For years, stakeholders have been debating the best ways to implement a safety incentives program. Should the program be results-based or process-based? What should its objective be? What are appropriate prizes? What kind of return on their investment can companies expect?
To try to answer some of those questions, Occupational hazards this month takes a look at the elements of safety incentives programs that proponents seem to have reached some consensus on. The following points are meant to help you decide whether a safety incentives program is right for you, and also to guide you through the process of setting up such a program.
1. A safety incentives program is only one facet of a comprehensive safety program.
Experts say you'd be surprised by how many companies try to use an incentives program in lieu of a functional safety program or as a supplement to a poorly designed safety program.
"Safety incentives programs are icing on the cake," said Bill Sims Jr., president of Bill Sims Co. Inc., a Columbia, S.C.-based incentives company. Sims prefers the term safety "recognition" to incentives. "They complement a well-rounded safety program. If you don't have return-to-work light-duty programs, accident investigations, safety committees, you have no business running a safety recognition program."
For an incentives program to be successful, all the other "pieces/parts" of a comprehensive safety program need to be in place, says Gary Hanson, president of Akron, Ohio-based American Safety and Health Management Consultants Inc.
"This is part of creating a culture of safety," Hanson said. "It's not the total package."
2. The end goal of a safety incentives program is to reduce accidents and injuries.
This is perhaps the most controversial aspect of safety incentives programs, mainly because some stakeholders argue that offering prizes to employees for working "X" number of days without a lost-time injury encourages underreporting.
Marc Flanders, ARM, principal of WC Solutions Group, a risk management consulting firm in Chesterfield, Mo., says concerns about underreporting are valid. But he believes underreporting usually stems from incentives programs being poorly designed.
"I think sometimes safety managers will take a program that's off the shelf and plug it into their operation," Flanders said. "Safety bingo often will build up a big prize, you may go 30 days and all of a sudden one guy has an injury and the whole pot goes down to zero. Something like that might cause hiding or underreporting of injuries."
Conventional wisdom has evolved a bit on this issue. The end goal of a safety incentives program still is to reduce accidents, incidents and injuries and thus keep workers' compensation costs in check. But consultants such as Flanders now believe that a more process-based approach one that focuses on boosting attendance at safety meetings or soliciting safety suggestions from workers, for example can help achieve that end goal.
Flanders said he advocates safety incentives programs that aim for a balance between reducing injuries (often referred to as "lagging indicators") and encouraging activities, depending on the company's "safety culture" and objectives.
Buck Peavey, president of Lenexa, Kan.-based Peavey Performance Systems, which runs a safety jackpot program, recommends a program that rewards individual and group achievements such as attaining a good score on a safety education quiz, participating in safety training or wearing PPE.
Encourage those "proactive" behaviors, Peavey says, and a reduction in lost-time injuries will follow.
3. Reward everyone and reward often.
One common problem with incentives programs is that they target the wrong people, Peavey said. He explains it in terms of the 80-20 principle in sales: Eighty percent of employees will work safely most of the time, regardless of incentives; the other 20 percent are the workers who need an incentive to work safely.
Flanders added: "I see some companies put all their budget into the people who are safe for a year. I tell them, 'Wait a minute. You're spending all your money on the people who are safe. What are you doing to change the behavior of people who aren't safe?'"
Most proponents shared the sentiment that a successful incentives program takes an "everybody wins" mentality.
Flanders also recommends a "multi-leveled incentives program."
"It should involve everyone in the safety process, starting with top management, going to supervisors, to the employees and to the individuals managing the incentives program," Flanders said.
While cash generally isn't recommended as a prize for plant-level employees (Peavey called it "about the worst incentive you can offer"), Hanson said cash is acceptable for managers and supervisors in the form of a bonus if the company, division or plant meets its safety-related goals. Just remember that cash awards are taxable.
Most experts agreed that regardless of whether a program is results-based or process-based, awards need to be given out at least every 30 or 60 days.
Peavey recommends a program that rewards weekly.
"The problem is you can't really reward for proactive behavior every 6 months or a year," Peavey said. "These behaviors happen on a daily basis."
That's not to say you shouldn't reward workers for being accident- or injury-free for 6 months or a year, Peavey added, but that should only be one component of a safety incentives program.
4. Awards must be genuine, meaningful, important and worth achieving.
Hanson, who before becoming a consultant spent 10 years as the corporate director of risk management for Dairy Mart Convenience Stores Inc., said Dairy Mart's safety incentives programs weren't expensive compared to the results they produced. But he emphasized they were effective because the rewards had trophy value they provided meaning to the employee that far exceeded the prizes' monetary value.
Hanson said Dairy Mart got great results when it gave jackets emblazoned with the company logo to plant employees who went a year without an injury. He said an even more powerful motivator was Dairy Mart's annual safety recognition banquet for its drivers and plant employees, during which the president and other company executives "mingled" with employees and their families. (There was no "head" table.)
The president of Dairy Mart handed out safety awards to each driver with a personal touch.
"The president made me give him a 5-by-8 card with the name of each driver, the department he worked in, how many years he was safe, his wife's name, his kids' names and any other special notes about that driver that the president wanted to bring up for instance, 'his boy hit a home run during the big game,'" Hanson said, adding that the president reviewed the cards in advance and kept them on his lectern for the awards presentation. "Now these men are Teamsters. These are real men no babies, no sissies. And they're hauling these 48-foot trailers all over the place, which is dangerous work ... And he melted them like candy."
The point: Don't discount the importance of a pat on the back, as long as it's heartfelt and genuine.
After the first banquet, "Within 3 years, our injury rates went down to nothing and our vehicle accidents disappeared," Hanson said.
If your company is on a tight budget, Hanson said, even a little "pizza diplomacy" can enhance workplace safety.
"Set up some goals for injury performance, and if everyone stays safe for a few months, Papa John's shows up at the door."
Finally, Mark Moran, author of The Safety Incentives Answer Book and vice president of content development for safetycertified.com, believes employees' preferences should dictate the type of prizes offered.
"The important thing to remember is different employees like to be recognized in different ways," Moran said. "One person's plaque may be another person's junk. Just find out what makes people tick."
5. Keep the program simple.
The structure of an incentives program should be "unambiguous," said Dave Fromm, president of Shawnee Mission, Kan.-based American Safety Management Inc.
"People need to understand what will happen if they behave in a certain way," Fromm said. "[For example,] 'Work 50 days without a lost-time accident and we're giving you an award.'"
Clear, consistent communication is a key to the success of an incentives program. And that starts with the kick-off, which Sims believes should be similar in pomp and ceremony to "launching a battleship."
Likewise, Fromm said the kick-off needs to be emceed by someone from "as high a level in the company as possible" to show that management believes in the program.
"You need to emphasize the fact that your safety program is much broader and deeper than an incentives program," Fromm said. "You need to emphasize that we're doing this to reward you and add a dimension of fun to our program."
It's also essential early on to get other critical issues out in the open such as the fact that hiding injuries is unacceptable, Flanders said.
"If you do use a results-based program, it's very simple: 'We want you to report each and every claim. It's not only the law, but it's a company rule,'" Flanders said, adding that it should be put in writing. "'If you don't, you'll lose all your rewards for the month.'"
6. Peer pressure can be a valuable tool.
Opponents and proponents of incentives programs have aired concerns that peer pressure from co-workers or supervisors or both can engender injury hiding.
While those concerns likely are valid, experts also point out peer pressure can be used in a positive way to achieve a company's desired results. The key, according to Peavey, is in how an incentives program is structured.
"Peer pressure can be a good thing if it's done right," Peavey explained.
Peavey said longer-term programs that reward employees for working a year without a lost-time injury are "unhealthy" and "usually backfire." Instead, he recommends programs that reward everyone and often and that are conducted in a "fun, spirited way."
While underreporting always is a concern, Fromm recalled one instance in which peer pressure acted as a deterrent to false reporting.
Fromm explained he was working with a company with approximately 40 employees that was about to reach 50 days without a lost-time accident.
"One employee went up to the owner of the business and said, 'I thought you'd like to know, but Joe Brown is going to have an accident tomorrow,'" Fromm said, using a generic name in the example. "The employee then told the owner that this person was planning to fraudulently have an accident to collect the workers' comp money and to stick it to management.
"It turns out Joe Brown was going to be laid off anyway, so the employer just moved up the termination."
The point: Employees talk to each other. If an employee is taking advantage of the company, other employees might be reluctant to blow the whistle. But an incentives program with group awards gives employees a reason to blow the whistle or at least exert some peer pressure, Fromm said.
If an employee announces he or she is going to fake or exaggerate an accident to get some extra time off, "With a safety incentives program, it affects everybody, so their fellow employees will say, 'No you're not. You're coming back to light-duty.'"
7. Upper management needs to be on board.
Just as total management commitment is essential to the success of any company's safety program, experts agree that getting upper management to buy in to a safety incentives program is critical because, after all, they're the ones buying it.
Experts estimate that incentives programs could cost the company anywhere from $50 to $200 per worker, depending on the size of the company and the success of the program. (Keep in mind: The better the results are, the more the company pays out in prizes and rewards.) Flanders, though, believes that costs for companies that custom-design their programs will drop significantly after the first year.
"In the first year, there should be a significant investment in communications materials signs, banners, results boards, participation boards and printing costs and a time investment in developing the structure. The program still needs to be reinforced in the second year, but the learning curve pretty much has been completed by then."
Even so, in today's economy, getting the keepers of the corporate coffers to relax their grip on the checkbook is no easy task.
Many consultants will perform a cost-benefit analysis for top company brass when trying to convince them of the value of an incentives program. If a safety manager, risk management director or human resources manager is designing the program, Flanders recommends they do the same.
The three key points to remember are:
- Employers pay a steep price for lost-time injuries, not only in terms of workers' compensation costs but also indirectly. Hanson estimates the costs of lost production, additional payroll and training time, extra supervisory time, the drop in quality in the worker's absence and missed sales dates can be anywhere from 4 to 10 times the cost of the workers' compensation claim itself.
- Since incentives programs are designed to make workplaces safer, and an unsafe workplace is a blight on the bottom line, the overlapping objective of an incentives program is to improve the company's bottom line.
- A successful safety incentives program should pay for itself. In terms of workers' compensation insurance premiums alone, Fromm estimates companies can realize savings of anywhere from $2 on every dollar spent to $10 on the dollar. Hanson, meanwhile, said he's working with one self-insured Ohio company that saved $850,000 in workers compensation costs after having an incentives program in place for a year. "I have hundreds of those stories," Hanson said. "Companies have saved millions doing this."
Once company executives sign the check for an incentives program, their work isn't done: Flanders said higher-ups need to be involved in the initial design and "visible" throughout the program, whether that means handing out rewards or addressing employees during the kick-off festivities.
The other reason management commitment is so important is to ensure that company brass won't pull the plug on an incentives program prematurely. Otherwise, management could lose employees' trust and respect, Hanson said.
"Once you set your program in place, it should be a continuous part of what you're doing," Hanson said. "It doesn't have to cost a lot of money. You don't have to keep raising the bar or throwing more marbles into the ring. You just have to be consistent.
"You can't let other things interfere with what you're doing. A lot of companies have cookouts. They may have it three times, but the fourth time it's canceled because something important comes up. But you can't do that. You're protecting the most important person in the world and that's the person who's going to work for you."