The use of R/A/G to flag progress is popular in Board and Committee reports. It’s simple and intuitive. However, there are two traps to be wary of, and one means of making the traffic lights system more informative.
Trap 1 is that there may be confusion between whether the traffic lights are indicating the state of affairs as at the time reported (mid way through a project, for example), or are signalling what the end state might be.
So a project that’s starting to go off the rails half-way through could still be reported as Green – not the expected Red or Amber – if the report’s authors are convinced they will bring the project back on track in the end.
The scope for confusion is obvious, so in order to avoid innocent (or otherwise) errors in reporting, make clarity on this point a part of your reporting guidelines.
Trap 2 is also one of interpretation. The use of R/A/G appears both intuitive and universally-understood. But what’s Amber to me might be Red to you and my Green might be your Amber, so unless you have definitions on what the triggers are for each colour in your reporting guidelines, this useful signalling mechanism might be actually be leading report readers astray.
Finally, there’s an aspect of human nature that means when faced with a choice between three things, we often plump for the nice, safe, middle one. In part that explains why so many Board and Committee documents are a sea of Amber when reporting on status; and often the reports are stuck on Amber month in, month out.
That’s just not terribly informative and, worse, the apparent stability might mask underlying changes – until, too late, matters start reporting Red.
I suggest that in order to avoid these problems you adopt the Red / Red-Amber / Green-Amber / Green approach.
This has the effect of forcing matters out of the nice, safe Amber middle ground. It makes the reporting more descriptive, as executives have to think harder about the status of what’s being reported upon, and gives earlier warning of any deterioration (or improvement) in matters, which might otherwise be masked in a warm, Amber glow.
Recently, at one well-known, well-run financial institution, I came across a new traffic light – purple. This being a matter that had become stuck on red, but the executives concerned felt it did not matter….
As always, time is short and there’s much to do, so good luck and get cracking.