The Incentive Starting Line: Where to Start When Designing Your New Safety Incentive Program
Wednesday, April 12, 2017
Incentives excel at motivating important behaviors. Incentives also motivate people to go above and beyond their job requirements.
By David Roark | April 01, 2017
Last year, 2016, was a big year for safety incentive programs. The Occupational Safety and Health Administration's newest anti-retaliatory rule, which was made in May 2016, forced many programs to change. A new administration in the White House has left the private and public sectors wondering what might happen next.
The low price of a barrel of oil leaves many companies reassessing budgets and business models. At the same time, many companies recognize the power of incentive and recognition programs to improve safety performance, even when budgets are being cut and the future seems uncertain. In fact, the incentive industry has grown in the face of these crises as many safety professionals search for a way to improve their safety performance with a solid return on investment (ROI).
Starting a safety incentive program can be a very effective move for a company, however, several important considerations should be assessed before designing and implementing a new program. OSHA guidelines and ROI are two high-level issues that should be managed carefully. With that in mind, where should you start when designing a program from the ground up? It helps to look at common traps that people often fall into so you can avoid them.
First, people often get confused about the difference between a "safety program" and a "safety incentive program." A safety program is a group of standard operating procedures, guidelines, and policies that define and manage safety within an organization. A safety incentive program is designed to encourage employees to go above and beyond within the company's safety program.
When developing any incentive program, it is imperative that you first establish a few straightforward goals. When a client asks me, "What should I incentivize?" the first thing I do is discuss their safety program and where they have the most issues. Do they do GPS monitoring for their truck drivers? Have they been struggling with slip/trip/falls?
Figure out how you can use your safety incentive program to improve the existing safety program and company safety culture. Often, a safety program is designed by a safety professional. It is important to consider finding a safety incentive program expert to help you design and manage your safety incentive program. These experts can occasionally be found internally, but consultants and solution providers are also available. The Incentive Marketing Association (IMA) directory1 is a valuable resource for finding solution providers and other incentive providers and experts.
Another major consideration is that many of the organizations you deal with on a regular basis will have an opinion on how your program should work. For instance: In May 2016, OSHA amended 29 CFR 1904.35, which explicitly requires that a company provide reasonable procedures for employees to report work-related accidents and prohibits any form of retaliation against employees for making a report. This means you can't say, "We will give you a point bonus if the company is accident free for a month." There are, however, other effective ways to structure a program that are not retaliatory. For instance, you can incentivize employees to achieve certifications and training that will result in a safer work environment, or you can create a program that incentivizes performance that does not tie back to reporting. Another example of an organization that might have an opinion about your safety incentive program is the labor union. Many unions tend to want to include anything that is given to an employee in their labor contracts. This can complicate the design process and can degrade program effectiveness.
(In March 2017, the U.S. House of Representatives voted to overturn the OSHA rule, so at this writing it may be repealed.)
Making the Distinction Between Compensation and an Incentive
One comment that I often hear from client companies is "Safety is their job… why should I give them something for doing it?" This question requires you to make a very important distinction between compensation and an incentive. Compensation is received by an employee for doing the job that he or she is required to do. For instance, if someone works for a company that requires hard hats on their production floor, that employee is compensated to work on the floor wearing his hard hat. If he fails to do that, he fails to do his job, and that is a human resource issue.
However, it is different if you incentivize personnel for making hazard identifications with a hazard mitigation program. That incentive can be used to drive employees toward finding hazards and fixing them. Incentives excel at motivating these important behaviors. Incentives also show appreciation and gratitude or motivate people to go above and beyond their job requirements. It is very important that you look at the type of task that is being incentivized to determine whether an incentive is even appropriate. In fact, if an incentive is given for simply meeting job requirements, it can often become viewed by the employee as compensation. This has two negative effects. First, it removes the appreciation and value inherent in the incentive. Second, if the employee, for some reason, does not receive that reward, he can often perceive it as losing compensation that he is owed, rather than a reward that he got for going above and beyond, thus having a net negative effect.
Cash vs. Rewards
Perhaps the most important consideration that you must make before starting a safety incentive program is "What will the reward be?" This is followed by "How will employees earn that reward?" The first of these two questions is actually the topic of some very recent research. In any meeting about an incentive program, somebody in the room will bring up the fact that they have "asked their people" and their people overwhelmingly agree they "just want cash." In fact, as it turns out, the issue is how you ask the question. If you ask a participant what she wants, she will usually say cash by default. The IMA's 2015 "Participant Study" conducted by the Incentive Research Foundation (IRF) showed that when presented with a choice of options including cash and equivalently valuable non-cash rewards (merchandise, gift cards, and travel items), more than two-thirds of the people asked chose the non-cash rewards.
Cash is very problematic when it comes to the impact on an employee and income tax considerations. Merchandise, gift cards, and travel are all very valuable tools and can be used in different ways and for different reasons, so it is imperative that you consider which non-cash gift is right for a program.
How the employees will earn the reward is often an equally daunting question involving many considerations. Program structure is a huge one. A drawing for a big gift can be very budget friendly but can also result in having participants who lose and get nothing. A points-for-performance program requires maintenance, customer support, point tracking, and order management.
The rules of a program will determine how effective the program is at promoting a safe culture within the organization. The platform you use to deliver the program also has costs and benefits. For instance, online programs are very popular and almost universally easy to access, but they often come with a restrictive price tag for a small program. Consider what will work for your employees, your budget, and your goals. Ultimately, your ROI hinges on this.
Trainer and author Dale Carnegie once said, "People work for money but go the extra mile for recognition, praise, and rewards." In a business world where the importance of employees and their level of engagement are at the forefront, it is important to consider how to better engage people in safety. A properly designed safety incentive program uses recognition, praise, and rewards to get people to go that extra mile and actively participate in a culture of safety.The cornerstone of that statement is that the program must be properly designed. By taking the time to make these very careful considerations before you dive headlong into your new safety incentive program, you can turn the program into a successful and long-lasting asset.