The Myth of the Magic List

It Takes Work to Develop Meaningful EHS 

Not long ago, a colleague asked me, “Do you know of anyone who has a good list of leading indicators for EHS programs?” The question interested me for several reasons. Certainly, EHS managers have a high degree of interest in developing leading (as opposed to lagging) indicators. Our professions have traditionally used what are considered to be lagging indicators to measure our performance: injury rates, waste generation, illness incidence, workers’ compensation costs, and the like. Now, however, top management is challenging us to develop leading indicators based on the idea that we also need predictors of future performance. 

Unfortunately, many EHS managers (and, to be fair, many business managers) don’t understand what leading indicators really are. Evidence of this lack of understanding is the common misconception that there is a “magic list” of leading indicators, which would allow us to simply pick a few we think would work best.
INDICATOR VS. OBJECTIVE Given this confusion about leading and lagging indicators, I’ll begin by proposing some definitions we can use going forward. Part of the confusion likely stems from the term “indicator.” Gauging EHS performance isn’t as simple as the indicator metaphor suggests. We can’t just glance at a dashboard to determine whether our projects are trending up or down. For this reason, I prefer the term “objective” and will use it in place of “indicator” throughout this article.
An objective is simply “a statement of a desired state of performance.” Objectives must meet the criteria described by the acronym SMART: specific, measurable, achievable, relevant, and time-bounded.
So what is a “lagging objective”? It is a statement of a desired state of performance that will be achieved at some defined point in the future. For example, if our goal is to achieve a total injury rate of 1.0 by the end of the current fiscal year, this is a lagging objective: we won’t know whether we’ve met that objective until the end of the defined time period.
A “leading objective,” therefore, is a statement of a desired state of performance that will contribute to the achievement of a defined lagging objective. To understand the basis for this definition, we need to reconsider some ideas that were first proposed by Robert Kaplan and David Norton more than 25 years ago. THE BALANCED SCORECARD As professors at the Harvard Business School and business consultants to some of the largest organizations in the United States, Kaplan and Norton recognized that businesses focused too much on top-level financial objectives, to the exclusion of recognizing and measuring the factors that would lead to the accomplishment of those objectives. In other words, business managers were focusing only on lagging business objectives: profitability, growth, margins, and so on. While businesses had highly sophisticated tools for measuring and tracking these lagging objectives, they had almost no processes for even identifying the factors that would predict the outcome of those objectives.
Kaplan and Norton proposed that in addition to the top-level financial objectives, three other perspectives be used to identify and measure leading objectives: customer objectives, business process objectives, and learning/growth objectives. They called this approach to business management the “balanced scorecard.” The balanced scorecard was widely implemented in the 1990s, and it still influences business management today.