Train the Trainer 101: Safety Incentive Programs

Safety incentive programs are popular and get a lot of attention. This edition of “Train the Trainer 101” is designed to spark your imagination by reviewing some of the issues and answers that can help an administrator decide how best to award or recognize safety performance.

As a contractor, I complete contractor qualifying documents that frequently ask, “Do you have a safety incentive program?” There is a box for “Yes” and a box for “No.” There is no follow-up question regarding value, who’s covered, metrics or performance. On the occasions that I have asked why the question is part of a qualifying document, the familiar response is that safety incentive programs demonstrate upstream management commitment to safety. Well, behaviorists and OSHA do not necessarily agree. There are a couple ways to look at incentive programs. Many who examine them are skeptical of their value. In some cases, the programs are actually illegal.

Regulatory Prohibition
At face value, safety incentive programs just seem like a good idea. You are giving employees a little extra for being safe. It’s actually awarding people for following the rules. The incentive program skeptic might ask, “Isn’t that what we pay them for?”

Most safety incentive programs offer cash awards or other prizes for not getting hurt or not having an incident. The skeptic sees this program as offering cash awards or prizes for employees not having incidents or injuries that they can’t hide. Herein lies the issue: Does a reward provide incentive toward better performance or incentive to hide poor performance? The next question is, does a reward for performance break the law?

According to OSHA, if an employee reports an injury, it is considered retaliation if that employee is not included in an annual safety award shared by all employees because of the injury. The employer has discriminated against the employee for reporting the injury, which is a violation of OSHA 29 CFR 1904.36. In a March 2012 OSHA memorandum issued by Richard E. Fairfax to OSHA regional administrators, Fairfax states, “Reporting a work-related injury or illness is a core employee right, and retaliating against a worker for reporting an injury or illness is illegal discrimination …”

An employer is permitted to discipline an injured employee for violation of a safety rule without being accused of retaliation, but in most cases, the rules and disciplinary action for violation of the rules are clearly spelled out in the employer’s written procedures.

Last, but certainly not least, taxation is required of bonus programs with certain exceptions. Whether gifts are items of value or cash, in most cases they are all considered additional income. Items of value are taxed at the price the employer paid for them and the tax rate is usually 25 percent. In most cases, cash bonuses not included in a regular payroll check are also taxed at 25 percent. The tax law for incentives and bonuses is detailed, and you should consult your tax or legal department to make sure your program doesn’t trip over itself years down the road when you get audited.

The Human Element
Depending on the metrics used, the practice of incentives or awards for safety performance has several issues. Even if they don’t violate OSHA regulations and do comply with tax laws, programs may inadvertently reinforce negative or undesirable behavior. There are several reading references listed at www.osha.gov/SLTC/etools/safetyhealth/mod4_factsheets_refs.html that provide nonregulatory guidance for administrators and address incentives and behavioral responses. One of those references is to E.S. Geller’s “The Truth About Safety Incentives,” a recommended read for any administrator conducting incentive programs.

In the March 2012 OSHA memorandum previously mentioned, Fairfax also discusses the disincentive to report injuries that is created by safety incentive programs. Essentially, OSHA’s concern is how an incentive can devolve into a disincentive. Incentive programs initially are expected to drive desired behavior by awarding compliance and safe work performance. However, it is human nature to avoid loss. The undesirable behavior occurs when the threat of the loss of an award drives a cover-up or false reporting.

The difference between utility and contractor incentives – particularly in supervisor-manager award programs – is stark. In utilities, the award bank is usually a budgeted item. The money spent is not tied to any particular project or net performance. In contracting, the reward or bonus is usually either specifically tied to net performance or coincidentally tied to net performance. Some employers audit each job a manager is tied to, and the manager’s annual performance bonus is computed accordingly. Some programs fine a project a flat fee against incidents, reducing the net performance and thus the bonus. In others, accounting directly debits direct costs to a job account, indirectly affecting a performance bonus. Any of these methods can have the effect of preventing reporting or concealing incidents, and the net effect risks corruption of the safety culture.

Minimizing Abuse
There are several methods that are considered the most productive when developing incentive programs. The most effective approach may be to exclude managers and supervisors from the incentive matrix (sorry, managers!). This method works in utilities and contractor companies by eliminating any stakeholder issues among supervisors. It doesn’t eliminate the potential for the workforce to lean toward cover-up, but supervisors and managers are more intimately aware of workplace conditions and incidents are less likely to be concealable. Where managers and supervisors are not in the safety award program, performance bonuses are often tied to the enterprise performance as a whole. Everyone is equally rewarded for the performance of the group and not tied to any specific safety performance criteria.

Entitlement is another issue. I often hear from safety managers who have been victimized by long-term programs that the programs weren’t well thought out and now employees simply expect them to take place every year. Trying to change or eliminate ineffective incentive programs is very difficult when employees become accustomed to an extra week of pay every year. One method of limiting the entitlement trap is to establish new programs with limited terms. This allows for opportunities to make changes or adapt programs to make them more effective once the program term has ended.

Nothing is Perfect
The best programs promote proactive performance and are tied to certain upstream performance goals. The upstream goal model is usually linked to certain expectations like safety meeting topics, a safety rule of the week or particular pre-task elements. A familiar model uses site visits to query crew members regarding the rule of the week, safety meeting topics or pre-task elements taken from the tailboard documentation. Correct responses result in names being added to quarterly or annual drawings for valuable prizes. The more proactive performance goals that are met, the more often employees’ names are entered into the pot. With this method, all performance awards are tied to proactive upstream elements – not downstream performance.

These upstream goal models often include a quarterly or year-end event that is attended by everyone and features door prizes and a meal. I have attended annual safety recognition events held by cooperatives where family and friends attend as well. Contractors may have regional or project-centered events. During these safety events, everyone gets a new jacket or some other gift of reasonable value. Remember that quality counts. At the safety events, names are drawn from a pot populated by names entered through the upstream element of the program. Using this model, everyone benefits and has a chance for the grand prize.

These programs don’t just happen. They require planning, communication and training, especially of supervisors and managers. Every employee must have equal opportunities to be in the drawings. There is always concern that the employee who turned over a crane will win the grand prize 60-inch plasma TV, but statistics and behavior are on your side. If proactive upstream focus is employed, such events can be prevented. And the person who turns over the crane is not likely to be the head of the class on the proactive elements. Statistics are on your side, but obviously the luck of the draw is like any other lottery.

Use Baseline Evaluation
Safety management requires thoughtful effort and broad-view activities to achieve success. Every program benefits when a measured, integrated approach is employed, and incentive programs can be an effective element of that integrated approach. It is important to establish a pre-program baseline so that you can see if the program has produced the desired results. Those baselines can be incident statistics, but workforce attitudes and acceptance are important, too. Numbers can be backed up or explained when the attitudes of participants are analyzed through surveys or gap analysis. Incentive programs rarely stand on their own. They work best when they are part of an overall program. When baselines are used, precious resources can be directed toward the activities that work.

Culture is the Best Incentive
Everything mentioned in the preceding discussion does not mean that incentive programs are bad. As we have seen, they obviously have issues, can be abused and, in some cases, may be illegal. That doesn’t mean they shouldn’t be considered. Ideally, every workplace would have a culture of safety that drives pride in safe performance and lives on proactive upstream incident prevention. A fairly distributed company-wide recognition of effort and achievement is a good means of supporting and engendering that culture.

About the Author: After 25 years as a transmission-distribution lineman and foreman, Jim Vaughn has devoted the last 16 years to safety and training. A noted author, trainer and lecturer, he is director of safety for Atkinson Power. He can be reached at jim.vaughn@atkn.com.

Editor’s Note: “Train the Trainer 101” is a regular feature designed to assist trainers by making complex technical issues deliverable in a nontechnical format. If you have comments about this article or a topic idea for a future issue, please contact Kate Wade at kate@incident-prevention.com.

Safety Management


Jim Vaughn, CUSP

After 25 years as a transmission-distribution lineman and foreman, Jim Vaughn, CUSP, has devoted the last 20 years to safety and training. A noted author, trainer and lecturer, he is a senior consultant for the Institute for Safety in Powerline Construction. He can be reached at jim@ispconline.com.

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