Safety for manufacturers is part of the process from the ground up, but getting enough of a handle on safety performance to get ahead of potential risk is the component that most organizations struggle with.
The ways in which safety performance is gauged has shifted over the past few years due to the fact that information gathered from lagging indicators was seen as limited, late, and offered little insight for future prevention. By their very nature, lagging indicators in safety can only provide a snapshot of the current safety level. They offer a small window, if any, into future results. Still, many organizations use lagging indicators for the basis of safety performance evaluation due to the ease of identifying trends from past performance and the ability to assess incident outcomes.
Leading indicators assist in improving safety by providing early warning signs of potential failures, thus reducing incidents and enabling organizations to identify and correct hazards before an accident can occur.
The Building Blocks of Safety Performance
When organizations elevate safety to a core organizational tenet, the first step must be to create tangible performance metrics. Since the 1990’s, the proliferation of EH&S management systems has helped manufacturers focus on measurement techniques and tools. Unfortunately, the vast majority of safety initiatives are based on lagging metrics, such as fatalities or incident rates. Increasingly, the creation of safety regulations stems from leading indicators, ones that look to prevent incidents from arising, with top reasons being; reducing the risk of an adverse event (80%), staying in compliance with regulatory requirements (76%), improving brand reputation (37%), minimizing costs (32%), and sustainability mandates (28%).
To establish top performing companies, Aberdeen used four organizational performance metrics: overall equipment effectiveness (OEE), recordable injury frequency rate, operating margins, and audit actions completed on time. Respondents were asked to identify the frequency at which products in the past two years met these targets. The two maturity classes were formed based on the metrics of Best-in-Class (top 20%) and All Others (bottom 80%). Table 1 highlights each group’s performance.
Best-in-Class companies consistently outperformed their peers in all four target metrics. With an injury frequency rate that was 1.4 times lower compared to All Others. Best-in-Class companies were also eleven times more likely than All Others to meet their operating margin. And companies who meet their margins are operating smoothly without delays due to adverse events.
When deciding upon leading indicators, it’s helpful to understand its relationship to lagging indicators. In terms of personal safety, lagging refers to injuries and fatalities. This definition differs from process safety in manufacturing where lagging indicators can be directly measured by harm and failure, yet cannot quantify the current state of a safety management system. The five key components of leading indicators:
- A simple and close connection to outcomes
- Objectively measured
- Interpretive agreement from multiple parties
- Broad application to company endeavors
- Clear and accurate communication
Leading indicators play a large role in enabling decision making for safety matters. The appeal is in their inherent potential to predict and prevent adverse outcomes by providing senior management a set of safety targets that focus on continuous improvement. These same forward-looking metrics should be used to support employee communication and empower them with direction on how to transform their culture from passive to proactive and solution driven.
Read the full report for more on amplifying the culture of safety at your organization.