Meaningful Performance Indicators - Part 2 w/ Erik Sherman

Erik Sherman, February 2022


As promised, Part 2 has been released in this month's article Meaningful Performance Indicators. If you have not yet done so, I encourage you to read Part 1 Commercial Vehicle Stats Are Garbage which was released in January 2022.


Link: https://www.pvtlindustry.com/post/commercial-vehicle-stats-are-garbage-part-1


 

“Trust me when I tell you that this is the safest operation around”


Does this sound familiar? Perhaps if you’ve built a career in sales. If you own the business, you’ll want your sales people to be able make a statement like this without risking looking like a fool.


Safety is a state of being. It involves a feeling of security; being protected from harm and predictably living your best life. Your proximity to this state is your relative level of safety.

This article isn’t going to tell you how to get there - instead we’ll explore how you’ll know that you’ve arrived.


Safety is typically measured in terms of rates and frequencies. Some of the more common statistics you will encounter include Lost Time Incidents or Collisions per-Million Miles. In these stats, we use a total number of specific incident types, evaluated against time or distance. It’s helpful to know how the company is performing, so these stats are reported with specific windows of time in mind, be it three months or twelve.


Knowing these numbers gives you a baseline for performance, however knowing if it’s good or bad requires benchmarks. Companies routinely submit these stats to clients in hopes that their safety performance will result in the contracts your company needs to support the salaries, equipment, and growth necessary for success. If we dig into that a bit deeper, your clients are using these stats as a predictor of your success; despite the fact that these stats say very little about the future.


For these stats to be reliable predictors or future performance, it would need to be true that

your company is populated by robots that behave in the same ways every time similar conditions occur. This isn’t true for the overwhelming majority of businesses. Those with this level of automation actually tend to experience fewer losses than more traditional operations where the “human factor” tells us we should anticipate failure as a feature of the human condition - not a bug.


This has is an openly discussed contradiction in the occupational health and safety community. This is why these types of stats are known as “lagging indicators”. You need to wait for the loss to occur before it can be added to the record, so in this sense you are always lagging behind the current state of operation.


Enter “leading indicators” - the measurement of behaviours commonly associated with pro-active approaches to ensuring safety in the workplace. This includes the use of hazard assessments, inspections, training, and more. We assume that any company performing these activities at a predictable frequency and to a high enough quality, will experience fewer losses than those who do not. Consider what you have heard about near-misses. This is a type of incident that may have occurred in loss (including injury) under slightly different circumstances. Near misses are often communicated as a leading indicator despite the fact they too have occurred in the past. Based on this, they qualify as a lagging indicator and

just as with the others we mentioned, they are not a proven predictor of future events.


So if a leading indicator is a behaviour or action that creates safer conditions for work to occur, then we should be able to test the accuracy of this belief. This was the original goal of the Certificate of Recognition (COR) program and through the audit,

a company should be capable of demonstrating that they have all the necessary blocks to work with as they hire, train, manage, and holds accountable; all employees of the company.


Every study performed on this assumption has proven that companies who hold COR experience lower frequency of injuries and a corresponding reduction of the impacts that come with those incidents. This is why companies are often asked by their clients to hold COR in the provinces and territories that they operate in. This tool isn’t without problems, however it is one of the most reliable filters we can put in place when predicting a contractors relative level of safety on the job.


What if we want to measure safety as it relates to non-injury losses? If your company is providing transportation as a service, then it’s important to establish a state of safety as it relates to equipment damage, cargo loss, and even regulatory compliance. While we might be inclined to look at insurance claims history, equipment damage, and R-Factor, these are just lagging indicators that once again have no value to anyone seeking this answer. Instead we look at many of the same leading indicators, such as preuse inspections and preventative maintenance performed.


There is no equivalent to COR that we can lean on for help in this situation and you would be right to ask if these data points alone can accurately predict future outcomes relating to damage or loss. Because damage incidents, like injuries, are a result of actions and conditions, they have a similar link to behaviour. An inspection skipped for convenience is a leading indicator that could be combined with others to tell a story.


A common practice among larger fleet operators is to track total cost of ownership for their on-road equipment. These costs include everything related to the vehicles operation from initial purchase to fuel, preventative maintenance, and repairs. You might expect that a poorly performing preventative maintenance program would lead to higher costs of ownership and predict a greater frequency of breakdowns or even cargo loss. But when the most important aspect of any preventative maintenance program is inspections, you cannot afford to ignore the role people are playing in this outcome.


Let's take a look at some of the potential outcomes associated with this type of metric we are talking about.



Costs are not affected by the completion of inspections


This tells you that inspections are being completed at the desired frequency but without the desired effect of identifying maintenance concerns before they become incidents of loss. Causes range from the inspection being inadequately designed, performed, or scheduled.

You may find that this results from a range of factors such as administrative failures, lack of training, or poor task supervision.


Costs increase relative to a lack of inspection(s)


This demonstrates that failures to complete inspections at the desired frequency has a negative effect on the predicted “health” of the equipment. The equipment costs may be increasing due to obvious issues such as proactive replacement of defective parts or even fines due to failed roadside inspections.


Costs decrease when inspections are being conducted as desired


This is a positive sign that signals inspections are being performed properly, at the desired frequency, and that maintenance is being performed prior to necessitating unplanned repairs.


Each of these results should be examined to understand how you arrived at this point and to either implement controls necessary for improvement, or acknowledge the success of everyones efforts. When communicated to potential clients, this type of metric gives them a reliable way to predict loss arising from your company’s work.


So what’s the formula you can follow to build meaningful metrics?


Know what you need to know in order to tell the story. What does safety mean to your company and how do you know it’s being achieved?


Identify what contributes to the factors that make a workplace safe. Is it a single behaviour?

Not likely. Consult with those performing the work to understand the qualities of work that create the characteristic of safety on the job. Break it into specific moving parts that are both observable and measurable.


Test the theories that have been formed around how the result is being achieved and what potential deviations tell you. When successful, you’ll see the predicted results. This counts for interventions as well. A corrective action should yield improvement in the results. Be prepared to go back to square one if you don’t see this effect.


Be consistent. Because these metrics are intended to show where you are versus where you’ve been, it’s important to remain consistent in how you approach the collection and interpretation of the data, as well as the actions your taking in response.


Most companies track failures. While important to monitor and manage, failures are only half of the picture. Successful companies understand why they are successful and continuously reinforce those things that are proven to work over time. Remember, the result should be safety, not “safe enough”. Being able to demonstrate a deeper level of knowledge around how your company is performing and how it’s continuously managed will give your clients the peace of mind you want them to have while getting the desired results from the evaluation of performance metrics that make sense to the workers being

measured.


Until next time.


 

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Thank you again for taking the time to read, and I hope you have a safe day!

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