Today we are going to discuss Incentive programs and the effects that they can have on employee behavior and the overall safety culture. I think that there is a pretty common thought out there that if we pay people more or if we motivate them through some form of monetary incentive, that they will work harder, faster or produce higher quality products. This thought process has certainly been employed on safety initiatives as well, often times without truly exploring the impact that incentives could have beyond this mental model or assumption.
You shouldn't have to pay people to be safe.
I have heard this comment many times over the course of my career. "You shouldn't have to pay people to be safe." I will explain my experience with some incentive programs in a few moments, but for the most part, I have agreed with this statement. Not so much from the perspective that we shouldn’t offer incentives, but from the perspective that the working safely was a criteria of the work agreement that I had with my employer. I was paid a certain wage to perform a certain task and that was conditional upon several things, one of which being that I was responsible for my well-being as well as looking out for those around me. With that being said, I certainly saw the results of incentivized activities throughout our workplace. I wanted to see some of those results in our safety program and therefore implemented or oversaw several different incentive programs over the years.
In order to give you an idea of where I am coming from, I thought a brief background would be appropriate. My educational pursuit was Environmental Management, and my career began with a small environmental consulting and contracting firm. I was in this position for about five years and we never had much of a safety program at all, let alone an incentive program. My experience with incentives began in my next position where I was offering safety training service at wind farm installation sites across the U.S. In this position, I would interact with the crews out in the field erecting the turbines and getting them into an operational state. Often times, I would see meals or small gifts utilized to celebrate a variety of accomplishments, one of which being going injury free on the project. This was either based on a number of days without injury, or entire project that went successfully without injury or, at a minimum, performance below a cut off injury rate. For example, a rate of better than 1.0 injury rate. Everyone seemed genuinely appreciative of these events and felt good about receiving the incentive, even if we didn’t spend much time talking about why we were getting the free meal at times. I also learned a lesson about handing out gifts during this position. For one project where the crew had finished the project without a reported medical treatment injury, inscribed pocket knives where presented to the workforce. Now this workforce, largely travelled in tact from one project to the next, so what do you think happened at the next project? We had a very large increase in the number of hand lacerations. Instead of using the appropriate tool in many cases, employees were quick to pull that nice new knife out of their pocket and try and use it for the job at hand, often with poor results.
In 2008, I moved into manufacturing and continued to see many of the same types of incentive programs. Many revolved around lengths of time without an injury and most involved some sort of monetary award. In one case, employees received a financial bonus quarterly. If they went one quarter injury free, the bonus was $50, the next quarter the incentive jumped to $100, and so on up to $200. So in theory a department that went a year injury free would receive $500 the first year and $800 for the second year if it continued. If an injury happened, the bonus was eliminated for that quarter and the next quarter started back up at the $50 bonus, but we will come back to that specific example in a few minutes.
Before we go too much further, I thought we should cover OSHA’s view on incentive programs. A memorandum to VPP officials was released in 2012 that started a great deal of discussion on this matter and I think the statement that best describes the position of OSHA is that in the middle of the slide…”Incentive programs that discourage employees from reporting their injuries are problematic…” Looking at this from another angle that means dis-incentive programs that discourage reporting is also problematic. Things like repeat offender programs that result in termination, or discipline that is perceived to be handed out only to those that report injuries, and so on. The information there at the top of the slide is a reference for a proposed rule that was put together by OSHA. This rule is currently being reviewed by the Office of Management and Budget, which is the last step before being published as a final rule. Under this new rule, it is anticipated that any program that encourages under reporting, will be cited. This should not be much of a surprise to many.
Bloody Pocket Syndrome: An employee can cut their finger off, but instead of reporting the injury and eliminating a financial incentive for themselves, they hide their hand in their pocket and address it themselves.
In 2010, a national emphasis program was initiated to look into under reporting of injuries and illnesses and these programs were a focal point of the inspections. Then in 2012, a memorandum was sent out to the Whistleblower program managers and regional administrators, outlining OSHAs view of incentive programs and specifically mentioned incentive programs, like the quarterly bonus program I mentioned a few minutes ago. The reason being, that those types of program can intentionally or unintentionally incentivize employees to not report injuries. This is sometimes referred to as the bloody pocket syndrome, in that, an employee could cut their finger, but instead of reporting the injury and eliminating a financial incentive for themselves and probably their coworkers, they hide their hand in their pocket and address it themselves, never informing the employer. Obviously, this is a bigger issue with minor first aids and musculoskeletal injuries that are not as easily identifiable or obvious. However, we all know that focusing on near misses, safety opportunities and first aids are great ways to determine areas of risk and eliminate the more severe injury potentials, so this is a really big problem, regardless of the potential regulatory outcomes. Not only do we have compliance problems and an unhealthy culture that is not reporting these injuries, but we are missing out on a wealth of information that could help us eliminate future similar or more severe injuries.
Some of you might be thinking that this wouldn’t happen in your workplace but I challenge you to really dig into that and find out for yourself what is going on within your culture. You can get some of this information through a comprehensive gap analysis complete with interviews and anonymous surveys, but you can also simply really dig into your data. If you do not see statistical correlations with your injury data; that may be enough to tell you that you are missing key bits of information. Early on in my manufacturing experience I was exposed to this first hand. We had an injury take place and we were recording a re-enactment and doing our investigation. While we were reviewing the recorded statement, the employee said something quickly and almost as if it meant nothing at all. He had gotten his hand caught in a machine, resulting in a laceration, but his statement was that his first reaction was to pull his hand out and look at it. He stated if it was small injury he thought he might not have to report it. That statement spoke volumes about many issues, but it opened a lot of questions and few answers initially. Why would he not want to report this injury? This was at the end of his shift so maybe he didn’t want to go through the incident report, maybe he didn’t want to sit at the ER, or maybe it was because the entire department was a few days away from receiving the $200 bonus. It was likely a combination of all of these things but it was the extent to which attempts were made to hide this injury that opened my eyes to the destructive nature of this type of incentive. Instead of implementing our first aid procedures and trying to get this employee immediate help, the crew quickly came together and contemplated chipping in money to pay for any medical treatment. If 15 or 20 members of the department all chipped in $50, the employee would have enough money to go and get treatment and everyone still could walk away $150 ahead.
When you look at your incentive programs you really have to explore what is your intention and what are your actual outcomes, and this needs to be done through a critical eye. It is really easy to miss some of the destructive actions and behaviors that can come out a poorly designed or implemented program.
Let’s start with an easy example. We offer up a $100 month bonus for departments that go injury free. Sounds an awful lot like what we just discussed, right? Obviously the initial intention was not to reduce injuries by limiting reporting but that is certainly an outcome that can come about. If you have a program like this in place, I cannot guarantee that you have under reporting, but my opinion would be that it is likely occurring or will occur at some point in the future. One of the methods in which you could investigate what is happening would be to dig into your other indicators. Are you having a high rate of first aids, but few minor medical treatment cases? Are you only having severe injuries? That could be because the minor incidents are hidden from view and you only see the significant injuries that cannot be hidden. In the event of the severe injuries or fatalities we often only have a few precursor events that take place that would enable us to learn what was likely to happen and correct it before something catastrophic takes place so even if you have an active near miss program in place, your incentive program could be undermining your ability to be successful and protect the workforce.
What about the rate at which safety opportunities or near misses or behavioral observations are reported? The Heinrich triangle is not set in stone, but if you continue to get high reporting in these areas and no injuries, despite little correction or process change, your reporting probably needs some serious consideration.
How about this example? You institute a $25 per month incentive for employees that complete 2 safety opportunity reports and 2 behavioral observations per month. Even if you meet the goal of increasing reporting, are you satisfying your intention? I have never instituted a program simply to collect a bunch of information. The information had to be quality information that allowed me to understand a situation and act on that data. So is your incentive driving a culture of simply “checking the box” or truly finding these opportunities to improve and creating a culture of caring and sharing through the observation and coaching process? There is another potential downfall with this type of incentive as well. What if in addition to that $25 a month incentive you offered $500 per year for perfect attendance, or high production related bonuses? What message does that send about not only your safety incentive, but the safety culture as a whole?
In a study performed by Gneezy and Rustichini in 2000, they offered a small incentive to high school students that went door to door collecting donations. After that incentive was offered, the amount collected in donations actually decreased over previous years. The amount being offered created a perception of what their effort was actually worth. Before a price was put on that level of effort, the students were intrinsically motivated to get out and collect donations and this was viewed favorably by the community and school. Once the extrinsic motivator was introduced, it indicated to the students that their efforts really weren’t that important because the school and community were only willing to invest a small amount in their level of effort. Then, on top of the issues that we just discussed, now the willingness of the students to increase their level of efforts was correlated with earning higher payments. In other words, the school would have to pay more than what they offered simply to get back to the level of effort they were getting before any incentive came into play.
In kind of the opposite manner, a high incentive could also discourage people. Take this next example where community members were offered a large monetary incentive to allow a new nuclear waste facility into their neighborhood. The high incentive sent a signal to the community that there was a significant risk associated with this and therefore there was a reduction in willingness to accept the plant, as compared to when there was no incentive. I am sure many of you can relate to a situation like this where there is a higher rate of pay or incentive for hazardous jobs, but I also look at this example from another perspective. The high incentive could indicate a great deal of effort to achieve the goal. For example, a business could raffle off a brand new pickup truck if a site goes injury free. This could drive all sorts of problems from under reporting to turning people off to the safety program. First off that 1 truck would be hard to win, simply from a percentages perspective so why bother trying, but that expensive shiny truck could also indicate that it is really, really hard to achieve zero injuries and people actually get discouraged right from the onset.
So, I guess we are back to the beginning of this webinar. Perhaps the question is: “Should we incentivize people for safety?” To answer that question, I think we need to look at what motivates us as people. One concept that stuck with me from a conversation on incentives is that we are motivated in three basic ways. The first is that of the extrinsic motivator, this could be financial, like we have already discussed or this could come through a form of external recognition. The second would be the intrinsic reward…What am I getting out of this personally? Do I enjoy doing this activity? This could be accomplished through a sense of meaning or progress or personal development. The last motivator is that we care about the way we are viewed by others. If we value those around us or the culture or community that we are a part of, we care how we are viewed by those, therefore we will be motivated to do the things that are viewed favorably by the culture or community.
When I look at the extrinsic motivators, I have changed my view slightly. I still believe that additional monetary incentives do not need to be part of a successful safety system, but recognition and celebration most definitely do. I do not simply mean buying everyone lunch and saying a collective “good job”. This chart illustrates the way we view recognition programs and the most effective and forward thinking are those that impact the individual, focusing on the proactive initiatives and efforts. Celebrating as a team or department or plant can be effective as well, but in my experience, nothing impacted my performance more than an authentic and meaningful form of individual recognition. Whether that be my peers recognizing my contributions through a MVP EHS professional award, or a simple thank you note for something I did. These all impacted me and will stick with me.
I think a healthy recognition program focuses on the successes of all of those groups. We should come together to celebrate our success and our proactive efforts. I never really realized the power of something as simple as a thank you note, but a couple of years ago, I thought I would ask our division president to send handwritten thank you notes to some of our high performing employees. He simply wrote each individual a short, handwritten, note thanking them for their individual contributions to our safety teams and system. That was it. Total time involved maybe 2 hours, total cost, maybe $50. The impact, however, was profound. Within a couple of days I had one of our employees approach me asking me if I knew he received a note. When I explained that I did, he broke down and told me how much it had meant. In his over 30 years of service, this was the first real thank you he had received. This simple act meant more than any gift card, or t-shirt or meal ever could.
I do think it is necessary to point out at this time, that I feel that all of these extrinsic motivators need to be linked to proactive efforts. We should celebrate safety improvements, or the fact that all of our employees are involved in SafetyActionTeams, or that we observed a high quality safety coaching moment, or that we are performing more high quality training than ever before. If this incentive is tied to injuries, or the lack there of, that signals to the workforce that our intent is to reduce injuries, not necessarily create a safer work environment with a strong safety culture.
The intrinsic motivators are a little more difficult for us to influence, but I do believe that it can be done. Within EnPro we utilize, what we call, Safety MyVoice. We can also tap into the already present intrinsic motivators that people have. The people that come to your business every day are not limited in their skill set or passion to what they do at your facility. Each of them has a potential within them that we rarely tap into at work. Creating an environment to identify these passions and finding opportunities to release that potential can yield extraordinary results. For example, what if you had a front line employee that really wanted to become a teacher, but circumstances brought them into a front line manufacturing position? Why not tap into that passion and potential by creating an opportunity to develop themselves towards that goal? You can help that person create lesson plans, and a syllabus and a training program and then help them deliver that content.
This is a practice of really trying to determine how we truly feel about our safety and those people around us and create a link to that true value of safety within each individual. I think that as a basic survival need, we are all somewhat aware of why we need to be safe, but this practice is about going deeper and truly trying to determine how and why we feel the way we do. The graphic in the lower right corner depicts the approach that we take when looking at our overall system and culture. I discussed this approach in a previous webinar, discussing behavioral based safety, which you can find on our website, but part of what I am trying to communicate is that we often take time to work on the things that I do outwardly that effect the culture or community (upper right), we focus on the things that the community or culture shows outwardly, like rules and procedures, and that is the lower right corner. We even take time to focus on the internal aspects of our community or culture, like creating values or other cultural programs. In my experience, organizations spend very little, if any, time in focusing on the internal thoughts and feelings of the individual. If we don’t take time to develop the internal view of safety, how or why do we expect it to be reflected purely or authentically in the things that we do or say.
Safety MyVoice is intended to facilitate that deep internal look and open communication, which also helps establish the base for a strong intrinsic motivator.
As for developing the image motivators, first we have to create a culture that values the activities we are trying to incentivize. I am not going to go through this plan in detail, but within EnPro we recognized this need and have put cultural development programs in place that help us create the image motivator.
In the behavioral based safety webinar, I mentioned earlier, I also discussed Edgar Schein's view on culture and that it is made up of three components. The artifacts, or the identifiable aspects of the culture, the espoused values and the shared basic assumptions of the culture. The espoused values should set the foundation for the shared basic assumptions of the culture, that is, the assumptions that are so ingrained and taken for granted within the organization that any deviation from those assumptions is simply not permitted. Again, if you have a high performing safety culture, people will act in a certain way, simply because they want to belong to that culture. If Safety and action around creating a safe work environment is highly valued by all, then there will be an unspoken motivator for all to participate in the creation of that workplace.
One last thought on creating the cultural incentive is your current organizational model and how it supports the sustainment of the espoused values and basic assumptions.
We believe strongly in utilizing Safety Action Teams to help create that culture and drive the value through the entire organization. I also recently gave a webinar on Safety Action Teams and that can be found on our website as well, if you are interested in learning more about that.
If you are interested in experiencing our culture, I encourage you to take a look at our upcoming Safety Summit in Denver, CO. At the Summit you can hear how we became one of Americas safest companies from our CEO, Safety Leaders, Operational leaders and front line colleagues. The second day of the summit includes a tour of one of our operations and you get to hear directly from our front line what makes the culture and systems work. We also invite some employees back to the conference room for an open Q&A with attendees.
If you are interested in behavior based safety training, please check out our SafetyFirst program at one of many US locations. We take general behavioral awareness and couple that with facility or industry specific data to create specific behavioral triggers for your workforce.
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