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True North

Nov. 13, 2014
A blend of leading and lagging indicators is the best way to get a full picture of whether your EHS efforts are pointing your organization in the right direction.

Over the last 10 years, a growing number of organizations have transitioned from outdated and ineffective EHS programs based on lagging indicators to effective and state-of-the-art EHS programs based on leading indicators. We've known for some time that solely focusing on lagging indicators produces mediocre health and safety programs that might seem "world-class" until a serious incident happens. Leading indicators, on the other hand, can help create a more transformational safety culture, and the industry continues to evolve in that direction. 

Does that mean that the "Days Without an Incident" sign is obsolete? I would argue that it isn't. What about "Days Without a Near Miss" or even "Days Without an Observation?" If your organization has had a serious injury or illness or significant damage to property, inventory production or the environment, it's a safe bet that there have been near misses that preceded the event. There definitely have been numerous observations – whether reported or not. If you have no observations, you have a workforce that's either not paying attention or too disengaged (or too scared) to report. 

The difference between incident consequences can be a matter of chance – near misses might be a near fatality. Think about it: Workers easily can identify an unprotected roof opening. So why do so many organizations wait until a near miss occurs before they address a particular workplace hazard? 

If not reported, a near miss or injury will occur. It's only a matter of time. And that infamous "Days Since Last Recordable" sign? That one is a resounding, "Yes, get rid of it." If you're focused only on recordable incidents, you're functioning in a blind spot.

Lagging vs. Leading Indicators

The biggest issue with lagging indicators is that they've already happened. Does past performance predict what will happen in the future? Ask a stockbroker. They almost certainly have been burned by a historically well-performing "sure thing" stock that tanked after the opening bell. 

Imagine that you use the "hierarchy of controls" to eliminate certain hazards that have been responsible for previous incidents within a process or operation. Does this mean that all hazards associated with that process or operation never will rear their ugly heads again? As safety professionals, we just did a great thing – we eliminated a hazard and possibly saved a life. But do we cross our fingers and hope that those changes didn't create any other perilous conditions, or do we monitor the effectiveness of the controls? 

Without reliable data and a system that reminds us to verify, this type of monitoring might not happen as often as needed. It might engender a false sense of security that could be more hazardous than the original situation. 

A blend of leading (are we reducing our risk?) and lagging (how did we do?) indicators provides the optimal approach.

Successful organizations not only depend on organizational-wide buy-in, but they also rely on data and metrics to measure success and bring further visibility and clarity to EHS performance. Although some organizations might have the motivation and drive to improve their health and safety cultures, they might not be gathering the kind of information they need to reach their full potential. 

A good starting place might be to determine which performance indicators can produce actionable items that will influence lagging indicators. In essence, you're developing a predictive model. Safety professionals understand the differences between lagging and leading indicators and the deliverables they produce. Although there are varying opinions on how to use those indicators, experts generally agree that leading indicators support and drive more lasting and transformational cultural change in an organization. 

Still, lagging safety indicators allow us to define the number, types and severity of incidents and associated costs. These metrics enable an organization to measure its improvement with concrete numbers over time. These, in turn, can drive down direct and indirect costs, which ultimately affect the bottom line. 

The Real Purpose of Lagging Indicators

The value of what organizations learn from leading indicators such as observations and near misses can exceed the value extracted from lagging indicators, but both can provide valuable information about the status of a health and safety program. 

Leading indicators put any organization in a more proactive position in preventing injuries, illnesses, property damage, etc. They also enable an organization to assess how well their health and safety programs are working for them. 

Lagging indicators cannot provide:

  • Information on how well employees are responding to a company's health and safety efforts.
  • A better answer to the questions, "When and where will our next loss occur?" or "What type of loss are we likely to experience?"
  • An understanding of how employees identify, classify, understand and respond to hazards.
  • An ability to identify and trend observations and near misses.
  • The ability to reward employees for their reports and observations, providing the positive reinforcement that can accelerate positive organizational change.

Lagging indicators can become an operational distraction, forcing a company to become too focused on the past to see what's coming. At the same time, correct use of lagging indicators surely can complement other initiatives. 

The real purpose of lagging indicators is to let organizations know how they performed against a benchmark (e.g., reduce injuries by 10 percent over the previous year). Of course, they're easy to track and understand, not only for safety professionals but also for others who might not be as astute in their appreciation of health and safety metrics. Everyone can understand that "we had five lost-time injuries last year and they cost us $325,000." 

That said, lagging indicators do little to show whether health and safety strategies are working, because they fail to provide insight on how the rank and file interpret safety and health programs. And they fail to measure the degree of employee engagement in EHS programs – the "culture of safety." That's one reason why lagging indicators should not solely dictate how organizations approach, design and monitor their health and safety efforts. 

Creating a Blended Approach

A blend of leading (are we reducing our risk?) and lagging (how did we do?) indicators provides the optimal approach. Both shed light on important elements that contribute to the success or failure of a health and safety program. 

Imagine, for example, presenting a leading-indicator-rich scorecard to five individuals in five different rooms with instructions to "determine why certain metrics appear as they are." The five individuals reconvene in one room and share their hypotheses. Although some will be similar, no hypothesis will be the same. 

Discussions begin, questions are asked and improvement efforts start taking shape. A plethora of "what if," "when will" and "why does" questions, among others, will be asked. These types of questions are better answered in a leading-indicator mindset. But the questions won't be asked without the metrics – the lagging indicators – in the first place.

Imagine that your observation reporting is down this month. What are some appropriate questions to ask?

  • Why did the percentage of employees submitting observations drop this month?
  • Were there no observations for workers to make?
  • Did something prevent workers from making observations?
  • Are employees choosing not to make observations?
  • Did something happen that discourages the reporting of observations?
  • Is there a noticeable decrease from the same period a year ago?
  • Is there something cyclical in the business that might be causing changes to employee behavior?

Only valid questions like these – that include both leading and lagging views – can best inform how to improve the program.

So how do you create a blended program to understand and measure risk, and to be proactive in reducing or eliminating as much risk as possible? 

Clearly, your primary focus should be on leading indicators. If you do nothing else, make sure you have a robust and effective observation process; a policy that encourages the timely reporting of near misses and treats them as "learning moments"; training programs geared not only toward hazards but also toward situational awareness (what actions or procedures should the trainee follow or practice); and transparency regarding the results of safety audits, allowing employee input and possible corrective actions. 

At the same time, you always should keep an eye on the lagging indicators such as lost time, injury rates (frequency and severity) and recordable incidence rates. 

Change does not happen overnight, and cultural transformation is guaranteed to challenge every organization that sets its sight on this lofty but rewarding, goal. You must possess clear resolve and have trust in the approach. It's the only way to get a full picture of what's really happening within your organization. 

Rest assured, though. A blended approach will reveal a "true north" and guide you in your quest to improve and sustain your EHS performance. 

Eric Glass, a senior EHS advisor with Franklin, Tenn.-based UL Workplace Health and Safety, has 18 years of risk management, loss control and safety experience. 

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