This is something I am working on, so I will copy and paste in my recent explanation to a software developer. One important piece of advice from my experience is, You should train your Management on how to have the conversation rather than how to "complete the form". Do NOT walk around with a form/clipboard, have the conversation and complete any documentation later. That form should be simple and not technical. The real fruit is not what's written, but more attitude and culture.
My email to software dev:
The Objective
The intention of Safety/Behaviour Observations is purely based on Employee Engagement. Essentially, it’s a H&S Culture improvement tool. Not a “catch people out” tool.
This visible demonstration of commitment to HSE should:
• Focus attention on HSE (Health, Safety, Environment)
• Vehicle for managers to demonstrate HSE leadership.
• Opportunity to engage with employees.
• Shows how well HSE is understood and applied.
• Shows where systems are working well.
• Helps identify and correct weaknesses in systems.
• Raises awareness of HSE/SA issues
• Identifies where people take risks.
• Prevents injuries, illness and environmental impacts.
• The company can gain a greater understanding how “Work is Imagined vs Work Done.” i.e. How aligned is the Reality and practicality vs our processes/standard operating procedures

The Observation must be based on behaviour and conversation rather than a technical assessment or in other words, The Observer does not need to be a Qualified or licenced worker to have an effective interaction/engagement. They only need to be trained in effective Engagement and Communication approach.

The observation will be a Visit and walk around of a work location, undertaken by Managers and Supervisors to observe working practices, engage with people and talk about health, safety, environment, and everyday working behaviors.
Safety Observations are not:
– Safety Inspections – which are performed regularly to ensure a safe working environment is maintained
– Safety Audits – which are performed to verify how the requirements of the OHS management system: procedures, instructions, objectives, plans, schedules, etc. are being implemented
Obviously, those types of check is covered by a different tools and Approaches (i.e., Worksite Safety Assessments, Vehicle Checks, Audits)

Currently using Assura, completely flexible system that can essentially manage any workplace process whether its H&S related or not. https://www.assurasoftware.com/

Agree with Kate it's a balance of meeting, compliance, best practice and the risk. Here is another example: If I have been Trained in MEWP 3 yearly, but I may only use an MEWP a handful of times each year? Am I competent? or just Trained? Should the Official Refresher NZQA Training be supplemented with "internally" run re familiarization sessions/toolbox etc. Or do you increase NZQA Refresher Frequencies. Just something to consider.