Case Study: Failure of a Safety Incentive Program SF ASSE 2011 David R. Paoletta, CSP

Case Study: Failure of a Safety Incentive

Program

SF ASSE 2011

David R. Paoletta, CSP

Agenda

• Psychological and Management Theories

• Shopping for an Incentive Program• Case Study of a Failed Incentive

Program• Conclusion: Motivation Vs Incentives

“ It is difficult to overestimate the extent to which most managers and the people

who advise them believe in the redemptive power of rewards.”

-

Alfie Kohn, Why Incentive Plans Cannot Work”, Harvard Business Review, 1993

Introduction

The goal of any workplace Safety Program is to raise awareness of hazards and eliminate unsafe behaviors that can result in injuries and process failures.

Introduction

Typical Safety Programs consist of:Action elements-

• Inspections• Observation and Feedback• Hazard control• Job hazard analysis• Safety meetings• Accident investigations

Administrative elements-• Safety Manual (procedures and guidelines)• Committees and coordinators• Reporting and Recordkeeping• Training, • Interest and motivation

Richard W. Lack 1996

Introduction

Rewarding positive historical safety statistics is the most common design for the majority of incentive/motivation programs.

Psychological and Management Theories

Safety Incentive/Motivation Programs may include:

• Reward and recognition for individual acts that promote safety

• Reward and recognition of outstanding safety program performance

• Incentive programs to promote desired behavior• Reward and recognition for longevity – i.e. time

without an injury (Plant, team, individual…)


2 Major Theories of Employee Behavior:

1. Operant Conditioning per Edward Thorndike, John Watson, B. F. Skinner.

2. Behavioral theories per Frederick Herzberg, William Ouchi, J. Scott Geller, Thomas Krause.


Skinner's basic principle of operant conditioning:

"A response followed by a reinforcer is strengthened and is therefore more likely to occur again."


How to increase safe behavior through Motivation and Positive culture:

Fredrick Herzberg:

“..motivators were the primary cause of satisfaction, and hygiene factors the primary cause of unhappiness on the job.”

Safety Incentive Programs

Seven Common Approaches to Safety Incentives/ Motivation*

1. Motivational speakers, meetings

2. Slogans, posters and signs

3. KITA: Kick In The Pants (Coercion)

4. Disciplinary Action (Threats)

5. Gain sharing programs (Bribery)

6. Contests, awards and incentives

7. Employee participation in process improvement

* Adapted from T. R. Krause

“Motivating Employees for Safety Success” Professional Safety, March 2000

“My boss just came back from a conference with an idea for me to set up an incentive program…”

Birth of an Incentive Program

http://community.blr.com/safety/forums/thread/40.aspx

Case Study of a Safety Incentive Program

Case Study/Proposed Program

Example Company’s Program Goals:

• Sustain Success: To increase awareness and make employee involvement part of the new culture of safety…

• Demonstrate Commitment: Statement by Management that safe behaviors are valued to the point of committing significant resources…

Internal company memo

Case Study/Proposed Program

• Develop “Critical Mass”: The effort to reshape the company’s Safety culture must become personal, visible and real to a “critical mass” of leaders and employees.

• Build the Safety Culture: This program coupled with other initiatives will yield permanent behavior changes necessary to correct the company’s culture.

Internal company memo

Case Study

But Which program?

• Poster programs

• Individual incentives

• Work group –level incentives

• Lottery systems

• Incentives for time without accidents

Informal Survey of Incentive Systems

“Safety Pays” A daily “bingo” drawing in which the “pot” grows until an OSHA recordable injury occurs.

Claims prevention and safety suddenly takes on a whole new meaning to the employee who's holding a bingo card that's one number away from winning him a significant amount of money!

http://www.safetypays.com


Customized solutions…

http://www.incentiveprograms.com

Company safety issues differ greatly; that means successful incentives take these differences into account. We consider the problems unique to your organization, the demographics of your workforce and the best methods to deliver results.


”Do It Yourself” Example 1:

Establish a "Bonus Pool" at the beginning of the year- deduct money for:

• Safety Audit deficiencies• OSHA Recordable injuries

At the end of the year, the balance is split up among employees…



”Do It Yourself” Example 2:

Team Vs Team…each team works to have no accidents or injuries.



”Do It Yourself” Example 3: Print "Safety Bucks" at the beginning of the year- award

bucks for:• Safety suggestions• Hazard recognition• Attending safety training

Award small prizes on a quarterly basis…



“Do It Yourself” Example 4:

Establish a Safety Improvement Suggestion Program:• Safety Committee judges suggestions

Awards the individual or team with the best submission…


The Proposed Program

The “Safety Jackpot” approach was approved for a 1 Yr pilot program:

• Promotes supervisor/worker communication• Self-service administration• Individuals could choose prizes• Program operates continuously• Incentives for every worker in company • Positive reinforcement

http://www.safetyjackpot.com/

The Proposed Program

The challenge was how to make “Safety Jackpot” fair, inclusive, promote safe behaviors and fun.

• A list of rewards for behaviors was generated• A cash drawing was added to “spice up the pot”• Field and administrative employees participate• A budget of up to $ 400,000 was approved by upper

management

Proposed Program

The “Safety Jackpot” program details:

• 3400 employees at 98 locations

• Baseline Yr Recordable injuries: 102

• Baseline Yr WC Costs: $260,000

Proposed ProgramThe “Safety Jackpot” program details:

• Program Cost: $117/employee or$398,000

• Projected savings: $488,000 direct and indirect injury cost (assumes achievement of estimated reductions)

• Net Projected savings: $90,000 (includes 35% reduction in ORI)

Ref: internal memo: “The Case for Rewards and Recognition in the Development of a Best in Class Safety Culture”

Proposed Program

WC Costs, 2005, 2006 (Projected)

$487,235

$260,000

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

2005 2006** Projected. Cost as of J un 30: $86019

Projected Cost Savings for Yr 1 Due to Reduced Injuries: $280,000.

Projected Cost Savings for Yr 1 Due to Reduced Injuries: $280,000.

Current and Forcast ORIR YR1

3.423.68 3.64

3.29

3.18

3.1

3.263.19

3.42 3.38

3.34

3.62

1

1.5

2

2.5

3

3.5

4

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Rec

orda

ble

Cas

e R

ate

Optimum Goal, 3.7

YR 3 Goal, 2.0

YR1 ForecastYR 2 Goal, 2.9

Company internal document.

Proposed ProgramThe “Safety Jackpot” program roll-out:

• Work-group level meetings • Information packages and catalogs sent to each

employee

• Video on company web site

• Program Web page & toll-free number available for questions

Safety Jackpot Program

Example Roll-out marketing materials:

Jackpot Step 1 Examples or behavior to be rewarded:

• Attend Safety Meetings +1

• Be observed with correct PPE +1

• Identify Safety Hazard + 2

• Participate in site audit +3

• Lead safety training/meeting +2

• Report near miss +3

• Good Samaritan acts +3

• Coordinate safety project +4

• Obtain workstation ergo assessment +2

• Provide accepted safety suggestion +1

Managers & Supervisors will distribute game cards to reward safe behavior.

Jackpot Step 21) Scratch the silver boxes on top of gamecard to reveal award points. The points, (25, 50, 75 or 100), are later redeemed for brand name merchandise.

2) The bottom half of the gamecard reveals one of the seven letters– J-A-C-K-P-O-T. Employees may trade cards to spell JACKPOT. When spelled, they will receive 1,000 bonus points toward merchandise and be entered into a Special Cash Drawing. Or… If “ENTRY” is revealed, you will be entered into a Special Cash Drawing (Bi-annual $500 to $10,000).

Jackpot Step 3

Jackpot Step 4

Additional order forms are available from your supervisor or the Safety Staff.

Merchandise is sent directly to your home!

Jackpot Step 5

Program Results

• $200,000 expended

• Initial (Yr 1) ORI: 3.32

• YTD ORI when program suspended: 4.14

• Union employees from one location ripped up cards and mailed them to the company CEO

Program Results

• Union employees refused to accept cards or collected them and gave them to a single employee

• Overall only 20% of employees participated

• Employees perceived program as “something for nothing” and of no tangible benefit to them.

• Program was scrapped after 9 months

Failure Analysis

• Lack of of leadership commitment at all levels.

• Supervisors needed to drive the program, and promote it to their people. Managers needed to drive supervisors, etc. None of that happened.

• Managers and supervisors saw it as a burden, employees saw it as "something for nothing", and senior management hoped for the best.

Failure Analysis

• No employee (or Union) involvement in developing or deploying the program

• Not all areas of the company participated directly in roll-out of program (I.e. ineffective start-up)

• Lack of understanding of program intent and goals

Failure Analysis

• Lack of understanding of how to redeem prizes

• Card distribution guidelines not understood/complied with by Supervisors

• Underlying cultural issues (distrust) not engaged prior to initiating the program.

Conclusions

• The Safety Jackpot program is not suitable for "jump starting" a safety culture.

• The company was counting on it to replace real cultural change initiatives, and it clearly isn't the tool for that.

Theoretical Basis for Failure

“…findings suggest that the failure of any given incentive program is due less to a glitch in that program than to the inadequacy of the psychological assumptions that ground all such plans.”

- Alfie Kohn

Ref: Kohn, A. “Why Incentive Plans Cannot Work” Harvard Business Review. 2002.HBR OnPoint © 2002 by Harvard Business School Publishing Corporation. All rights reserved.


According to Research by Kohn:

Pay doesn’t motivate. Over 70 studies have found that rewards tend to

undermine interest in the task (or behavior) itself;

this is one of the most thoroughly replicated

findings in the field of social psychology.

Kohn, A. “Why Incentive Plans Cannot Work” Harvard Business Review. 2002. & “Challenging Behaviorist Dogma” Compensation and Benefits Review. March/April 1998.


- Like punishments, rewards are manipulative

- Rewards rupture relations. Research shows that excellence depends on teamwork…

- Rewards ignore reasons, incentive plans offer a one-size-fits-all answer that ignores what lies behind sub-par performance.

- Rewards deter risk-taking, the No. 1 casualty of rewards is creativity.

Kohn, A. “For Best Results, Forget the Bonus” New York Times. 10/17/1993.

If not an Incentive Program…then WHAT?

Job Enrichment

• Increase individuals’ accountability for their work by removing some controls.

• Give people responsibility for a complete process or unit of work.

• Make information available directly to employees rather than sending it through their managers first.

• Enable people to take on new, more difficult tasks they haven’t handled before.

• Assign individuals specialized tasks that allow them to become experts.

Ref: Herzberg, Frederick “The Motivation to Work”.

1.Choice: Workers participate in making decisions about what they do.

2.Collaboration: Workers should be able to work together in effective teams

3.Content: Refers to a job’s tasks. To do a good job, people need a good job to do.

2 C’s of Quality


Job Enrichment

- Pay people well

- Pay people fairly

- Then do everything possible to take money off people’s minds.


Conclusion

Safety Incentive plans are a precision tool that can be used to fine tune an already successful safety culture – not a crow bar to leverage poor performance.

QUESTIONS???THANK YOU!

David R. Paoletta, MS, MBA, CSP

[email protected]

Documents

Case Study: Failure of a Safety Incentive Program SF ASSE 2011 David R. Paoletta, CSP