Meeting Safety Management Challenges
To manage effectively, management needs information which tells them in real time how well the organizational systems are meeting business challenges, customer needs, innovation and growth.
- By Peter Furst
- Nov 24, 2020
Generally, prior to 1992 all businesses measured their success based on financial (outcome) metrics alone. Kaplan & Norton wrote an article for the Jan-Feb 1992 issue of the Harvard Business Review magazine titled “The Balanced Scorecard – Measures That Drive Performance” which revolutionized how businesses manage performance and measure outcomes. Now, just about every business uses some form of the Balanced Scorecard. As discussed in a previous article, there are problems with safety management. Another impediment is in the area of safety metrics.
Management is responsible for efficient and effective operations. Information is required to accomplish this. The traditional financial measures used were historical outcome metrics, which tell you how you have done, but not much else. To manage effectively, management needs information which tells them in real time how well the organizational and operational systems are meeting business challenges, customer needs, innovation and growth. These are process metrics. Management also needs information on how quickly things are improving, which are also progress metrics. All three metrics are required to manage effectively.
Organizations are required by law to keep track of their recordable accidents, with some exceptions. They are also required to provide that information to the Department of Labor, which issues annual average injury and fatality metrics for various industries. Organizations can use this to gauge their comparative performance. Doing better than the industry average is a rather poor target to strive to outperform.
Insurance companies who offer workers compensation policies track their insured’s accident losses by total number (frequency) and how costly they are (severity). This determines the premium they will charge for that policy in the upcoming year. Usually their loss control department (or the broker) will review the losses on an annual basis with their insured. They may offer suggested interventions so as to reduce the losses and therefore control the cost of the insurance policies going forward.
Organizations may also keep track of accidents in a format that may assist in reducing them, therefore controlling their cost risk as well as their resulting negative impact on operations. All are outcome measures. The safety practitioner also conducts site inspections to initiate corrective action regarding any physical hazard or unsafe behavior. They investigate accidents and try to determine the cause, then use that information to keep them from occurring again.
Safety generally comes to management’s attention after an accident happens. Annually, safety will be discussed at the workers compensation insurance policy renewal. This may involve a review of accidents and their associated cost. So, the primary measurement of safety becomes loss statistics and their associated cost. This puts safety into an expense disposition with a focus on cost cutting. This makes it difficult for safety personnel to get management to commit resources for many possible safety improvement initiatives.
The biggest disconnect is in the area of aligning safety with operations. One hears safety practitioners bemoaning their fates and complaining of not having management support, sufficient resources or the full backing of operational personnel. They also complain that employees are not made available and that they don’t have sufficient time to receive training.
Safety personnel also see line management falling short in the implementation and execution of safety processes. Safety metrics do not tell senior managers how the safety effort correlates to their operational processes. The organizational scorecard approach, if applied to safety, will provide the alignment, and metrics will resolve much of the issues and concerns that are seemingly difficult to overcome.
Applying Scorecards to Safety
So, how do we utilize the scorecard for safety? If the business has implemented an organizational scorecard process, then a similar one for safety makes sense. If not, then we have to become creative and identify elements which will provide outcome, process and progress metrics for safety. The four business perspectives proposed by Dr. Kaplan are:
1. The customer perspective
2. The internal business perspective
3. The innovation and learning perspective
4. The financial perspective
In comparison, the safety scorecard contains these four perspectives:
1. The stakeholder in safe work performance. This is everyone—all levels of management as well as the workers, partners, suppliers and even vendors.
2. Safety process and procedure. Everything that is done to make safety "work"—programs, training, audits, employee management, risk planning, etc.
3. Innovation in safety. Knowledge improvement, skill enhancement, alignment and integration of operations with safety, etc.
4. Safety performance management. Operational excellence, leadership, empowerment, engagement, risk, performance standards, performance measurement, etc.
So how do we go about accomplishing this? For example, assume that the vision we have for our safety effort is "an injury-free workplace." The next step is to identify strategies, objectives, measures and targets for each of the above perspectives. The organizational scorecard places vision and strategy at the center. This process establishes goals that ensure everyone within the organization will adopt behaviors and take the actions that will achieve these goals. The measure is also designed to ensure this occurs and provides an assessment of how everyone is doing in accomplishing the central vision. Senior management now has a process that effectively focuses all the efforts of the organization toward the vision and has the information with which to operate efficiently and manage effectively.
The benefit of the Balanced Safety Scorecard is that safety becomes an integral part of operations. The organization selects any number of perspectives for which they collect data and use that information with which to drive excellence in operations and business.