Measure then manage

Marsh Risk Management focuses on benchmarking

By Doug Dickinson

Along with rising insurance rates bus companies also face growing concerns and exposures from a competitive standpoint. In this environment a growing number of carriers are evaluating their operations carefully in order to make improvements and create a roadmap for long-term success.

Benchmarking fleet operations is a valuable tool to generate both operational and cost efficiencies within an organization, and to help owners and managers gain deeper insights into their systems. For example, where a company typically uses collision frequency per 100 million passenger miles to review results, a more proactive benchmarking approach puts the focus on management processes.

Definition of fleet benchmarking

Fleet benchmarking a systematic review of the fleet safety management controls that involves measuring current performance against industry best practices. Ranking the broad range of controls as they relate to the effective management of a fleet safety program, the numerical scores in each area can present some unique challenges.

Quantitative performance measures are helpful and fairly easy to calculate. But generally they apply only after an event has occurred. Therefore management can only respond once a problem begins to surface through losses or other measures. While significant, these result standards are limited in application and scope, and do not allow an organization to proactively address its concerns.

Benchmarking the safety management effort provides an opportunity to systematically evaluate controls against established industry best practices across a wide array of categories. Experience and research studies clearly demonstrate that with certain controls in place an organization will experience fewer losses and achieve greater efficiencies.

A best practices approach meets the challenge to put a score to qualitative measures. For any area a best practices rating yields the highest score. Where an effort fails to achieve a best practice rating, benchmarking will at least rank its actual contribution toward the desired controls.

It is important to understand that a standard set of practices for one sector of the industry may not necessarily apply across the board. For example, best practices for a university transportation system will differ from the best practices for a transit system in a major city. The gaps identified in this process represent clear opportunities for an organization to make improvements.

The benefits of fleet benchmarking

Benchmarking fleet safety management efforts can provide an effective analysis of the strengths and weaknesses. Ultimately, the benefits of this process depend on what the organization does with the findings and how it applies throughout.

Effective benchmarking helps management gain a clearer understanding of specific controls that work and those in need of improvement.
For instance improved management processes can work to reduce unauthorized stops, and gauge weaknesses in any area of the operation against industry best practices. The ability to identify program deficiencies gives management opportunities to institute and prioritize changes to its current practices.

Generally, organizations will choose to implement program changes that do not measure up to industry standards. For example, relative to other industries bus companies rated poorly in the area of personal security. This might be one area to address.

On the other hand benchmarking against industry best practices just as effectively reveals the strengths of a current program. The process can help management understand which controls currently in place meet or come close to best practice levels.

This helps management weigh the costs and benefits of expending additional resources in one area in relation to potential gains from similar expenditures in another. Recognizing the positive effects in one area, similar improvements are often possible by transferring the model to other operations.

Successful management builds on existing program strengths and works to improve results by addressing weaknesses in safety management control.  As a case in point, one bus company focused on new driver training only to discover its program was consistently better than the other industries in the assessment. Management therefore concluded it should consider adapting the successful processes and protocols in the training program to weaker program areas.

Elements of fleet benchmarking

Marsh uses a benchmarking analysis that includes 20 different measurements that span fleet operations within an organization. A team of experts with extensive industry expertise identified the categories to capture the essential elements of a comprehensive safety management program. Their thorough review of numerous Department of Transportation (DOT) and Federal Motor Carrier Safety Administration (FMCSA) studies further validate the information in the various categories.

The Marsh safety management protocol

  • Bonus and awards  recognition system
    Desired behaviors become habit with properly administered reinforcement. This component examines the use of positive reinforcement and recognition for those who meet expectations.
  • Accident review board
    In conjunction with remedial training and driver retention programs, a committee should review all incidents, determining causal factors. This component examines the process of using front line employees and management to perform root cause analysis and assign preventability.
  • Safety advisory committee
    An advisory committee is effective in supporting safety initiatives. It oversees the use of management and front line employees to identify and examine complex safety issues,
  • Vehicle inspection and maintenance
    Management must establish policies regarding safety conditions of vehicles operated on behalf of the company, and management and employees need to adhere to them. This component examines the practices of maintaining and auditing vehicle conditions against safe operating standards.
  • Self-auditing systems
    Self-auditing processes appraise the overall adherence to company policies and activities in relation to established procedures and goals.
  • Early return-to-work program
    In addition to prevention measures, there are many practices that may reduce the overall costs associated with work-related injuries. This component examines injury prevention activities and workers compensation cost containment practices.
  • Accountability
    The organization must hold all levels of operation accountable for safety. This component evaluates practices that empower ownership for safety at various management levels.
  • Cargo and personnel security
    The organization must take measures to train and protect employees from theft and personal harm. This protocol examines the procedures to foster the security of the workforce. The security of the vehicle operators and their passengers also is a major focus of this component.
  • The assessment methods
    The methods used to collect the information necessary to complete a comprehensive fleet safety benchmarking analysis vary by category. Structured interviews with top management, safety personnel, driver trainers, drivers and dispatchers reveal how people within the organization perceive the function of the safety management programs, as well as their response to the programs. Management uses the information collected and compared against a matrix of industry best practices to derive a score for each component.
  • Summary of results
    Once the committee compiles the results from hundreds of fleet safety benchmarking analysis it can determine their key findings. While the results for an individual organization may vary widely, several components demonstrate strengths and weaknesses consistently across industry types.

Consistent strengths include:

  • Upper management commitment
  • Driver selection and qualification
  • Loss reporting and investigation
  • Vehicle inspection and maintenance

Consistent weaknesses include:

  • Trainer Certification Program
  • Written Safety Manual
  • Remedial Training
  • Safety Advisory Committee

These patterns may indicate the traditional areas in which safety management efforts are effective, and also where additional opportunities exist in other areas of the company. The unique nature of each operation within an organization requires an individual review to yield meaningful results.

Benchmarking can provide the essential review of the overall fleet safety management effort that will assist in bringing direction to the program. It can provide management with an important tool to discover how well the organization is functioning; not just against it competitors, but also in terms of where the company needs to be.

Benchmarking is a cost-effective way to create a roadmap for future success.
It directs a more economic application of resources toward the goals to reduce losses, increase efficiency and improve the bottom line.

Doug Dickinson is a vice president for Marsh Risk Consulting. The company focuses on the transportation industry, and provides fleet reviews, GAP Analyses of both heavy and light vehicle fleets, and conducts safety assessments for all types of fleet operations.