Skip Navigation Links.
Collapse IRMI OnlineIRMI Online
Expand How To Use IRMI OnlineHow To Use IRMI Online
My Paid Publications
Expand What's NewWhat's New
Expand DashboardsDashboards
Expand Commercial Liability InformationCommercial Liability Information
Expand Commercial Property InformationCommercial Property Information
Expand Commercial Auto InformationCommercial Auto Information
Expand D&O, PL, E&O, EPLI InformationD&O, PL, E&O, EPLI Information
Expand Workers Compensation InformationWorkers Compensation Information
Classifications and Cross-References
Expand Risk Mgt. and Multiline InformationRisk Mgt. and Multiline Information
Expand Risk Finance InformationRisk Finance Information
Collapse Construction InformationConstruction Information
Expand Contractor's Guide to OCIPsContractor's Guide to OCIPs
Expand Construction Risk Conference HandoutsConstruction Risk Conference Handouts
Collapse Free Construction CommentaryFree Construction Commentary
Expand Builders Risk InsuranceBuilders Risk Insurance
Expand Construction Defect CoverageConstruction Defect Coverage
Expand Construction Liability InsuranceConstruction Liability Insurance
Expand Construction Quality InsuranceConstruction Quality Insurance
Collapse Construction SafetyConstruction Safety
Construction Safety: The Effect of Traditions (March 2014)
Employee Engagement and Organizational Performance (January 2014)
Construction Killing Conditions (December 2013)
Inspections—A Few of My Favorite Things (September 2013)
Construction and Safety Performance (July 2013)
The Power of Relationships (June 2013)
Safety Myths and Wrongheaded Beliefs (May 2013)
Safety Is a People Problem (March 2013)
Little Things Allow Big Things (March 2013)
Ineffective Construction Management Practices (December 2012)
"Safety Symmetry" Provides Clues to Safe Sites (December 2012)
Correction Conversations Can Improve Construction Safety (September 2012)
Innovations in Construction Safety—Error Proofing (August 2012)
Dangerous Days for Construction Safety (June 2012)
Construction Conflict Resolution (April 2012)
Playing "What If" To Search Out Hazards (March 2012)
The Ten Elements Framework (January 2012)
Construction Safety Middle Ground (December 2011)
Ten Elements of Safety Excellence (December 2011)
Underground Construction Risks (September 2011)
Managing System-Driven Incidents (August 2011)
The Experts Often Wear Tool Belts (June 2011)
The Importance of Influence (May 2011)
Construction Safety Contributors—Small Stuff Certainly Matters (April 2011)
Construction Crises: Danger or Opportunity (March 2011)
Without Gravity, You Would Not Fall (January 2011)
Performance Management and the Human Error Factor: A New Perspective (December 2010)
Ten Questions Every Construction Safety Professional Should Ask (September 2010)
Just Fix It versus Let's Fix It (June 2010)
Selling Safety—You Have To Make the Case (April 2010)
Construction Project Risk Management (May 2010)
Selling Safety, Softly (January 2010)
Supervisor's Role in Employee Performance (November 2009)
Construction Injury Prevention through Safety (July 2009)
Construction Injury Prevention through Design (June 2009)
Construction Risk Management in a Hard Economy: The Treasures (June 2009)
Construction Risk Management in a Hard Economy: The Risks (April 2009)
Construction Blasting Risk Management (December 2008)
Eliminating Equipment Failures by Eliminating Failing Equipment (December 2008)
Construction Blasting Fundamentals (November 2008)
Construction Project Audits—Examples of Poor Practices (October 2008)
Enterprise Safety Management: Implementing a Framework (August 2008)
Construction Project Audits (July 2008)
Construction Risk Management: Recognizing Incompetent Workers (March 2008)
Construction Risk Management: Avoiding the Incompetent Worker (March 2008)
Truly Improve Construction Risk Management (February 2008)
Enterprise Safety Management: Creating a Framework (January 2008)
Enterprise Safety Management: Creating an Injury-Free Workplace (September 2007)
The Construction Foreman—Working without a Net (May 2007)
The Injury-Free Construction Site and the Foreman: An Underutilized Resource in the Safety Process (March 2007)
Managing Construction Risk through Pre-Operational Planning (September 2006)
Measuring Success—Integrated Risk Management (June 2006)
Safety Excellence by Design—Integrated Risk Management (May 2006)
Owner Safety Leadership (February 2004)
Eyewitnesses and Other Sources of Accident Data (August 2003)
On The Trail of Truth: Conducting an Accident Investigation (April 2003)
The Incident Investigation: Learning through Hindsight (February 2003)
The Value of Safety (November 2002)
The Cost of Safety (October 2002)
Debunking the 13 Myths of Construction Safety (May 2002)
Site Assessments: An Informal Process of Questioning (Part 1) (August 2001)
Site Assessments: Initial Assessment (Part 2) (December 2001)
Site Assessments: Conducting a Site Assessment (Part 3) (January 2002)
Site Assessments: Some Final Thoughts in Completing Site Assessments (Part 4) (February 2002)
Safety Incentive Programs: A Critical Assessment (April 2001)
Ergonomics (February 2001)
Substance Abuse (October 2000)
Contractor Qualification (August 2000)
Partnering: A Plus for Safety (March 2000)
Expand Design LiabilityDesign Liability
Expand Equipment Theft PreventionEquipment Theft Prevention
Expand SuretySurety
Expand Wrap-Up ProgramsWrap-Up Programs
Expand Personal Lines InformationPersonal Lines Information
Expand Claims, Caselaw, LegalClaims, Caselaw, Legal
Expand Insurance IndustryInsurance Industry
Expand Glossary of Insurance & Risk Management TermsGlossary of Insurance & Risk Management Terms
Expand SearchSearch
Terms of Use
Privacy Statement
System Requirements
Support

Safety Incentive Programs: A Critical Assessment

April 2001

A majority of U.S. businesses use some sort of safety incentive. Nevertheless, the debate continues as to their effectiveness. Learn how such programs are designed, their pros and cons, caveats to implementation, and possible alternatives.

by Ron Prichard, P.E. Ph.D.
Aon Worldwide Resources

The effect of rewards on motivation and performance is a well-studied subject in both management and safety literature. A majority of U.S. businesses use some sort of safety incentive, and most safety professionals believe that they are an important element in any safety and health program. Still, there is a vocal minority viewpoint contending that the ideologies surrounding the concept of safety incentives are based on flawed premises.

Three parallel debates have been underway for the past 4 years over the use of safety incentives:

  • Within the management community over the use of incentive pay and other means to improve work quality and productivity;
  • Within the safety profession over the viability of incentives to have a substantial, long-term impact of reducing accidents in the workplace; and
  • Within the construction industry over the use of contract incentives to improve construction performance and safety incentives to improve safety performance.

Proponents feel incentives are an essential tool for any organization, regardless of size or industry, in promoting safe work practices. Incentives build and maintain employee interest in working safely and act as a motivator for employees to work safer. However, opponents feel safety incentives are to be avoided like the plague. This minority viewpoint holds that incentives reward the wrong behavior, and over time become toxic to the effective functioning of a safety and health program.

This article discusses how safety incentive programs are designed, the pros and cons of such programs, caveats regarding implementation, and recommendations for a path forward.

Crafting an Effective Safety Incentive Program

There are five critical steps for crafting an effective safety incentive program that must be addressed before implementing an incentive program in the field.

  1. Have a properly functioning, and complete, safety program. A safety incentive is just one part of an effective safety program. It is no panacea for an inadequate safety management process nor can it replace any other part of a safety program. Employees cannot improve performance if they are not properly trained to perform their tasks or have no idea what is expected of them. If employees have not been taught how to recognize and mitigate hazards and exposures, incentives simply become bribes to ignore or underreport injuries.
  2. Examine safety performance within the organization. If accidents are higher than average, the safety program is either not working properly or is failing in implementation. Corrections must be made to reduce injuries prior to considering an incentive program. If this is not done, injuries will continue at the same rate as before, since the root causes have not been addressed. Plus, by adding safety incentives to a poorly functioning safety program, accidents may be underreported in pursuit of the rewards.
  3. Gain management support and proactive participation. If management does not believe in the safety incentive program and stand behind it, neither will employees. Workers must believe the program is fair, it will be properly administered, and that they have a shot at actually winning achieving the reward. If not, the workers will not support the program. They must have trust, and this is best accomplished through an active and strong management presence and role.
  4. Structure the incentive program. Set goals, select rewards, and develop the administrative process. The goals are important because if set too high (such as an all-or-nothing approach), early failure will discourage participation; if too low, there is no effort required (thus, no change in actions) to gain the rewards. Goals must be clearly defined and easily measured.

    Rewards should be tailored to fit the workforce. If not, it's unlikely the incentive program would motivate anyone. The rewards must have value to the workers, not management. The power of money is strong, however, many other things, such as gift certificates or time off, can be just as powerful (if not more so, under the right circumstances).

    There are two additional aspects to consider when structuring an incentive program. First, workers must be required to take an active role in some elements of the program. A passive approach requires less worker involvement, resulting in a lack of required action and, hence, no change in behavior. Second, it is essential to determine how the program will be run and maintained. This final step involves determining how records will be maintained, the methods of performance measurement, reporting and monitoring, and the process by which rewards are provided. These elements must fit together and be viewed as fair by he workers or resentment may result.

    Failure to establish proper guidelines and administer programs fairly is usually cited as the primary reason for incentive program failure. The larger (number of participants) and longer (in duration) the program, the more critical this step is. The importance of administration cannot be overemphasized. Workers will judge the program on how well and fairly it is administered. This is no simple task. Administering a safety incentive program is a complicated process that occurs just at the point enthusiasm is dimming and time is running out, often resulting in the administration process being thrown together in a haphazard manner.

  5. Ensure effective communication about the program as it is implemented. Workers need to understand why the program is being implemented, the rules, how it works, and how progress is measured. They need to be continually reminded about the incentive program, the reasons for it, and how they are doing. They need to see management involvement and support, through active participation and coaching.

Pros

Advocates of safety incentives believe use of a "carrot" encourages and promotes appropriate safe behavior. It is a way for companies to show they care for their employees and will recognize those who work safely. Long-term behavior can be changed by creating heightened safety awareness and providing financial rewards for proper behavior. The result can be improved morale and reduced workers compensation costs.

Proponents agree that to be effective, safety incentive programs must be properly developed, implemented, and maintained. Any failure of an incentive program to create the desired change in behavior is usually attributable to mistakes made in the implementation process. The most common failures are a loss of management commitment (leading to a breakdown in enthusiasm and eroding funding) or the improper administration (usually related to an over-burdened administration system struggling to cope with immense paperwork requirements).

Finally, those advocating incentive programs stick with them in the belief that such programs do no harm (even if they do not help), and that discontinuing them would create even more difficulties; safety incentives "are too woven into our culture."

Cons

A primary concern with incentive programs is that they are a form of bribery. As manipulative attempts at control, they are demotivators, creating significant motivation to "cook the books" (the underreporting mentioned above) than they do for changing actual in-the-field behavior. This minority holds that incentives are relied on for two primary reasons: (1) safety professionals do not really know how to reduce accidents so they have to resort to bribery, or (2) management wants feel good, and nothing accomplishes that faster than giving things away ("playing Santa Claus").

There are three primary reasons that undermine any benefit envisioned by safety incentive plans.

  1. They do not obligate any change in existing processes or procedures. The premise of those supporting safety incentives is that accidents are solely the result of "unsafe acts," and that workers can be bribed to act differently through incentives, i.e., behavior is driven solely by consideration of consequences. This attitude does not take into consideration that accidents are generally the result of some combination of unsafe conditions, improper processes or procedures, and inappropriate actions. Attitudes, beliefs, and values can be the driving forces behind actions, not just consequences. Incentives only secure temporary compliance with directives, and only for as long as workers can see a direct connection between action and reward.
  2. Incentives ignore reasons. They deflect attention away from the real issues and can disguise genuine deficiencies and strategic flaws that exist within the organization or the safety management (and construction management) process.
  3. Incentives are premised on "wrong-headed" assumptions, related to the first problem—unsafe acts. The assumption is that accidents are intentional acts and that rewards will cause employees to stop behaving improperly.

The primary concern of those who dispute the efficacy of safety incentives is the long-term toxic effect they can have on behavior within an organization. Employees, subcontractors, and contractors are quick to learn the rules and how to manipulate the system, to minimize the changes needed while maximizing their gains, at the expense of the sponsor.

Actual practices have shown that employees become disillusioned with incentive plans when they feel exploited because the expected rewards are not forthcoming. The criteria and performance evaluation must be seen as objective and within the performer's control. The recipient should consider the reward equal to the effort that produced it. Too insignificant, and the incentive will be insulting and ineffective; overdone, and the balance of fairness will be upset. Extensive human behavior research has shown that when people are led to think about what they will get for doing a task (the reward), they typically do it less well and/or lose interest in it.

Those against incentive programs believe that, at best, reward programs are difficult to establish and administer, and are fraught with pitfalls that can undermine the desired outcome. No matter how good the intentions of the program, an improperly administered program can have significant adverse impacts on performance. At worst, these type of programs reward the wrong kinds of behavior and distract management attention from other, high-value actions.

Recommendation

Many people firmly believe that improved safety performance is the product of an effect safety incentive program. Yet, when you examine individual programs in-depth (the author of this study studied more than 2 dozen contractor safety incentive programs), you find that incentives alone are not the reason for safety success. An effective safety management process is crucial to improved safety performance.

There simply is no direct correlation between efforts and returns. This is due to the fact that most programs have not been formally evaluated, examined. or measured. Effectiveness, in the few situations where it has been gauged, is generally based on anecdotal evidence.

Incentives are part of the traditional command-and-control paradigm. The primary basis for utilizing incentives is that everyone else is using them and they report improved performance. Thus, popularity, rather than documented evidence of impact, is the logic supporting decisions. Even research of best practices within the Construction Industry (conducted by the Construction Industry Institute, as part of its Zero Accident study) indicate that the inclusion of incentive programs among the top ten practices was based on popularity of use, not on demonstrated effectiveness. This creates a murky and confusing research base on which to base a decision affecting the economics of a substantial construction program.

The impact of rewards is very ambiguous. At best, incentives can be said to make people "feel" good; in the most likely case, they do no harm; and at worst, they are very damaging to long-term performance. Given the level of effort required to establish and properly execute a safety incentive program, and this high level of uncertainty regarding the return on investment (ROI), it makes more economic sense to dedicate resources toward those activities which have clear and unambiguous positive effects on safety performance. A safety incentive program should only be implemented when there are no remaining high-impact actions left to implement.

The following are some other safety-oriented activities that should be given priority:

  • Develop and implement a prequalification process to screen out "bad actors" to keep them from participating in the program.
  • Utilize a weighted bid evaluation process to give credit to top safety performers.
  • Implement a drug/substance abuse screening program, which includes random, post-accident, and for-cause testing.
  • Implement a complete and comprehensive safety management process, including a layer of "program management" for providing watchful oversight of the entire renovation program.

Conclusion

On a short-term or individual-case basis, safety incentives may appear to influence outcomes, the intended consequences. However, over the long term, rewards have seldom demonstrated any significant influence in generating lasting behavioral changes. In addition, the unintended consequences and side effects provide incentive for the wrong behaviors and produce the wrong results.

The usual counter to this reality is that the program was improperly administered, and that another layer of complexity—refining the program more precisely—would address the negative results. Even those in support of these incentive programs recognize that if rewards do not possess reinforcing characteristics (an ability to influence future behaviors or actions), they cannot be effective. Over time, this method creates a large, complicated, and cumbersome process, where the administrative burden grows exponentially. The reality is that training programs have demonstrated a substantial, unequivocal impact on improving safety in the field, while incentive programs have not.


Opinions expressed in Expert Commentary articles are those of the author and are not necessarily held by the author's employer or IRMI. Expert Commentary articles and other IRMI Online content do not purport to provide legal, accounting, or other professional advice or opinion. If such advice is needed, consult with your attorney, accountant, or other qualified adviser.

Advertisements
    
 
© 2000-2014 International Risk Management Institute, Inc. (IRMI). All rights reserved.