Lead and Lag Indicators in Health and Safety: Moving from Reactive to Proactive

Most health and safety reports in New Zealand still lead with injury numbers. They're easy to count and easy to compare, however they only tell you what's already gone wrong. Nathan Hight co-founded Safe365 in 2016 to help businesses measure the other side of the ledger. Safe365 is a commercial partner of Advanced Safety, we've worked together since 2017 and I've used the tool with clients. When Nathan came on Health & Safety Unplugged he argued that the whole system, from regulation to the tools and training built around it, pushes businesses into reacting instead of managing risk before anyone gets hurt.

This post covers the difference between lead and lag indicators, why so many businesses stay reactive, what good lead indicators look like and what directors should be asking for. We recorded the conversation in 2024.

What Are Lead and Lag Indicators in Health and Safety?

A lag indicator records an outcome, while a lead indicator records an activity or condition that makes a good outcome more likely. Both matter, however they answer different questions for a board.

The weakness on the lead side is worth taking seriously. A count of toolbox talks or inspections describes effort, not effectiveness. The lead indicators that earn their place measure whether a critical control was actually checked and actually worked. That's why I tie them to critical risks first.

Why Businesses Stay Reactive

Nathan's view is that businesses are reactive by design. The traditional model has a regulator setting rules, businesses aligning to them, technology companies building tools to support that and the health and safety profession training to service it. He believes that whole system rewards legal compliance, when compliance is really only the entry point.

His comparison came from his years as a surf lifesaver, starting as a 14-year-old volunteer. Lifeguards have no regulations telling them how to watch a beach. They're constantly reading the conditions, who has turned up and whether people look competent, then working together to step in before a risk turns into an incident. That's proactive by nature and he was surprised to find most businesses didn't think the same way.

He also pointed to how lag data dominates the national picture. In his view WorkSafe and ACC mainly hold lag data, records of what went wrong. He also felt the ACC levy system doesn't do much to reward businesses that manage risk proactively. He contrasted that with the UK, where insurers compete for a business and have a commercial reason to help it reduce risk. Those are Nathan's views from 2024, however the point for a single business holds regardless: if all you measure is harm, you'll only ever be able to react to it.

Where Businesses Are Weakest

Safe365 measures health and safety maturity across thousands of organisations. Nathan said a 2024 Safe365 analysis of about 10,000 organisations found director knowledge and management knowledge were two of the lowest scoring areas. The intent was usually there, with health and safety on the board agenda and in the company values. What fell away was the upskilling, particularly around risk management and directors understanding and exercising their due diligence duties on an ongoing basis.

That lines up with other New Zealand findings. WorkSafe's annual report for 2018/19 put roughly half of New Zealand workplaces in the immature or passive range for safety culture. A 2023 Better Governance review led by the Business Leaders' Health and Safety Forum and the General Manager Safety Forum found health and safety was generally on board agendas but performance had stalled. One of the project team said some officers treat it as box-ticking to protect themselves from prosecution.

Nathan's description of the leaders getting good results was simple: they have their finger on the pulse. They can name their critical risks and what's being done about them, describe their health and safety strategy and show real openness to talking with the people doing the work.

What Good Lead Indicators Look Like

WorkSafe, ACC and MBIE published a set of example lead indicators in 2018 as part of SafePlus. The common thread is that each one measures how well a specific risk is being managed. These are the kinds I'd want to see in front of a board, built from that thinking.

• The percentage of critical controls checked in the field in the period, plus the percentage found working.
• Near misses reported per month, broken down by critical risk, with a rising number treated as a healthy sign of reporting.
• Corrective actions from serious incidents closed by their due date, with evidence the fix worked.
• How many times workers stopped work they believed was unsafe.
• Site visits by directors and executives, with what they found.
• The percentage of workers in high-risk roles who are current on the training for their critical risks.

Each of these needs a lag measure beside it. Nathan's thesis at Safe365 is that as a business improves its maturity score its harm figures should come down. He said Heathrow Airport, then a client, raised its Safe365 index by about eight points in 2023 alongside a fall in harm of about 25 per cent. That's Safe365's figure and I haven't verified it, however the principle is sound: track the lead work and the lag outcome together so you can see whether one is moving the other.

Risk Tolerance: The Concept Boards Miss

Near the end of our conversation I mentioned one of my own red flags. When I ask who built a company's risk matrix, the answer is often that it was copied from the WorkSafe website or an industry website, with no cross-section of the company ever asked what high risk means for them. Nathan said he'd seen management systems with another company's name and logo still in them.

His bigger concern was that boards rarely understand risk tolerance. The colour bands on a risk matrix are the organisation deciding how much residual risk it will accept before something has to be escalated. Most risks can be reduced but not eliminated. Some tolerance is unavoidable as a result. Directors who don't understand that tend to assume the health and safety person will make sure nothing goes wrong, then ask how it could have happened when something does. My post on risk appetite and risk tolerance in health and safety covers how to set them properly.

How to Start Measuring Proactively

Nathan's advice was to measure first (he'd point you to Safe365 for that) then work out where the gap really is. If health and safety isn't on the board agenda, the problem is intent and it starts with education. If the intent is there, the gap may be knowledge or capability. That points to training directors on risk management and their due diligence duties or running scenarios with them.

1. Name your critical risks and the controls that matter most for each one.
2. Pick two or three lead indicators per critical risk that show whether those controls are checked and working.
3. Report them to the board beside your lag data, every time.
4. Self-assess honestly with a cross-section of the business in the room, not one person filling in a form.
5. Act on the lowest areas first and watch whether the lag data follows.

The fourth step matters more than it looks. Nathan made the point that prequalification has trained businesses to score themselves as high as possible, when the value of a maturity assessment comes from an honest, inward-facing conversation. He said there's little to gain by talking your score up. Having several people in the room gives you the check and challenge that brings out a realistic answer.

If you'd like a quick, honest view of where your system sits, the free Compliance Compass Self-Check takes about 20 minutes around a leadership table and gives you an ordered list of what to fix first. My officer due diligence checklist for NZ directors covers what boards should be verifying.

Watch the full conversation with Nathan Hight on Health & Safety Unplugged below.

Frequently Asked Questions About Lead and Lag Indicators

What is a lag indicator in health and safety?

A measure of harm that has already happened, such as injury rates, lost time, notifiable events or ACC claims. Lag indicators show outcomes, not whether risks are being managed.

What is a lead indicator in health and safety?

A measure of the activities and conditions that prevent harm, such as critical control checks completed, near misses reported, corrective actions closed on time and leaders' site visits.

Why aren't lag indicators enough?

Low injury numbers can hide serious risk, especially for rare events with severe consequences. A business can go years without a serious injury while a critical control quietly fails.

What are good lead indicators for a board report?

Indicators tied to critical risks that show whether controls are checked and working, for example the percentage of critical controls verified in the field, near misses reported by risk and serious-incident corrective actions closed on time.

How many lead indicators should a business track?

Enough to cover each critical risk without burying the board. Two or three per critical risk is a sensible starting point, reported alongside lag data.

What does proactive health and safety mean?

Managing risk before anyone is hurt, by understanding critical risks, checking controls and acting on early warning signs, instead of responding only after an incident.

Sources: WorkSafe, ACC and MBIE, SafePlus Lead Indicators: Examples across industry sectors (January 2018); NZ Law Society report on WorkSafe’s 2018/19 annual report; Better Governance review, Business Leaders’ Health and Safety Forum and General Manager Safety Forum (March 2023); Health & Safety Unplugged, episode with Nathan Hight. Safe365 is a commercial partner of Advanced Safety. This post is general guidance, not legal advice.