Why Safety Incentives are Dangerous

Walter Cardin was safety engineer for Shaw Group a subsidiary of Stone & Webster Construction. Walter Cardin is presently in jail serving a 78 month for falsifying injury reports. Why? Because of safety incentives worth $2.5 million offered by the Tennessee Valley Authority (TVA). You can read all about the case on the World Nuclear News website.

This is the problem with safety incentives. They tend to cause under reporting of injuries. It only makes sense. If you get paid for going a certain amount of time without any injuries and a couple of days before that period of time is up someone at the plant gets injured, you are tempted to not report it in order to get the reward. When money is involved, honesty is often hard to come by.

So what the solution?

  • Train your safety officers to recognize and praise good safety practices
  • Offer incentives, not for days without injuries, but for new or improve processes that result in safer work.
  • Involve the employees by making them a part of the safety committee. All to often managers only are on the safety committee, instead of involving the ones closest to the actual work; these employees might better be see where improvements can be made.

Ultimately you need to motivate rather than try to get results through dangerous incentives. Believe in your employees and expect the best from them. Some will let you down but you will find that most will step up.

Incentive Programs can result in discrimination

A new memorandum by OSHA published on Monday of this week seeks to clarify issues regarding safety incentives that may actually be illegal.

At issue is the fact that certain types of incentive programs would actually discourage employees from reporting injuries which is not only discrimination and illegal but also puts everyone at risk.

The memorandum goes through the obvious violations of employees reporting injuries and in some manner being disciplined for doing so (because the way they got the injury was a violation of company policy, because the way that they reported it wasn’t in keeping with company policies, etc…).

In the fourth example, however, it covers incentive “programs that unintentionally or intentionally provide employees an incentive to not report injuries. For example, an employer might enter all employees who have not been injured in the previous year in a drawing to win a prize, or a team of employees might be awarded a bonus if no one from the team is injured over some period of time.”

Well-intentioned as these incentive programs may be, they essentially cause the employee who is injured to hold back the information from his employer either out of peer pressure (all my co-workers will miss out on the prize) or out of a desire to get some kind of reward (if I don’t report it I’ll qualify for the free lunch).

Obvious examples of this type of illegal incentive program would be something like “If we can achieve 90 days without injury, everyone will get the company will buy everyone lunch.” If you do get injured, you’ll be motivated to not report the injury because if you do everyone will lose out on the free lunch (or whatever the prize may be).

If you have questions about whether or not your incentive program is legal and beneficial, or for ideas on how to put together an incentive program that doesn’t discriminate against the whistleblower, OSHA has a phone number that you can call: (202) 693-2199

Non-Cash Incentives better than cash incentives

A new study, released by the Incentive Research Foundation (IRF), seems to show that non-cash incentives (i.e. prizes, travel, merchandise, etc…) work better than cash incentives (bonuses attached to the paycheck, for example).

The study which says that it gathered data from a variety of sources going back two decades, claims that “non-cash’s influence over people can be more powerful—and as such more profitable—than cash alternatives.
Non-cash is indeed proven to be more “effective” and therefore, more “efficient” than traditional forms of compensation when used properly in the Total Rewards mix, which makes it a more affordable investment. 

This finding challenges the commonly held belief that cash incentives are preferred by employees.

The study goes on to state that: “when people make a hypothetical choice between cash and non-cash incentives, cash is indeed preferred by employees.  However—and here is the hook—when it’s no longer hypothetical, meaning when an award is identified,  employees actually performed better in pursuit of it, even when the award was of equal value to the cash alternative.” In other words what they say they prefer is cash but when the results are measured, employees do better when it is non-cash incentives.

The study doesn’t try to explain why this is but one can guess that it has to do with a sense of responsibility vs. a desire to obtain things that one wouldn’t normally justify spending money on. I know that I have bills to pay and that I’m usually behind and could always use more money to catch up, that’s the responsible side of me talking; but there’s the other side that wants fun things, trips, merchandise, etc… While I can’t justify purchasing them for myself as long as I feel that I should spend the money elsewhere, I will strive to do whatever I can if I know that I’ll get to have something I wouldn’t normally be able to because I wouldn’t feel like I could justify it.

You can download and read the whole whitepaper here.