Safety Incentive Programs: What Works?

Aug. 11, 2004
The trend toward implementing incentive programs based on safety activities rather than injury results pays off for three diverse companies.

Even as recently as 5 years ago, the vast majority of companies that offered safety incentive programs provided cash, prizes, awards or other forms of recognition to employees for performance related to "lagging indicators." That is, management tallied up the number of accidents, incidents and near misses. If the numbers fell below a certain level, employees would be rewarded. If they were above the designated levels, they would not be rewarded. Some companies tied the rewards to individual performance. Others tied them to team, departmental or even company performance.

While the philosophy behind such programs seemed sound (giving rewards to employees for results), there were a number of criticisms levelled at such programs by some safety consultants, some union leaders and even OSHA. First and foremost on the list of concerns was the idea that such programs could create pressure on employees not to report accidents, injuries, near misses or other incidents so as to keep the "record" intact. While one might expect that coworkers would lead this pressure (and they frequently did), there were even some documented cases of supervisors and managers pressuring employees not to report accidents. These cases tended to be in situations where rewards that were designated for teams or whole departments were on the line.

Another concern was that failure to report incidents, even minor incidents and near misses, was defeating the whole purpose of a proactive safety program, which is to generate as much information as possible on trends so that steps can be taken to curb future problems. That is, if employees are pressured not to report incidents, management will have virtually no information on which to base future safety initiatives. In fact, some experts suggested, employees should actively be encouraged to report any and all incidents so preventive measures could be introduced.

A third concern was that, in a lot of cases, accidents could occur through no fault of an employee, so why penalize the employee or work team for such an incident?

As more and more companies began to realize the shortcomings of lagging indicator programs, and as OSHA began to formally frown on such programs (threatening to more carefully review safety documentation in companies that had these programs), many companies began to consider the implementation of "leading indicator" safety incentive programs. These are programs designed to reward employees for safety-related behaviors and activities, rather than for results. Examples include reporting safety violations, making safety suggestions, taking steps to remedy unsafe situations and volunteering for safety committees.

These days, there still are numerous companies with lagging indicator safety programs in place, but it seems that more and more are moving toward leading indicator programs, or, at least, combination programs where the leading indicator component is much more influential than the lagging indicator component.

Here, we talk with three such companies about the journeys they have taken through the "winding road" of safety incentive programs, as well as the results they have achieved.

Jordan Contracting (Anaconda, Mont.)

Darrel Storey, safety director, became familiar with incentive programs when he worked for two previous employers. "The programs seemed to work well, so when I started here, I implemented one, since the company didn't have one in place at the time," he states.

Under the program, the company established four goals for each of its projects:

  • No accidents
  • No incidents of any kind (eg: property damage)
  • No environmental incidents (spills, etc.)
  • Reporting a minimum of 10 safety observations per month.

If employees met these criteria, they would receive safety-related awards, such as gloves or coolers (to eliminate heat stress). "Performance in each category generates a specific number of points toward an award," explains Storey.

While the company does measure lagging indicators (accidents and incidents), there is limited emphasis on them. The major emphasis is on the safety observation program. That is, when employees see unsafe acts, unsafe conditions, environmental issues or any positive safety actions while they're working, the company encourages them to fill out safety observation cards to document the incidents. Using the information from these cards, management can then begin to address the concerns to prevent accidents. "We also communicate the information as a 'lessons learned' training tool to all our crews," adds Storey.

Example: One employee made an observation on the company's truck loading procedure. At the time, there were two loading areas for trucks. When a truck left one area, it was required to pass the other loading area. The employee noted that a truck in the second area could inadvertently back into another truck as it was passing by. "As a result of this observation, we changed the route so this wouldn't be a problem," states Storey.

Employees can even fill out cards if they see something unsafe on the way to or from work, or taking place in another company's work crew at a jobsite.

"Employees have really bought into this program," he emphasizes. "When we started, for example, the minimum number of required observations was a lot lower. We ended up increasing it to 10 in order to challenge them a bit more."

The company got the idea for the safety observation component of the program from its primary client, Atlantic Richfield, which had been using the observation cards for a while. "The managers and I in our company came up with the other three goals," he adds.

While the program has been working well, it is not without its challenges. Storey identifies three. First, if employees see the same item occurring more than once, management encourages them to report the problem each and every time, so they can track trends. However, some employees don't feel comfortable writing up the same observation more than once. "These are situations where we have been working to improve the problem, but it hasn't been completely addressed yet," he explains. "The additional observations are important so that we know there is still work to be done."

Second, managers and supervisors often overhear employees talking about safety problems or observations, but they (the employees) don't automatically write them up. "We have to remind the employees that it would be a good idea for them to write the concerns up and submit them, so that we can take some action," he notes.

Third, there is also some concern that employees might become complacent that they will come to expect awards every time, even if they don't reach the goals. "We don't want them to forget the reason we give the awards, which is for achieving high levels of safety," he notes.

Despite the challenges, the program has been reaping rewards. An unexpected one was the creation of a safety culture. When new employees sit through safety training and presentations from management on the importance of safety, it is possible that such messages go in one ear and out the other. However, once they get onto the jobsite, this risk is eliminated. "New employees quickly see that the employees who already work here take safety seriously," emphasizes Storey. "In fact, some employees take the new employees under their wings and focus on the importance of the safety culture to them."

Jordan Contracting began its safety incentive program in early 2002. Since June 2002, employees have worked without an OSHA-recordable accident. "In addition, we have had fewer than 10 incidents of any kind, including property damage," he adds. "And in terms of environmental issues, we may only have one or two small spills a year."

The future? As a way to build even greater participation, the company may begin to ask employees to make suggestions on what kinds of awards they want.

Georgia-Pacific Color Box - Pelahatchie (Pelahatchie, Miss.)

According to Bill Huff, quality, safety and environmental manager, there was a time when the company paid people to be safe, which, he believes, was not a good thing to do. "They received $30 a month to be safe, which went into an account, and it was paid out as quarterly and annual bonuses," he recalls. "If we had an accident, there was a penalty of 20 percent of the amount."

In 2003, the company scrapped that program and replaced it with a job observation program. Each day, employees receive a card with a checklist for making certain observations, such as those related to ergonomics, PPE or forklifts. They receive $25 a quarter if they complete 80 percent of their cards, a maximum of $100 a year.

The company also offers incentives if employees identify safety issues via preventive action individual problems they see above and beyond the observation card topics that they solve on their own. For this, they receive a $25 gift certificate to a local retailer.

As a result of the program, the company has seen its OSHA-recordable incident rate plummet from 9.7 in 1997 to 1.6 in 2003.

Still, there is work to be done, according to Huff. "When we look at the causes of incidents that still occur, it turns out to be employees violating safety procedures, such as bypassing machine guards, lockout-tagout procedures, etc.," he explains. As a result, the company is considering a modification to the program, where, in addition to checking off the traditional safety observations, employees will stand and observe co-workers working for 5 or 10 minutes. "Then, they will discuss what they have seen, both positive and negative, with that employee," he states.

Wheelabrator Westchester (Peekskill, NY)

According to Catherine Tubridy, EH&S compliance director, some safety incentive programs may become so effective that they no longer even need to exist. "When I came here, employees knew management cared about safety, but there was no interaction between management and employees related to safety," she recalls.

Two years ago, the company implemented a formal safety incentive program offered by a third-party company as a way to increase employee participation. "It also gave management a way to thank employees for suggesting safety ideas," she adds. Under the program, employees identified safety ideas and hazards, wrote them up, and received scratch-off cards that would provide points toward receiving gifts. That is, as they accumulated points from the cards, they could turn them in for gifts from a catalog. Employees loved the idea, and made use of the gifts. "Tools were very popular, as were home electronics," she recalls.

Employees could receive even more points if they identified a hazard and fixed it on their own, rather than just reporting it. That is, they could run their suggestions by their supervisor or the safety committee, then make the change. "For example, if people were constantly getting hit in a certain area, an employee could take the initiative to put a guard around it," states Tubridy. "This aspect of the program made it less of just a complaint program and more of an active program."

The program also had a performance component. An employee could receive five points if his or her work team went a month without an incident or injury. If the whole plant achieved the same goal, each employee received 10 points. However, if an employee committed a safety violation, he or she received no points.

It wasn't long before employees started to get into the habit of constantly looking for things guard rails and safety chains that needed to be put in place, placing labels where they were supposed to be, etc. Beforehand, safety was viewed as something extra. It eventually got to the point where it became part of the work culture.

As a result, the company initiated a bold move: It eliminated the incentive program altogether in May 2004. "We no longer feel that we have to constantly reward employees for safety ideas," explains Tubridy. "In addition, it got to be a real pain keeping track of the cards and the points."

Now, employees simply receive personal recognition for their safety suggestions and behaviors. For example, they get their names mentioned, and receive thanks, during safety committee meetings.

Employee reaction? Surprisingly, there was no backlash, according to Tubridy. "It turns out that they were ready for a change, too," she explains. "They now realize that safety is part of their everyday jobs. We haven't received any negative comments at all about not receiving points and gifts anymore." She adds that it is difficult to describe in detail, but the whole attitude toward safety is completely different in the company than it was 3 years ago. "There is a new openness where employees feel comfortable discussing their safety concerns with all levels of management," she adds. "We realize that we don't need to reward employees for being safe. That is part of their job. As a company, we spend a lot of money on safety on PPE, on machine design and guards, etc. and employees realize our commitment to this."

Still, Tubridy would like to see the recognition become more formal. "We might implement something on a quarterly basis, such as a cooked meal, a baseball game or a golf outing," she concludes.

Sidebar: Safety Incentives Resources

AMC Theaters, Kansas City, Mo.; (800) AMC-4TIX;

The Coleman Co., Wichita, Kan.; (800) 830-3399; e-mail: [email protected]

Peavey Performance Systems, Lenexa, Kan.; (800) 235-2495;

The Bill Sims Co., Columbia, S.C.; (800) 717-3561;

Starbucks, Seattle, Wash.; (800) 611-1669;

William Atkinson is a business writer with more than 25 years' experience. He specializes in writing about safety, health and environmental issues.

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