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Due Diligence Disconnect: When Reporting goes bad!

Over the past 20 years, I have prosecuted, consulted to or trained many companies on workplace risk management.

With the benefit of these interactions, I have been fortunate enough to see and learn what companies are doing right and where there is “room for improvement”.

With respect to the latter, one observation common to most is the bias towards quantitative reporting on risk management performance.
Whilst businesses have certainly improved by skewing reporting from lag to lead indicators* the over-use of quantitative measures is a major due diligence shortcoming that is not being identified or remedied by a majority.

[* I define a lag indicator as where you measure an outcome, whereas a lead indicator is where you measure a process / initiative designed to achieve an outcome.]

What is the Problem?
If I asked you a simple question – and no fence sitting:
“When it comes to managing workplace risk, which is more important – quality or quantity?”
What would your answer be?

I do ask this question in my training, and understandably, almost everybody says “quality”.

Now, on the assumption this is the correct answer, does this belief correlate with the way businesses internally report on their risk management performance?

My experience is that it does not (most companies having a disproportionate bias towards quantitative metrics) and this introduces many problems, such as:
• It defies logic and what we know to be more important.
• It implicitly promotes and encourages “get it done” rather than “do it right”.
• There are risks that the statistics do not truly representing the state of affairs.
• It begs the question: Why are companies so heavily reliant on numbers in the first place?
• The provocation of questions regarding motive for the quantitative approach (convenience / lack of foresight / genuine disinterest) potentially undermines purported corporate commitment to the issues being measured.
• This in turn (and for a variety of other reasons beyond the scope of this article) exposes potential frailties in senior management due diligence efforts.

A classic example I cite during training, by way of illustration, is hazard inspections. Most companies do these as part of their arsenal to proactively identify hazards of all types. Consequently, one could track the number of inspections completed, check that the number marries up to whatever the management system expectations were, and report on the number.

This is a quantitative styled metric, and by traditional definition is a lead indicator.

But – is it a helpful “lead indicator”? …

To answer that question you must ask yourself what are you actually measuring? In this example, you are simply keeping tabs on how many inspection forms were submitted!

Worse still, there is a real likelihood that the forms are not being filled in properly in the first place, further diluting the value of the exercise…
Potentially, you now find yourself with a misleading indicator.

Alternatively, if you were to prudently approach the hazard inspection reporting from a qualitative perspective, you could capture information such as:
• The efficiency of the inspection process.
• Feedback and developments with respect to enhancement of existent processes.
• Whether the inspections achieve desired outcomes.
• Types / categories of hazards identified and relationship to injury data
• Trends?
• How the inspection process ranks against other proactive hazard identification initiatives.

In Closing
I believe there is an argument for breaking with tradition. To revisit your current reporting and explore ways to reorientate measures from quantity to quality. Move from convenience to significance.

Every time your report includes a number in a spreadsheet, question it. It is likely redundant, abused or simply does not deliver the type of intelligence necessary to making informed decisions.

To find out more about our Mock Court Programs, please give us a call on  1800 85 86 98 or contact us via our website today.

Written by Bruce Whitehead

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