
“Due diligence, has got a lot of noise lately in the safety space… I’m absolutely convinced that the way it’s being flogged around the safety industry fundamentally misrepresents what due diligence is about. I think it also represents the real lack of critical thinking that we see in the safety industry.” (Long, Smith & Ashhurst, 2016, p. 20)
So what does this mean?
The point is that being able to demonstrate ‘due diligence’ is not about having a thing (a policy or a system or a heap of procedures and checklists) it is about doing a thing. Demonstrating due diligence is about being diligent. And diligent is defined as “showing persistent and hard-working effort in doing something”. So, demonstrating due diligence is focused on doing; it is an activity thing.
So what does demonstrating due diligence really mean?
Being diligent requires ‘Officers’ to go and look, question and understand what is going on in their business. It required ‘Officers’ to enter the workplace and actively interact with the people conducting the work. It requires ‘Officers’ to understand about (not just know about) the risks that they (actively) know are present in the business and that people are engaging with. The ‘Officers’ understand about the risks because they are diligent (persistent and hard working) in their risk understanding activities. They are diligent in their active pursuit of these activities which include: active questioning, active listening and active understanding.
Further, demonstrating due diligence is also about being able to (actively) confirm that ‘what is going on’, is actually what they agree is ‘what ought to be going on’. It is actively confirming that what the human, fallible, error prone people conducting the work, understand the policies and procedures are saying is what they (the Officers) deem are the most appropriate ways to manage the risks that they (actively) know are present in the business. And they know this because they are active in finding out from these same people what those most appropriate methods might be; including actively ensuring ‘as best they can’ that these same people have the necessary resources (skills, knowledge, well-being, support, equipment, etc.) to discern and manage the risks.
But wait; (do you want to go for the ‘steak knives’?) – there’s more: demonstrating due diligence is also about being active in knowing when the unexpected happens (what Weick and Sutcliffe (2007, p. 12) call having a “sensitivity to operations”). Again this means that ‘Officers’ actively engage with people to learn about what is ‘really’ happening, as opposed to what they ‘hope’ is happening. And most importantly it is about: stopping and reflecting (as individuals and collectively) on what has happened (good and not so) and paying active heed to experiences and learning from them.
I’m reminded of Dewey’s philosophy on learning “… education’s purpose is to prepare us to survive and, hopefully, flourish in a future that is by nature uncertain.” (Dewey, cited in Hildebrand, 2008, p. 125).
So how is due diligence practised in your organisation? How is the demonstration of due diligence seen? Is it an ‘activity’ as in a “persistent and hard-working effort” to understand that ‘what is going on’, is actually ‘what ought to be going on’ in order to discern and manage risk? Or is it a desk top audit process governed by a 6 point checklist?
Note: this article is an extract from a chapter of Robert Sams’ soon to be released book Social Sensemaking: a reflective journal, how we make sense of risk. I have had the pleasure of collaborating with Robert on this, his first book, and (although I am obviously biased) I reckon many of you will soon agree that it is a cracker. You can put your name down for a copy here: firstname.lastname@example.org.
The following short video by Greg Smith may give people a closer insight to the concept of due diligence:
As ever, I welcome your comments and thoughts and maybe a chat about making sense of being diligent in your workplace.
Author: Max Geyer
Encarta Dictionary: English (UK) viewed 6th July 2016
Hildebrand, D. L., (2008) Dewey: A Beginners Guide, Oneworld Publications, Oxford, England.
Long, Dr. R., Smith, G., & Ashhurst, Craig C., (2016) Risky Conversations: The Law, Social Psychology and Risk, Scotoma Press, Kambah, ACT, Australia.
Weick, K. E., and Sutcliffe, K. M., (2007) Managing the Unexpected: Resilient Performance in an Age of Uncertainty 2nd ed., Jossey-Bass, San Francisco, USA