Changing Behaviors for the Better
A poorly designed incentive program is almost always better than no program. A well-designed incentive program produces way better results than a poorly designed one.
- By Jerry Laws
- Jan 01, 2018
This article has been developed from a conversation during the Incentive Marketing Association’s July 2017 annual Summit, when OH&S spoke with Sean Roark, CPIM, who was completing his term as president of IMA. He is a regular contributor to OH&S.
OH&S: We've been talking about OSHA's guidelines regarding safety incentives. Without the strict guidelines that OSHA proposes, how do they uncover and penalize fraudulent programs that are just meant to discourage reporting?
Sean Roark: A great phrase that I first learned from an historic American document is, "We hold these truths to be self-evident. . . ." My professional research of best practices has shown me that if a program element is not ethically achieving the desired result at the highest moral level, the longer it is allowed to perpetuate, the more disastrous the after-effects will be when the truth is ultimately, and in my experience, inevitably, revealed. Refineries explode, mines cave in, workers have health issues. To be clear, I'm not proposing that we sit back and wait for those horrible outcomes, but I strongly believe that if there is a good path and a disastrous path to be followed using something like outcome-based safety incentives, the role of the regulator is to prevent access to the disastrous path, not wall off the entire route and ignore the high positives because of the existence of a possible negative.
OH&S: Are you suggesting that there is over-regulation going on right now?
Roark: There is actually a new plunge into the regulatory climate to implement a no-outcome-based policy that has failed in the past. Here is a capsulated history, which I sourced courtesy of Steve Slagle, managing director of the Incentive Federation:
In 1999-2000, while creating what would become known as "The Ergonomics Rule," OSHA began to challenge the efficacy of certain types of safety incentive programs that focused on what is known as rate-based or outcome-based measurements. These programs reward workers when no or low incidences of accidents or injuries are reported over a specific period of time, and OSHA had supported such programs for many years. OSHA later changed course and began to cite industry experts’ opinions that workers might under report injuries or accidents in order to receive a promised reward for an accident-free workplace. This was a rule, which OSHA is allowed to promulgate, but Congress, which can overturn arbitrary agency rules, did just that in 2001.
In 2009, OSHA asked the Government Accountability Office to study the issue of accident and injury reporting, and in its 2010 report, the GAO stated, "Little research exists on the effect of workplace safety incentive programs and other workplace safety policies on workers' reporting of injuries and illnesses." In the GAO's research review, they discovered that "researchers distinguish between rate-based safety incentive programs, which reward workers for achieving low rates of reported injuries or illnesses, and behavior-based programs, which reward workers for certain behaviors, such as recommending safety improvements. Of the six studies GAO identified that assessed the effect of safety incentive programs, two analyzed the potential effect on workers' reporting of injuries or illnesses, but they concluded that there was no relationship between the programs and injury and illness reporting." (Emphasis added)
Nonetheless, the GAO and, later, OSHA, concluded that "experts and industry officials, however, suggest that rate-based programs may discourage reporting of injuries and illnesses. Experts and industry officials also reported that certain workplace polices, such as post-incident drug and alcohol testing, may discourage workers from reporting injuries and illnesses. Researchers and workplace safety experts also noted that how safety is managed in the workplace, including employer practices such as fostering open communication about safety issues, may encourage reporting of injuries and illnesses."
OH&S: Okay, so we understand that OSHA does not recommend "outcome-based" incentive programs. Still, you mentioned that the rule affecting that was overturned by Congress in 2001. Why is that a concern now?
Roark: Here's my opinion: Because the folks at OSHA, like many other clever folks who deal with Congress, have noticed some lack of cooperation and coordination within the two houses that makes the passage of even a simple bipartisan resolution a challenge. Taking advantage of that, or perhaps by simple coincidence, OSHA re-introduced a "guideline" as part of their "Safety and Health Program Guidelines," which went into effect [in December 2016]. This particular guideline states, in summary, that any outcome-based incentive criteria constitutes a rule violation. In implementing this guideline, they engineered a shift in perception and legal presumption. Previously, a company that thought its incentive program was fair could assert that, and it was up to OSHA to prove that the company was wrong and the program was not fair. OSHA could not meet this legal standard in many cases where a well-designed program clearly emphasized the need to properly report and penalized any participant who failed to meet that requirement.
Now, OSHA has set a guideline which essentially stipulates that any outcome-based award is presumed to be a violation, and the burden of proving it is not shifts to the company. It has had a serious dampening effect on safety incentive programs, to the point that many managers who do not recognize the spectacular efficacy and integrity of a well-designed safety incentive program have either severely cut back or completely discontinued safety incentive programs.
OH&S: Will following this guideline be effective in keeping compliant companies out of trouble ?
Roark: With OSHA, perhaps. The cost to the employer may be hard to measure, but will be there. In the end, a poorly designed incentive program is almost always better than no program. About a third of the time it's worse, but let's stay on track with the fact that a well-designed incentive program is produces way better results than a poorly designed one. Finally, a well-researched incentive program that custom-fits the needs of the client and maximizes the engagement of the participants can save lives and actually improve the bottom line of the offering company, through a superior ROI. So, if you accept the premise that outcome-based awards are an incredibly effective engagement tool, then you have to downgrade the program that is offered which specifically excludes that tool to good or fair, which using the yardstick I laid out above, will have a cost in ROI, employee health, and morale—and regrettably but statistically almost certainly, lives. This conclusion is in direct contradiction to OSHA's mission.
OH&S: Why are some companies continuing to include outcome-based awards in their programs?
Roark: I'd start with my previous answer. Some economists recognize it will generate more value in ROI than is at risk by offending OSHA. Ethicists will take a high ground that if a company genuinely wants its employees to be safe, then it will employ the most effective and proven means to achieve that goal. Folks who follow this sort of thing at a high level will offer outcome-based awards because they believe that time is on their side. Those people think that OSHA has exceeded its authority in even promulgating the guideline and that the faulty logic will not stand up when it is ultimately challenged in court.
OH&S: Why hasn't it been challenged already?
Roark: Now there's an interesting question. I don't have access to "inside OSHA's head" but have been told by some very reliable folks whose past observations have ended up to be validated that there is an actual OSHA procedural directive to their regional offices to not cite this rule unless it is a clearly indefensible case, preferably including either a loss of life or serious injury. If this is true, then OSHA senior policy staff recognizes that the chilling effect of the untested rule is going to effectively discourage result-based criteria (which we have established they are not fond of), and the greatest danger to losing that chilling effect would be if the rule were to be challenged and overturned in court. Don't prosecute under the rule, and it can't end up in court, the Big Chill perpetuates. Quod erat demonstrandum.
OH&S: So, what is the takeaway from all this to a safety professional?
Roark: I can't say what's true for everyone, but here is the elevator version of this whole issue, stipulating that you are in a tall building and the elevator is stopping at every floor:
Design is the key. Frankly, this whole regulatory mess has evolved from flawed programs that mostly had the best intentions and assumed that the easy way out was to tie rewards to OSHA, workers' comp, or other statutory reporting rates. In fact, for the most part, my understanding is that this practice evolved from the assumption that such reporting was an "impartial measurement" and reflected results arising from firmly defined and monitored rules by a third party. Have people tried to corrupt this practice? You bet. Does it sustain as a long-term policy? Nope. Sooner or later, I believe that the sheer momentum of habit and culture will reveal itself in something so disastrous that it can't be hidden.
OSHA makes no bones about how the OSHA culture views outcome-based incentives. They view such incentives as discouraging reporting and deny any positive redemptive value in the practice. Here's the crux of it: They make an arbitrary unilateral claim that all outcome-based incentives discourage reporting. They say it as a proclamation, and the inference is that it is a given that every ethical and intelligent person should know. Those of us listening to these pronouncements make our rebuttals, but from a smaller stage to an audience that is not nearly as broad. Then, turn to another pronouncement: "We will penalize anything that promotes under-reporting." They don't specify incentives, but anyone who reads the previous arbitrary assertion does not have to go very far to make a connection.
I am not urging everybody who reads this to throw in a bunch of outcome-based awards as if they were throwing tea in Boston harbor. I do suggest that you don't succumb to broad-brush pronouncements that all such awards are unethical, and look to what outcome-basis, such as "no violations of SOP" or a celebration of a plant's "Partnership for Success" can reward the shift of your employees' consciousness from "me" to "we" without any connection to what is recorded or reported under the OSHA standards.
OH&S: You mentioned ongoing projects at the beginning of this conversation. What would you pick as the primary ongoing challenge as relates to viable and effective safety incentive programs?
Roark: The most obvious to me is continuing to educate our clients that a safety incentive program is not about the "stuff." Some clients use gift cards, others merchandise, travel, or experiential awards. Oftentimes these elements are blended with recognition, in the form of plaques, certificates, company-wide "shout-outs," or wearables and promotional products that proclaim that the wearer is part of a team, and a successful, caring team. The most fundamental lesson that I convey to my clients, and the piece of information that seems to serve them best, is the fundamental understanding that it's not the "stuff" they give to their employees that create a safer workplace, but rather what the employees have to do to receive the "stuff." Create a set of rules that teach and imprint best safety practices, and you can get an employee who would never change a habit if you paid them to follow the rules, in order to earn the points for the blender that they want to receive, and in doing so discover they have changed their habits, and consequently their company's culture, towards safety.
We're having this conversation on a Walt Disney property. I have examined and appreciate Disney's ability to identify what their "guest" participants want to experience, define what their corporate goals are, and find what steps and standards they have to implement to deliver the desired experience to their target audience, while achieving the endgame that they have defined as success. I suggest from this model, your readers can appreciate what the safety incentive professional does, following a similar process to design the program that fits for your company's unique needs.
Sean Roark is immediate past president of the Incentive Marketing Association, treasurer of the Incentive Federation, and chairman of the ASSE Downtown Houston chapter. He was the first person named as a Fellow of the IMA and also was in the initial class of inductees as a Fellow of the Promotional Products Association International, making him the only person to hold both honors. He is a Certified Professional of Incentive Management and a recognized authority on the topic of safety incentive program design and management, and he has spoken on the topic across the United States and on four continents.
This article originally appeared in the January 2018 issue of Occupational Health & Safety.