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What is a Balanced Score Card (BSC) for Safety?

Created in 1992 by Robert Kaplan and David Norton, the Balanced Score Card (BSC) was initially aimed at helping public agencies better manage and measure performance.

More recently, Balanced Score Cards have been used for an integrated approach to performance measurement and management.

In principle, the Balanced Score Card allows organisations to look at their business based on the following four important perspectives.

  • Financial perspective – how do we look to shareholders?
  • Internal business perspective – what must we excel at?
  • Innovation and learning perspective– can we continue to improve and create value?
  • Customer perspective – how do customers see us relative to time, quality, performance and service, and cost?

Balance Score Cards are often used in the following three ways:

  1. To bring an organisation’s strategy to life.
  2. To communicate the strategy across the organisation.
  3. To track strategic performance.

The critical characteristics that define the Balanced Score Cards are:

  • Focus on the strategic agenda of the organisation concerned.
  • The selection of a small number of data items to monitor.
  • A mix of financial and non-financial data items.

With a Balanced Score Card, you have the capability to:

  • Describe your strategy.
  • Measure your strategy.

Balanced Score Cards can help organisational leaders better understand the interrelationships between the various facets by combining the following:

  • Financial.
  • Internal processes.
  • Innovation.
  • Organisational learning;  and
  • Customer perspectives.

Balance Score Card Application for HSE

The Balanced Score Card provides a measure of current performance and also the opportunity to “look forward” rather than backward (i.e., leading indicator as opposed to lagging indicator).

From a strategy perspective, Balanced Score Cards allow the integration of various (existing) scorecards relative to financial performance.  The Balanced Score Card provides a framework to translate a strategy into operational terms, supported by objectives, measures, targets and initiatives.

Let’s consider the application of Balanced Score Cards with regard to HSE within your organisation. Using the organisation’s risk ranking processes (based upon consequences and likelihood), risks can be determined for hazards identified and controls applied.

Application of controls should follow a hierarchy of controls relative to the risk level. The next step is to define “what will be measured” relative to the Balanced Score Card perspectives.  

Examples of HSE related metrics for consideration within a

Balance Score Card framework may include:

  • Financial perspective – workers’ compensation and program implementation budget.
  • Internal business perspective – management systems assessment scores, process-specific Implementation and risk reduction.
  • Innovation and learning perspective – continuous improvement (closure rates of inspections, investigations, notices, hazard analysis, Industrial Hygiene etc.), training retention, activities (e.g., training completed, programs performed) and trend analysis.
  • Customer perspective – worker perception surveys, injury & illness rates, industrial hygiene and employee involvement.

If you do embark on establishing a Balanced Score Card, you will need to establish clear “objectives,” “measures,” “initiatives,” and “actions”.

Use the following as guidelines for defining these aspects of your Balance Score Cards

  • Objectives: Set high-level goals
  • Measures: Define how to achieve the objective
  • Initiatives: Are put in place to answer the question “what actions am I taking to accomplish the objective?
  • Actions: Help that will allow you to complete your initiatives.

I suspect that many of you will be familiar with a risk ranking matrix that incorporates impacts relative to health, safety, environment, stakeholders, public relations etc.

I did an article using the risk ranking matrix for Brexit Operation Yellohammer as an example. In this same context, it would be quite feasible to include the 4 Balanced Score Card factors by incorporating the same into the risk evaluation process.

In Conclusion

On a final note, the UK Health and Safety Executive (HSE) supports the argument and recommends a Balanced Score Cards approach for HSE. They state that:

“Organisations need to recognise that there is no single reliable measure of health and safety performance. What is required is a “basket” of measures or a “balanced scorecard” providing information on a range of health and safety activities” (HSE, 2001, p. 5).

You can download the UK HSE document via this link.

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