Substantial Consequences of a Culture of Fear

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What happens when a culture of fear takes hold in an organization?  How can it put an entire enterprise at risk?   The story of Sasol, the South African integrated energy and chemicals company, offers some stark lessons.   Bloomberg reported this week on problems with two giant  projects at the company:  a ethane cracker plant in Louisiana and a wax project in Sasolburg, South Africa.  In both cases, massive cost overruns and schedule delays took place. The Board remained in the dark for quite some time, unaware of how bad things had really become. Here's an excerpt from the article by Antony Sguazzin and Paul Burkhardt:

But Sasol’s struggle to break with a long-standing command culture, in which executives are rarely questioned, threatens to bring the global expansion of one of South Africa’s most successful corporations to a halt.   Shareholders have turned on Sasol in the aftermath of massive cost overruns and delays at a chemical facility that’s now nearing completion in Louisiana. The company fired its co-chief executive officers, Stephen Cornell and Bongani Nqwababa, in October, saying a “culture of fear’’ of managers overseeing the Lake Charles project had contributed to its failures.

A report by South African law firm Werksmans Attorneys examined the troubles at the wax plant. The article states that, "The report showed how employees concealed bad news about the wax plant from the board and made overly optimistic assumptions pertaining to expected profits from the project."  Haven't we heard that description about so many other organizations that have found themselves thrust into a crisis due in large part to the consequences of a culture of fear?  

Now, Fleetwood Grobler has become CEO, and he's trying to change the culture.  Unfortunately, significant damage has been done.  It seems that it will be a massive effort to create a climate of psychological safety at the firm.