Safety’s relationship to business performance
There is a general view that safety, health and the environment (SHE) is a cost, not an investment. The available evidence suggests that good safety positively impacts a company’s ‘bottom-line’ as those companies with good safety performance are better all-round economic performers. If we are to get a genuine commitment to control and improve safety from all layers of management, we need to demonstrate compelling business benefits by linking leading SHE indicators to actual business performance indicators to demonstrate its return on investment (RoI).
Many companies solely focus on lagging safety indicators such as Total Recordable Injury Rates (TRIR), Days Away Restricted or Transferred (DART), near misses, etc., that provide after-the-event data. These provide useful information and insights into what has gone wrong so that lessons learned can be applied, but unfortunately the horse has already bolted. If we are to stop potential incidents, we need to get ahead of the curve and introduce a basket of leading safety indicators that can predict injury reduction and safety culture change, and improve business performance. However, each performance indicator must be linked to a specific outcome (as the examples below illustrate).
Identifying appropriate and robust leading indicators can be a challenge, but data-mining a company’s incident history can help. Data mining is defined as ‘a process of extracting valid, previously unknown, comprehensible, and actionable information from large databases’. For example:
• Where incidents have been caused by unsafe conditions, corrective and preventative action rates ((# of CAPA fixed/# of CAPA reported)*100) gives leadership the ability to track outstanding versus completed corrective actions in an effort to provide a safer working environment for their employees, increase safe behaviour by up to 20 per cent, and enhance their safety leadership efforts.
• Where incidents have been triggered by unsafe behaviours, per cent safe behaviour scores ((# of safe behaviours observed/total # of safety behaviours observed)*100) provide a measure of how safely people are actually working, and are linked to a wide range of positive outcomes including incident reduction.
• Where poor safety leadership has triggered incidents, a safety leadership index ((# of safety activities completed/total # of safety activities to be done)*100) based on leaderships weekly safety activities can help to instil a culture of safety leadership that influences the safety culture, employees behaviour, and corrective action rates.
• Where poor job planning is linked to potential serious injuries and fatalities (SIFs), possible indicators include the number of revisions to job plans and the number of times people have challenged a job plan contained in a job planning database. By focusing on these issues it becomes possible to identify and eliminate the precursors that trigger around 36 per cent of potential SIFs.
According to step change in safety, the criteria for selecting a suitable set of leading SHE indicators are that they:
• cover all items from the management system that pose significant threat;
• cover areas with the greatest opportunity for improvement;
• be objective and measurable;
• provide information that guides action to improve performance; and
• are under the control of those concerned to influence performance.
Obviously, the types of SHE performance indicators chosen should reflect the risk profile of the company concerned, but there are many universally applicable business performance indicators to identify the impact of SHE initiatives that include:
• productivity rate (productivity achieved/hours worked);
• cost efficiency ((revenue-expense)/revenue);
• cost-predictability ((revenue-planned revenue)/planned revenue);
• reductions in operating costs;
• insurance cost reductions arising from improved safety performance; and
• sickness/absenteeism rates.
So far, there is very limited evidence of the impact of HSE on business performance, and very limited knowledge of how to do so. At last week’s Global HSE conference in Dubai, I asked a panel chaired by Judith Hackitt CBE, how they link their HSE indicators to business performance. The vague responses indicated it was unknown, and not common to link the two. However, doing so offers many advantages, not least being able to identify which safety initiatives are most effective at reducing incidents and improving business performance. It would be of great service to the profession if readers could provide some insights into how their company links HSE performance to business performance.
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