When it comes to a safety incentive program, what KPIs (Key Performance Indicators) should we be following? Choosing the right KPIs will rely on a good understanding of what is important to the organization and the defined strategy of the organization. A KPI is a metric that is tied to a target and represents where you are compared to where you would like to reside.
The S.M.A.R.T.E.R. Standard
In defining your organization’s KPIs, it is important to remember the S.M.A.R.T Rule that defines the 5 conditions of a good KPI. But according to the KPI Library, GREAT Key Performance Indicators need to follow the S.M.A.R.T.E.R standard to truly be valued.
- Specific – It has to be clear what the KPI exactly measures. There has to be one widely-accepted definition of the KPI to make sure the different users interpret it the same way and, as a result, come to the same and right conclusions which they can act on.
- Measurable – The KPI has to be measurable to define a standard, budget or norm, to make it possible to measure the actual value and to make the actual value comparable to the budgeted value.
- Achievable – Every KPI has to be measurable in order to define a standard value. It is important that this norm is achievable. Nothing is more discouraging than striving for a goal that you will never obtain.
Relevant – The KPI must give more insight in the performance of the organization in obtaining its strategy. If a KPI is not measuring a part of the strategy, acting on it doesn’t affect the organizations’ performance. Therefore, an irrelevant KPI is useless.
- Timely - It is important to express the value of the KPI in a given time frame. Every KPI only has a meaning if one knows the time dimension in which it is realized. The realization and standardization of the KPI, therefore, has to be time phased.
Explainable - You must ensure KPIs are easy to understand and that you can communicate the expectation to all stakeholders involved. This ensures that everybody understand what is being measured. Too often, KPIs are hard to understand and you face the risk of miscommunication.
Relative - Your KPIs must be relative to ensure that your KPI definitions and goals still apply when your business or volume grows.
To develop meaningful KPIs you need to understand the safety risks of your operations and evaluate the systems that are in place to manage these risks, and can be put into place short or long term.
Leading and Lagging Indicators
KPIs fall into two types – leading and lagging. Lagging indicators tend to consider things that have gone wrong, such as injury statistics, exposure incidents, and regulatory fines. These indicators are more reactive. Leading indicators tend to give an early warning sign that all is not well and are more predictive of future performance results. These indicators are more proactive.
The leading indicators are there to identify the failings from routine measurements in order to fill in the holes before an accident occurs. The lagging indicators reveal the holes through the occurrence of incidents so that action can be taken to prevent a recurrence of that event.
The challenge is to develop meaningful leading indicators such as, percentage of accidents/incidents investigated to determine root cause, number of audits or inspections performed, types of findings and observations, training completed, reporting of near misses, timely preventive tasks performed, and safety committee meetings held and attended.
In Selecting KPIs, Keep These in Mind
Quantity doesn't equal quality
Measure the most important things
Make sure all levels of the organization buy-in
Don’t let the cost of measuring exceed the value of the results
KPIs will vary according to industry, but the important part is to have the right combination of leading and lagging.
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