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March 17, 2011

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IOSH 11 – Keeping score

Steve Pointer emphasises the importance of gaining the board’s commitment to health and safety and suggests practical methods practitioners can use to increase the common ground between them and their organisations’ senior management.

Good management of risk requires the involvement of all, but without commitment and engagement from the top of the organisation the odds are stacked against success. The board needs to be actively involved in monitoring performance at a strategic level and focusing attention and resources where they are most needed. But, too often, boards review only lagging indicators, such as accident rates and get involved in tactical rather than strategic issues. The challenge is to find a way of engaging directors in a way that makes a real difference and which protects employees, the company, and the directors themselves.

The Health and Safety Executive, Institute of Directors and others have published helpful guidance1 on the key actions for leaders of businesses and public bodies to take. However, feedback from EEF – the manufacturers’ organisation’s national network of health and safety consultants, as well as a survey of its members, indicate that companies are finding it difficult to turn these objectives into actions: they know what to do, but not how to do it. More than half of those surveyed needed support to help their boards set and monitor meaningful objectives.

It seems these issues have been around for a long time, so why do they remain such a challenge? The reasons vary according to organisational culture, and circumstances; however, three common themes are apparent.

Firstly, in the absence of an effective model, many management teams simply track accident and ill-health numbers, or rates, but meaningful measures need to go beyond these simple lagging indicators. Using these alone is like trying to drive by looking only in the rear-view mirror: extremely difficult to do, and any change of direction comes a bit late for the person you have just knocked down!

Reliance on historical data will also tend to miss low-probability, high-consequence risks. The BP Texas City refinery explosion illustrates all too graphically the importance of choosing the right measures. The Baker Panel enquiry into the 2005 explosion,2 which killed 15 people and injured 170 others, found that the metrics, incentives and management systems at the refinery focused on occupational safety at the expense of process safety. Put simply: the risk of explosion was over-shadowed by attention to the likes of slips, trips, and driver safety.

Secondly, like the US and the UK, health and safety professionals and board directors can find themselves divided by a common language. Business people speak about ‘value chains’ and ‘discounted cash flows’, while health and safety professionals can all too easily lapse into the jargon of ‘reasonable practicability’ and ‘hierarchies of control’. The result is frustration and disengagement.

Thirdly, directors have limited time. Bombarding them with detail can just turn them off. We need to find ways to involve directors in key decisions while keeping extraneous detail to an absolute minimum. This is easy with lagging indicators but for more nuanced and subtle leading indicators it can present a real challenge.

Get the balance right

Actually, the problems described are not unique to health and safety. They are exactly the same as those faced in relation to strategic business performance. Using only financial indicators, such as cash flow and profit and loss, does not provide a board with a full picture. Like accident rates, they are lagging indicators that have limited value in predicting future performance. What is required is a mix of measures that gives a rounded view of the business’ current performance and ability to manage risks in future. Crucially, the results have to be easily understood by all of the board, not just the financial director.

The balanced scorecard is one widely adopted solution. Developed by Norton and Kaplan in the early 90s,3,4 it combines leading and lagging indicators with process and competence measures in a visually-appealing framework that allows boards to see, at a glance, where their business performance is on track and where it needs attention. Board members need only get involved in the detail when indicators are getting seriously off track.

Exactly the same approach can be applied to setting and monitoring health and safety targets. As well as being tried and tested it has the great advantage of being familiar to many senior managers – it speaks their language. A scorecard can provide common ground between boards and health and safety professionals enabling them to engage effectively.

Balanced scorecards are certainly not new; nor is the concept of using them for health and safety. Health and safety professionals can take existing scorecards and overlay health and safety measures – for example, replacing lagging financial measures with lagging incidence rates. However, that takes time – as well as a good understanding of Norton and Kaplan’s work.

EEF and the insurance company Travelers have developed an online “how to” guide that takes you through the process, which is now available as a free online resource.5 It is a flexible toolkit that organisations can use to develop a scorecard that works for them. Behind the structure is detailed guidance on each measure, including its pros and cons, as well as a worked example. It was originally designed with manufacturing businesses in mind, but piloting quickly showed that it was equally applicable to other sectors (a local authority was an early adopter).

As Figure 1 opposite shows, the scorecard itself is simple and has visual impact. It encompasses four boxes, or ‘domains’. The main criticism of Norton and Kaplan’s original approach was that it was too rigid in specifying the measures that must be used by every organisation. It is therefore important to be flexible, identifying the right mix of measures for your organisation’s circumstances and level of sophistication. The only absolute rule is that there must be a minimum of one measure in each domain; without that, the balance is lost.

Leading indicators provide a real-time indicator of current health and safety management and, therefore, evidence of residual risk. These include the results of proactive monitoring, staff surveys and, most powerfully, management systems audits.

Process indicators track proactive work to review and improve management and risk-control systems. The board agrees a plan of activity for the year and then monitors its implementation. The plan can be as simple as reviewing and revising the health and safety management system and risk assessments – or, could include roll-out of major new systems, or equipment. Reports then focus on achievement of milestones towards completion of the plan.

Competence measures focus not only on relevant skills but also on management. At the start of the year the organisation sets out targets for training that can cover management, skills and inductions. The scorecard is then used to track progress in implementing this plan. Of course, training does not necessarily equal competence; it can be forgotten, ignored or poorly applied, hence the importance of balancing this domain with the other three. Leading indicators, in particular, will provide evidence of whether or not training is being applied in practice.

Lagging indicators provide a reality check. On their own, accident and ill-health rates are poor predictors of future performance. However, it would be foolhardy to ignore them altogether. They demonstrate how performance against leading, process and competence measures is feeding through at the sharp end in terms of injuries, ill health and absence.

For each measure, targets need to be set. The nature of these will vary: lagging indicators would typically be expressed as a rate, leading indicators as a percentage score, while competence and process targets would typically identify progress against milestones for planned activity.

Once this is done, the board need to be engaged to review and agree the targets for the next year. They should also agree how often they want to receive update reports. Updates need to be very short and pithy so they have impact on a busy executive with many responsibilities to juggle. Traffic-light reporting is ideal. Directors can see immediately how the organisation is doing and where problems need to be tackled. It is useful to supplement this with brief notes on each measure – ideally, these should comprise less than one page.

Experience shows that a successful approach covers the following ground:

  • Measures on target get a green light and a single line of commentary confirming success in this area;
  • Measures that are slipping and present a risk of missing annual targets receive an amber light. Commentary needs to be a little more detailed, explaining why the measure is being missed and what action is planned to correct it; 
  • A red light indicates a problem to which the board needs to respond – without intervention this target will be missed. Commentary needs to be succinct, but must identify how far off track the measure is and why, followed by options for corrective action, and a recommendation. If substantial resources are required the board will typically want this to be supported by a paper setting out the business case.


So what have we learnt from feedback on the EEF version of the scorecard? Firstly, it has been well-received in a wide range of industry sectors, not just manufacturing. It is well-suited to businesses employing more than 50 people; while the same broad principles apply, smaller businesses may prefer a less formal approach.

Secondly, you are not likely to produce a perfect scorecard in the first year. Don’t be over-ambitious; start with a relatively simple range of measures, learn from experience, and build on this in the future. 

Thirdly, avoid unnecessary health and safety jargon and strive to keep reports short and punchy, which adds to their impact.

Scorecard reporting is not a panacea – there are no ‘magic bullets’ in health and safety – but it is proving a powerful tool, capable of engaging senior executives in managing the strategic issues that matter.

1  Health and Safety Executive & Institute of Directors (2007): ‘Leading Health and Safety at Work’ –
2  Baker, J et al (2007): ‘The report of the BP US refineries independent safety review panel’, BP plc
3  Norton, R and Kaplan, D (1992): ‘The balanced scorecard: measures that drive performance’, in Harvard Business Review Jan-Feb pp71-80
4  Norton, R and Kaplan, D (1996): The balanced scorecard: translating strategy into action, Harvard Business School Publishing
5  The EEF/Travelers Health and Safety Scorecard is freely available online at:

Steve Pointer is head of health and safety policy at EEF – the manufacturers’ organisation and spoke on this topic at the IOSH Conference on 15 March.

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