In an ideal world, you wouldn’t have to keep reminding your workers to follow company safety policies and procedures. The desire to prevent injuries and illnesses—to themselves and co-workers— would be incentive enough to ensure safe behaviour and compliance with the rules. But in case you haven’t noticed, we don’t live in an ideal world. In our world, workers don’t automatically engage in safe behaviour, even though it’s in their own interest to do so. Thus, it’s often necessary to coerce and coax workers to work safely and in accordance with the rules.
To coax workers, companies often offer incentives such as prizes, vacation days or cash, for safe behaviour. But incentive programs are a somewhat controversial topic in the safety industry. If you’re thinking of adopting such a program, there are certain questions you need to consider. Notably, do incentive programs really work? And how in the world do you persuade upper management that spending money on an incentive program will pay off for the company?
One way to answer these questions is to look at the experience of other companies that have incentive plans. We’ll tell you about the success of one such company that offers an interesting perspective on how incentive programs can be crafted and used to improve overall safety performance. We’ll also show you how to use the company’s experience as a case study to sell your own incentive program to upper management.
The Challenge of Ensuring Safe Behaviour
Getting workers to behave safely requires a combination of carrots and sticks. Discipline is the stick. Safety incentive programs can provide at least some of the carrots. And while you can and should use both to good effect, implementing a safety incentive program generally costs money. So you can’t put such a program into place without winning the approval of upper management.
But getting management approval for an incentive program isn’t easy. With the pressure to cut costs and increase productivity, the idea of offering incentives to workers for working safely isn’t the easiest thing in the world to sell to a CEO. That’s where the experiences of the National Steel company can come in handy.
The National Steel Case Study
National Steel is a large steel manufacturer with divisions throughout the U.S. The company was experiencing abnormally high incident frequency and severity rates and the related, increased costs were threatening its competitive position. The company’s safety committee informed senior management that, over a two-year period, the extra costs due to workplace incidents incurred by just one division had been around $400,000 to $500,000.
Understandably, the committee and management considered the situation unacceptable and resolved to do something about it. So management instructed the safety coordinator to meet with the managers and workers in the plants in question to identify the causes of the problem. The safety coordinator also worked with an HR team to analyze the costs and types of incidents the company was experiencing. The team’s findings:
Based on these findings, the team concluded that a group-based safety incentive program might be effective. Under the program, each worker in the plant got a cash award of $75 (after taxes) every time the entire plant went six months without “a medical treatment case”—that is, an injury that couldn’t be treated by plant first aid and required a doctor’s attention. When and if a medical treatment case occurred, the “clock” was reset and a new six-month period started. The team believed that it was important to encourage a team effort at each plant because the actions of one worker could impact the safety of another. And it felt that peer pressure was necessary to keep workers focused. That’s why the team opted for a program that rewarded workers based on the group’s safety record rather than one that rewarded workers based on their individual safety records.
The Program’s Results
After the incentive program had been in place for two years, the HR team analyzed two sets of costs and compared them to the costs the company had incurred in the two-year period before it implemented the program:
Incentive program’s costs. Because the workers were rewarded with $75 after taxes, it actually cost the company approximately $97.50 per worker in rewards for each six-month period without a medical treatment case. Over the two years, the company made $138,743 in incentive payments to workers. The program had minimal administrative costs because the data used to analyze safety performance, such as number of medical treatment cases, lost-time incidents and lost-time days, was already being collected for other purposes. No additional staff was needed nor was it necessary to pay existing staff overtime to administer the program. But a conservative figure of $1,600 per year for administrative costs was used to calculate the program’s total costs. The team also included a needs assessment cost of $2,400 to cover the team’s time and travel expenses incurred while researching and setting up the program.
Total average annual cost of the incentive program: $72,172.
Incident costs. In the two years before the incentive program was implemented, the plants’ total incident costs were $1,046,488. But in the two years after the program was in place, incident frequency was reduced by 68%, while disabling incident frequency was reduced by 74%. Total incident costs dropped to $37,401—an average total decrease of $504,543 per year! And even when the team factored in the incentive program’s costs, the company still saved money.
Total average annual savings: $432,372.
These impressive results demonstrated that the incentive program had a positive impact on the business. It resulted in a new safety awareness for workers and a safer workplace with fewer incidents and even fewer disabling incidents. And clearly the benefits the incentive program provided outweighed the costs of implementing it. In fact, the team concluded that the incentive program’s ROI was 379%!
What it Means
Safety coordinators can learn several lessons from the National Steel case study:
How should you apply these lessons? First, you should review your workers’ safety compliance track record and consider implementing an incentive program if their compliance is lacking. But note that incentive programs only work in certain circumstances. For example, if workers aren’t complying with your safety measures because they don’t understand them or even know they exist, your problem is training, not lack of motivation. And an incentive program doesn’t take the place of having adequate safety measures in place. So you’ll need to determine what kinds of incidents occur most and why. If lack of motivation or focus by workers seems to be the issue, like it was at National Steel, then an incentive program might be just the ticket. Make sure that the incentive program you choose for your workers focuses on the types of behaviour you want to change or improve.
Conclusion
A safety incentive program can be an inexpensive yet effective way to improve safety performance at your workplace. You can then use the National Steel case study to persuade management—and yourself—that investing in such a program will pay off in the end by dramatically reducing incident-related costs.
INSIDER SOURCE
“Safety Incentive Program: National Steel,” by Ron D. Stone; Canadian Society for Training and Development, . www.cstd.ca/networks/nationalsteel.pdf
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