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The Safety Incentive Debate

By Seth Marshall of Safety Pays, Inc.

Over the past couple of years, there has been a growing controversy around safety incentive programs and the perception that such incentives encourage employees not to report on-the-job accidents and injuries. This point-of-view fueled by OSHA's recent attempt to discourage companies from using such safety management tools by citing them for record-keeping violations (all of which were subsequently overturned). The purpose of this article is to clarify the arguments and offer an informed explanation as to what this debate is actually about. Why have safety incentives, a common workplace tool for over 50 years suddenly been targeted as either useless or potentially dangerous?

We didn't start the fire…

Much of this fight has been going on for a number of years. Safety engineers, whose stock and trade is the technical side of the safety business, have long objected to behavior-based safety solutions. They, instead, have taken the attitude that more traditional components of a safety program are what's most necessary. Those components include on-going employee safety training, facility safety inspections, safety committees, etc. Moreover, until the past 10 years, there really was very little available as far as a full-blown safety incentive program was concerned. Sure, there were a few simple games such as safety bingo or safety lotto scratch-off cards, but by and large, those companies in the safety incentive business were really only interested in getting a customer to buy the prizes or premiums they offered as employee incentive rewards.

With worker's compensation becoming not just a hot topic, but a growing expense throughout the 1980's, more and more company owners and corporate managers began demanding of their insurer's loss control representatives that they provided more than just traditional risk management approaches. Part of this need grew out of the painful fact that an increasing number of workers were taking advantage of the workers' compensation system without regard to actual injuries. Such claims included workers who had been laid off or terminated for cause or employees who were faking an injury hoping for a big payday. No safety program is ever going to prevent that type of misbehavior.

Thus, there began an increasing demand in the marketplace for ways to motivate workers to more closely participate in the safety process. This became an absolute necessity in some states, such as California, where new legislation required safety incentives as a component of an overall safety awareness program. In a very short span of time, safety incentive consultants, and safety incentive companies, began marketing themselves as another effective risk management tool. And, indeed, workers' compensation claims started dropping nationwide and continued to do so throughout the 90's.

Unfortunately, human nature is such that success for many often breeds suspicion and contempt, not that anyone was arguing the turn-around in accident reduction was due strictly to the advent of safety incentive programs. Nevertheless, safety incentive programs were clearly a contributing factor to the loss control success that was happening over those years. As a result, they came under the magnifying glass, especially by the traditional safety people who were highly dubious that a simple rewards system could truly have any impact on a workforce. Moreover, where there was clear statistical evidence in industry after industry, those same folks came to the conclusion that injuries hadn't truly been reduced, but instead, workers were hiding the injuries they were having.

Even the greatest proponents of safety incentives would agree that such incentives can discourage incident reporting if done improperly. They would also point out that there are any number of management practices which can negatively impact injury reporting, including management's over-emphasis on accident-free records, punitive measures taken against injured workers, post-accident drug testing, or making an example of an injured worker in front of co-workers. Still, safety incentives have remained squarely in the cross hairs of many whom, for whatever reasons, believe them to be more destructive than constructive. What are their arguments?

Organized Labor

Some representatives of organized labor would have us believe that most on-the-job incidents result from unsafe conditions, as opposed to unsafe acts. Their stance appears to be that only management is responsible for safety in the workplace while employees are nothing but victims. Many high-ranking union officials insist that incentive programs have no impact on incident rates whatsoever, but only serve to drive incident reporting underground. A few such individuals have launched an all-out campaign against incentive programs, and they have succeeded in dissuading some businesses and safety professionals from using or recommending safety incentive programs whatsoever.

However, local officials and the rank and file do not necessarily share this viewpoint. Opinions vary widely, mostly depending upon the personal agenda of the members. Don't forget that the whole reason unions exist is to create a powerful adversary to match the power an employer otherwise holds over its workers. The very nature of collective bargaining is to get the most while giving away the least. So for many union officials, any employee program that promotes worker accountability is going to be in disfavor. On the other hand, those union folks who have witnessed successful implementation of safety incentive programs are understandably more favorable to the concept than those who turn away from the concept on principle. Those companies that have a positive working relationship between management and labor are more likely to have union members with a positive attitude relating to safety incentive programs.

Behaviorists

With the growing importance of human resources in controlling a company's costs (remember when HR was simply called "Personnel"?!), there has been more emphasis placed on influencing "employee behavior" in the workplace. Unlike the union view of 'it's never the employees' fault," pure behaviorists suggest that unsafe activities and habits cause most workplace injuries. They propose that employee training, observing at-risk behaviors, and retraining employees in proper safety techniques will result in reduced incidents. They recommend that any awards given should be tied directly to activities (non-traditional incentive programs), with the emphasis on safety training, as opposed to rewarding a group or individual based on results (achieving the reduction, if not, elimination of on-the-job accidents as is the case with traditional incentive programs).

Many behaviorists advise against using games of chance (safety bingo, lotto, safety jackpot, etc.) as a means of providing safety incentives. They place emphasis on the training with some attention to recognition and less attention to external rewards. A few vocal behaviorists adamantly oppose incentive programs as "quick fixes" that do not address underlying causes of workplace incidents. They urge that a results-oriented safety incentive program places an over-emphasis on the bottom line (no injuries or accidents). Instead they believe workers require techniques that mirror the basic instruction given in Psychology 101 courses-that variable intermittent reinforcements are the most effective means of teaching new behaviors.

OSHA

OSHA's liberal stance under the Clinton Administration placed the burden-of-proof on management to demonstrate that incentives are not being used to manipulate incident reporting (clearly, union lobbying efforts under Clinton over the past 8 years have paid off). During that time, OSHA attempted to issue fines for record keeping violations to a waste management company in Ohio on the pretest that said company had tied employee bonuses to incident-free records. This occurred after an OSHA inspector at the Ohio company asked an injured worker if he had lost his safety bonus because of his injury. Interestingly, no questions were asked as to whether or not this employee felt reluctant to report the incident due to the potential loss of his bonus, nor was he asked if any other company practices discouraged him from reporting his injury. What is even more interesting is the fact that this company had a lost workday incident and illness rate of over 60 that prompted the OSHA inspection in the first place. If this employer's safety bonus practice was intended to drive incident reporting underground, then one can easily conclude that it was unsuccessful in such an attempt!

Penalties for under-reporting have always been allowed under CFR 1904.2 of the record keeping standard. What has changed is the increased focus on traditional performance-based incentives as potential causes of under-reporting. OSHA is not suggesting that companies discontinue their incentive programs, but prefers non-traditional programs where emphasis is place on safety activities such as safety suggestions, reporting hazards and near misses, and attending safety meetings.

One must wonder…

Is OSHA's goal to reduce on-the-job injuries, or to enforce record keeping regulations? To what extent can any business or institution rely on OSHA's recent spate of regulatory action? Even OSHA's Voluntary Protection Participants (VPP), whose ranks include those companies with the best safety records of all, appear to be balking at some of the curveballs OSHA has thrown their way when it comes to safety incentives. Example: OSHA attempted to impose its stringent incentive restrictions on these VPP companies, only to back down in response to an outcry from he members of the Voluntary Protection Participants Association (VPPA).

OSHA justifies its position against traditional incentive programs, at least in part, based on an independent literature review of 20 studies, published between 1971 and 1981, that examined the use of safety incentives in the workplace. The conclusion to the review: all studies reported some improvement in safety practices, "but not all safety-related work practices improved in every study. The review further indicates that the differences in incident rates before and after implementation of incentive programs were often initiated or promoted by those who profit from selling the incentive programs, suggesting a built-in bias to the reports.

To understand a certain group or federal agency's arguments for or against incentives, one first must be clear about what its agenda is to begin with.

Safety Managers

Safety experts generally agree that incident reduction is far more involved than a discussion of unsafe acts and conditions. For years, Dupont has promoted the statistic that 94% of all incidents are caused by unsafe acts (by people) and unsafe conditions. Both contribute to the problem. Theses days, most safety managers fall into one of two categories: those of the old school who believe that rewarding an employee for something he or she is supposed to do in the first place (work safely) is unnecessary and send the wrong message. Then there are those who recognize that safety is more than just facility inspections, on-going safety training, etc. They recognize that creating an effective safety program requires on some level the employee commitment to make it work. And just as an auto company can design and build a great car, it's not going to get very far without any gas. Such safety managers recognize that safety incentives are the gas that will drive the overall safety program.

Too many safety managers become frustrated when a well-intentioned, comprehensive safety program is put into place, yet employees continue to get injured and file far too many workers' compensation claims. The best safety professionals recognize that incentive programs that address behaviors without also recognizing performance (i.e. Overall results in reduction if not eliminating on-the-job accidents/injuries) have inherent limitations. Many injuries result from simple carelessness that cannot be traced to a specific behavior. A worker who has exemplified safe behaviors for years can have a bad day. Stress, lack of sleep, emotional strain, minor illness and substance abuse-all are significant causes of on and off-the-job injuries. A strictly activity-based incentive program does nothing to address such injuries, not to mention the fact that it lacks one of the most powerful motivational tools known-peer pressure. An effective incentive program will capitalize on the impact of positive group dynamics as a means of shaping individual attitudes and behaviors.

Safety Incentive Companies

Is there any doubt that an individual or company in the safety incentive business believes such programs have a positive impact on workplace safety. Obviously, they all do. But, it's important to look closely at what a safety incentive program is really in business for. For example, assume the XYZ Incentive Company is actually a subsidiary of a big-screen TV manufacturer or in a joint venture with that manufacturer. The essence of their safety incentive program is that at the end of each quarter during which there has been no accidents or injuries, all of the employees' names are thrown in a hat for a big-screen TV drawing. This is a classic example of how safety incentives get a bad name. There is absolutely no question that if an employee is injured during the last few weeks of the quarter, he/she is going to potentially feel some level of peer pressure not to report the injury. There is simply too much riding on closing out the quarter to get that big-screen TV. So, indeed, this would be a case where a safety incentive promotes injury hiding.

The point is that not all incentive programs are alike. In fact, any safety incentive program which is based on a big reward being provided at the end of a set period (cars, boats, TV's…even injury-free pizza parties) is going to have the potential to negatively impact a worker's reporting an injury late in the game. Furthermore, OSHA and the unions are quite right that the payment of annual or quarterly safety bonuses based on overall group success should not qualify as a viable safety incentive program. This is probably the most common in-house safety incentive in use today, yet the least effective method of changing behaviors and attitudes towards safety. In fact, this approach is possibly the most likely method to lead to under-reporting.

Unfortunately, OSHA has adapted the attitude that any results-oriented safety incentive program, translates to the fact that injuries are being under-reported. Is this right or fair when the existence of safety incentives in a company is the only evidence to support a subsequent citation by OSHA? It seems appropriate that OSHA look at the type of incentive program in use as a possible deterrent to incident reporting, then investigate further to determine if, indeed, a record keeping citation is in order.

On the other hand, companies which promote strictly individual rewards ($100 bonuses at the end of each quarter to injury-free employees, or rewarding prizes such as dining certificates or movie passes to employees not involved in any accidents) does virtually nothing to raise safety awareness on a group basis and encourage each employee to keep an eye on his co-worker's safety. Plus, to what extent do individual safety incentives create an atmosphere which discourages an employee from taking advantage of the system to his own selfish end, especially if he has an ax to grind against the company.

Safety Incentives that work

The ultimate goal of any safety program should be to create a culture that embraces a goal of ZERO INCIDENTS. In designing a comprehensive incentive program, a combination approach that addresses activities and performance, hazard communication 7 rules enforcement, behaviors and attitudes, awareness and motivation, all as part of an integrated safety program is most effective. No professional safety incentive program designer can, in good faith, recommend a program that leaves any of these bases uncovered. With the potential for losses that every company faces, why settle for an incomplete safety incentive program?

A successful safety program involves management commitment to achieving safety goals. It fosters a culture of safety awareness and motivation at all levels. A safety incentive program should be rewarding, entertaining, easy to understand and daily. It should also generate healthy peer group pressure, be visually dynamic, flexible and involve recognition and rules enforcement. It should be administratively easy and promote employee accountability, communication, and individual initiative and encourage management/employee cooperation.

Any safety program that targets one area without addressing the others is less likely to succeed. Incidents may initially decline with such a program, but soon level off or increase. A good safety incentive program that promotes incident reporting may actually cause an initial spike in reported injuries, which then declines as the cause of each incident is investigated and addressed. In some cases, this may actually be a better indicator that the program is working than an initial decline in number of incidents.

Incentives can become a valuable tool to reach the objective of better reporting. For example, a cement company in Wisconsin documented that its safety incentive program actually helped management to get a better handle on incident reporting. This is because non-reporting was deemed a safety violation that resulted in a participant being eliminated from that current round of safety incentive goals. With the same program, a general contractor in Georgia reported going from 7 vehicular incidents in 7 weeks to 0 in 81 days with its safety incentive program. Given that vehicular incidents are much more difficult to hide, one can surmise that the reported results are legitimate, and not a phantom of under-reporting.

Management needs to be concerned about the temptation among employees for exaggerated or outright fraudulent workers' compensation claims. A successful safety incentive program will help to encourage groups and individuals to take injuries seriously. Appropriately guided peer pressure will help to encourage employees to seek treatment for a legitimate incident, but discourage fraudulent claims. Moreover, a good incentive program will always include some means by which each employee, on a regular basis, provides a signed certification that he or she has not been involved in any workplace accidents in order to encourage immediate reporting of injuries when they do happen.

A safety incentive program should never be designed in lieu of an effective and on-going safety program, and should never remove the responsibility of the company from doing everything within its power to maintain a safe working environment. Management should always be held accountable for setting safety goals and objectives, and making sure that the appropriate measures are being followed. Management must ensure that training is provided for all employees, hazards are identified, corrected and removed, and the total company-wide safety cultures is promoted from top down. Management should take responsibility for rules enforcement when employees become negligent. This includes the rule that all injuries and near misses as well as at-risk behaviors must be reported.

Recap

Management has the controls that can help to reduce the number of on the job incidents. Regarding the new proposed standard 29 CFR 1900.1, note that employee involvement is one of the key components of the process. The question is how effectively can one get employees involved in safety without tying rewards and punishments to incidents. After all, incident reduction-reducing the number of injured employees-is what counts for management so why should it not be as meaningful to the employees? Insurance costs and OSHA inspections are driven by performance (number of incidents). Is it realistic to expect employees to be motivated without a performance (incident reduction) element built into their safety incentives?

Today's industrial environment promotes employee empowerment that translates to employee responsibility and accountability. It's critical to foster the understanding that the employee is an asset to the company and not a liability. Ultimately, the companies with the greatest safety records are those who have successfully created a partnership between management and it's workforce. And just as outstanding managers are bonused in some way for their accomplishments, it seems both logical and fair that such a partnership would reward the workforce for such shared success.

Employee incentives are not about to leave the American workplace. Innovative methods for motivating employees are one of the reasons this country leads the world in productivity, quality and output. Is there truly any reason why those same types of methods can't be employed when it comes to safety? Of course not. Safety incentives exist because they make a difference. And the best safety incentive programs successfully motivate and reward a workforce without creating an atmosphere where injuries are underreported. Like everything else in this world, if something works, people are going to continue to use it. 

Go back to the main Safety Incentives Page.

The ultimate goal of any safety program should be to create a culture that embraces a goal of ZERO INCIDENTS.

It's critical to foster the understanding that the employee is an asset to the company and not a liability.

  Motivate and Reward the workforce in an injury-free atmosphere.