Accentuate the Positive

November/December 2014

Incentive programs that focus on safe behaviors and participation in safety-related activities can motivate employees without running afoul of OSHA concerns about discouraging injury and illness reporting.

By Deirdre Bannon

Safety incentive programs sound like a good idea. Promising some kind of reward to employees or teams who achieve a safety goal can help motivate them to improve their safety performance and improve the company’s health and safety record. But incentive programs also can have unintended consequences. Employees’ desire to receive the reward can lead them to not report injuries and illnesses—or to pressure their colleagues to do the same.

The Occupational Safety and Health Administration’s national emphasis program on recordkeeping, which the Washington, D.C.-based agency launched in October 2009, confirmed that underrecording of injuries and illnesses is a problem, an OSHA spokesperson says. She also points to research that Kenneth D. Rosenman and others at Michigan State University (East Lansing, Mich.) published in 2006, which compared the number of work-related injuries and illnesses in Michigan reported to the U.S. Bureau of Labor Statistics (Washington, D.C.) in 1999, 2000, and 2001 with those reported to four other databases. The research found that an estimated 68 percent of work-related injuries and illnesses were not in the BLS database. An August 2008 Monthly Labor Review article by a BLS official cites similar research that estimated the BLS database missed an average of 40 percent of cases.

Recognizing the role safety incentive programs might have in contributing to the underreporting problem, OSHA issued a policy guideline in March 2012, “Employer Safety Incentive and Disincentive Policies and Practices.” In an Aug. 14, 2014, memo on improvements to its Voluntary Protection Programs, the agency explains its concerns: “When an incentive program discourages worker reporting or, in particularly extreme cases, disciplines workers for reporting injuries or hazards, problems remain concealed, investigations do not take place, nothing is learned or corrected, and workers remain exposed to harm.” Further, the spokesperson says, “injured workers may not receive proper medical attention or workers’ compensation benefits to which they are entitled.” In other words, she says, “ensuring that workers can report injuries or illnesses without fear of negative consequences is crucial to protecting their safety and health.” In addition to putting workers at risk, incentive programs that create disincentives to injury and illness reporting “may also constitute unlawful retaliation or result in violations of OSHA’s recordkeeping regulations,” she says.

Despite those concerns, OSHA does not forbid or even discourage safety incentive programs. As the August 2014 memo points out, the VPP policies and procedures manual—which can serve as a guide to best practices—specifies that “incentive programs should promote safety awareness and worker participation in safety-related activities.” The memo clarifies that this type of “positive incentive program encourages or rewards workers for reporting injuries, illnesses, near misses, or hazards; and/or recognizes, rewards, and thereby encourages worker involvement in the safety and health management system. Such an incentive program can be a good thing and an acceptable part of a VPP-quality safety and health management system.” It then suggests a few examples of positive incentives: providing T-shirts to workers serving on safety and health committees, offering “modest rewards” for suggesting ways to strengthen safety and health, or throwing a recognition party at the successful completion of companywide safety and health training.

Even with that guidance from OSHA, it can be challenging to determine what kind of incentive program might work best for your company to create a safer workplace but not run afoul of OSHA’s concerns.

Advice From the Experts

The most important measure of safety is whether everyone leaves the yard in the same condition in which he or she entered it—free of injury or illness. You still can base incentives on your progress toward that goal, several attorneys say, as long as that’s not the only factor you measure. An incentive program also should take into account employees’ safety-related behaviors. The key in designing a program is “finding the right mix that has elements of both”—one that delivers rewards for more safety-related behaviors and fewer injuries and illnesses, says Richard Fil, a metals recycling and reclamation attorney with Robinson & Cole (Providence, R.I.).

One behavior to reward, for example, is the reporting of near misses. “Behavior-based programs that look at near misses … can help you keep track of improvements you need to make to your safety procedures,” he says. If you can show that your incentives encourage the reporting of near misses and other safety-related behaviors, “you will have firmer ground to stand on if OSHA questions your program.”

In Fil’s experience, companies are adding behavior-based measures to their incentive programs as a result of the 2012 OSHA policy guidance—they’re not abandoning safety incentive programs altogether. Nicole Bernabo, a labor and employment attorney at the same firm, agrees. She says she’s seen clients “tweak their safety incentive program to include [measures of] employee involvement in training, identifying hazard prevention, and work-site analysis.” Encouraging involvement helps an incentive program pass muster with OSHA, and it increases employee accountability and ownership of the safety program, she points out. As Mark Lies, a labor and employment attorney at Seyfarth Shaw (Chicago), puts it, “You want to encourage injury and illness reporting as well as a strong safety culture. … If you incentivize everything, including [safety-related behaviors], OSHA can’t say you’re encouraging workers not to report injuries.”

If OSHA suspects that you are discouraging employees from reporting, Lies says, it could ask to see your injury log and your safety incentive policy, interview employees to ask if they receive any benefit for not reporting injuries, interview the people who maintain the OSHA log, or interview doctors to see if company leaders have asked them to not report an injury. If it finds sufficient evidence of a violation, it could issue a citation and a penalty. In addition, if an employee suffers retaliation, he or she can contact OSHA to file a whistleblower claim, Lies says.

Bernabo makes one suggestion that’s relevant whether or not your company uses safety incentives: “Safety programs should have a clear nonretaliation statement regarding employees who report injuries or illnesses.” Lies agrees, saying it’s essential for your safety policy to state “that employees will not be retaliated against or suffer any negative action by the employer for reporting an injury or illness,” and it’s also essential to inform each employee of the nonretaliation policy.

ISRI doesn’t take a position on whether safety incentive programs are good or bad—it supports members in whichever route they decide to take. But John Gilstrap, ISRI’s director of safety, is not a fan. He thinks safety incentive programs don’t work. “The incentive or reward becomes expected, and it loses its incentive value,” he says. “Workers feel entitled to the annual turkey dinner, and they’re upset if for some reason that reward doesn’t take place.

“The only incentive programs that I’ve seen work effectively,” he points out, “are those that reward supervisors and managers for running a safe shop.” As he explains it, “line workers do what they are instructed to do or are allowed to do,” and their safety performance reflects the level of compliance their bosses tolerate. “If a worker acts in an unsafe manner, it is by definition because the supervisor allowed that behavior to occur, if only implicitly.”

The time it takes for supervisors to administer a program that incentivizes activities workers are “supposed to be doing anyway” would be better spent seeking hazards and training workers how to work safely, Gilstrap says.

Joe Bateman, ReMA safety outreach manager, also cautions against allowing safety incentive programs to become entitlements. For incentives to work, you must manage and track performance properly, he says, and tie the incentives to safe behaviors. “The purpose is to prevent injuries, and you do that by actively engaging in safety excellence,” he says. Bateman, who has visited about 50 scrapyards a year since he joined the ReMA staff six years ago, estimates that about half of ReMA member companies have safety incentive programs, though several stopped their programs after OSHA released its policy guideline in 2012.

Bateman says he’s in favor of anything—including incentives—that might improve the industry’s safety. “Hardly a week goes by [before] we hear about another person being severely injured or killed at a scrapyard,” he says. He’s hoping that with the rollout of ISRI’s Circle of Safety Excellence™ program, “more companies will take their safety programs to a higher level.”

Incentives in Action

Several scrap companies’ experiences with incentives can give a broader picture of what might—or might not—work.

A success story. General Iron Industries’ (Chicago) “PPE Employee of the Month” safety incentive program was very successful, says Alan Mesh, director of health and safety. During his daily walk-throughs, workers strove to demonstrate to Mesh that they were wearing and using all of their PPE properly. Each month the company recognized employees who did so the most consistently—“top achievers”—by posting their names on a board in the lunchroom and entering those workers into a drawing that awarded a gift card to one employee each month. It entered those who were top achievers for three months in a row into another drawing for various prizes.

In just three months, PPE compliance grew from 16 percent to 89 percent. “The ‘game’ went from one where workers tried to see what they could get away with not doing—and avoiding write-ups—to one where they wanted to make sure they were seen as using all of their PPE,” Mesh says. Top achievers “got their name on the board for a whole month, and that recognition among peers and appreciation meant more to them than the monetary reward.” The program also started a conversation about the safety culture at the yard, he says, which has continued to grow stronger. The second-quarter PPE compliance checks also included safe practices such as proper use of seat belts, harnesses, ladders, and other equipment.

The firm ended the program when it met its goals, but it might revive it as a refresher for workers, he says.

Changing the culture. SA Recycling (Orange, Calif.) recently launched a companywide safety incentive program that’s not based on illness or injury rates, but rather on participating in activities that help prevent accidents, says Director of Safety Tamara Deiro. It rewards workers for behaviors that include identifying hazards and near misses; participating in weekly and monthly safety audits by environment, health, and safety supervisors; and attending regular safety talks. SA expects temporary employees to participate, too, she notes, because the company wants them to be invested in the safety program, especially because they might become full-time SA Recycling employees in the future.

Some SA facilities provide additional incentives: Employees who make a safety suggestion can receive a bonus or a gift card if the facility implements the change, for example, and some general managers give out lottery tickets each month to those who identify hazards.

The companywide program is new, and there have been a few challenges implementing it, Deiro says. Some yards SA acquired had a history of disincentives: Supervisors would get in trouble for reporting injuries or illnesses or identifying hazards, she explains, and those supervisors would then retaliate against their employees. SA had to work hard to break down that mindset, build trust, and help employees understand that they can bring hazards to the attention of supervisors or managers without any fear of retaliation. To make a safety incentive program successful, middle management and upper management must buy into the safety program, be consistent, and agree with what needs to happen to make a yard safer, she adds.

Looking SHARP. The incentive program at Western Metals Recycling (Salt Lake City), a subsidiary of The David J. Joseph Co. (Cincinnati), gives workers quarterly and annual bonuses for their performance on “leading indicators” of safety such as participating in safety meetings, conducting site inspections, and identifying hazards and near misses.

“We keep employees engaged by acknowledging workers with different incentive rewards,” says Dan Johnson, Western Metals’ health and safety manager. “Employees have pride in their work, and they take ownership of the program—I get safety suggestions almost every day.” Recognizing employees’ contributions is “vital” in reinforcing the safety message, Johnson says. Some of his yards have gone six years without a recordable injury, he adds.

WMR facilities in Plymouth, Provo, and West Salt Lake City, Utah, and Englewood, Colo., recently received OSHA’s Safety and Health Achievement Recognition Program designation. SHARP honors smaller work sites that demonstrate an exemplary commitment to workplace safety and health. “During the SHARP audits, inspectors did ask us about our incentive program, and they were happy to hear our program was focused solely on leading indicators,” says Terry McWhorter, director of corporate safety for DJJ. That would not have been the case, he adds, if the incentives were based on injury reporting.

Many years ago, DJJ had an incentive program that was tied to employee injuries, but company leaders were unsure if the program was adding value, McWhorter says. “We were concerned that the program wasn’t necessarily promoting safe work behaviors, and employees simply expected to be rewarded for not having an accident,” he explains. The company restructured the safety incentive program to measure specific proactive behaviors. Active employee participation in the safety process is the key to success, he adds.

Reinforcement through rewards. Worker recognition is critical to creating a sense of buy-in and accomplishment, says Rick McCloskey, plant manager for Tri-State Iron & Metal Co. (Texarkana, Ark.). The company’s safety incentive program rewards employees who go one year without any lost-time accidents with a safety-related gift, such as steel-toed boots, rain suits, or Carhartt coats. If it’s a piece of clothing, the company will embroider it with the employee’s name and the company logo. “We don’t go with a cash incentive—we’d rather give back to the employee by giving them something they can use at work,” McCloskey says. Tri-State also recognizes those employees at the company’s holiday party and presents each one with a certificate. “Almost 100 percent of our employees achieve that goal,” he notes.

The company is about to add behavior-based elements to its safety incentive program. It is forming a safety team that will use checklists to inspect different areas of the yard. Crew leaders will not lead the safety inspections of their own work areas. The hope is that other workers leading that team will notice hazards the regular crew leader did not. Workers participating in the safety team will receive incentives, most likely gift cards to a retailer such as Walmart (Bentonville, Ark.), McCloskey says.

Suggestions welcome. Consolidated Scrap Resources (York, Pa.) does not have incentives for reducing the injury or illness rate—a decision the company made because of its concern about such programs discouraging employees from reporting injuries or illnesses, says Rick Hare, director of safety and environmental compliance. “We looked at various types of incentives—bingo, raffles, and other kinds of events—but we always came back to peer pressure [concerns]: If you had the accident, you’re the one who took the reward away from the group. So we didn’t think that would work for us.”

As part of its safety program, however, employees can submit ideas for abating hazards to the company’s suggestion committee. If the suggestion is implemented, the employees could receive remuneration, Hare says.

A negative experience. Not all incentive programs are successful. One that E.L. Harvey & Sons (Westborough, Mass.) operated backfired. Although no one was injured, it nearly cost the company one of its largest customers.

As Safety Director Jerry Sjogren explains, the firm used to give its drivers a quarterly bonus for going accident-free. Eventually, however, the drivers began to cover up minor infractions and accidents. They would pay customers to fix damages so they could collect the bonus.

The fraud continued until one driver had an accident that was too big to cover up. The driver backed into a major customer’s garage door and did not report it to the customer or to E.L. Harvey. When the customer complained, the driver denied he had caused the damage. Sjogren went to bat for his employee, he says, but the customer had a video of the accident that proved the driver caused the damage.

The company almost lost the client—whom Sjogren describes as “huge, really huge”—but through delicate negotiations, it was able to salvage the relationship. The investigation into the accident revealed that drivers were not reporting minor accidents to get the bonus, and they were pressuring their peers to not report them as well.

Today, instead of having an incentive program, the company tries to empower drivers, Sjogren says, by letting them know it’s OK to not do a job if they can’t do it safely. “If a worker drives two-plus hours to a work site and realizes they can’t do the job with the equipment they have, they might feel ashamed to come back with the job not done,” he explains. “But I tell them it’s OK, they will still get paid for their time.” Or if they’re trying to fit a truck into a tight spot, “it’s not worth the risk to themselves or to the millions of dollars of equipment they are operating” to try to make it fit, he says. “We tell our employees, it’s better to walk away and ask for help to figure out a better way to get the job done. Working safely is part of the job, and that should be enough incentive—you shouldn’t need a monetary reward.”

Incentive programs that focus on safe behaviors and participation in safety-related activities can motivate employees without running afoul of OSHA concerns about discouraging injury and illness reporting.