It's A Great Time to Try Incentives

"Safety incentive programs are the ones where you can really hit the budget on the head. There really is no reason to be surprised at the end of the year."

Editor's note: Incentive programs demonstrate their power to produce better results during a tough economy, All Star Incentive Marketing President Brian Galonek agrees. In a Jan. 20, 2009, interview with the OH&S editor, he said safety professionals are especially eager to try incentives because they've exhausted the tried-and-true ways of improving safety metrics. Excerpts from the conversation follow:

OH&S: This is not a good time for a lot of companies. They're cutting spending and workforces. A white paper produced by Selling Communications Inc. for the Incentive Research Foundation, titled "Why Incentive Programs Endure Recessions," talked about these advantages of incentive programs: low fixed costs, ability to effectively target audiences, ease of measurement, flexibility, and potential for long- and short-term results. Are you seeing this research borne out in the current economic environment?

Brian Galonek: Yes. I read that article and I agree with it wholeheartedly. I do think that the biggest risk we have for future growth relates to companies that aren't currently running incentive programs, getting them to start something in these economic times. But certainly with the companies and the programs we already have out there, we have had great success; in fact, we had our best year ever in 2008 with 25 percent growth over last year.

Quite frankly, our existing programs look very strong for 2009, as well, with anticipated organic growth within most of our safety programs. While the article was accurate, I can't escape the feeling that the difference lies in whether it's an existing program or a company entertaining starting a new program. We've definitely seen a downturn in the prospects we've been talking to that were close to closing. But within our existing accounts, when you have a program that's driving incrementally better safety results, everybody's aware of its success. They realize, as long as cooler heads prevail, that it would be foolish to pull the plug on it. They'll stop spending money initially but then realize a higher claims rate that'll cost them more in the long run.

People know these programs work. They save money and don't cost, if you do it right and stick with it.

Galonek: I think that's why there's a lot of discussion about ROI and what percentage of incentive programs actually have a measured ROI. We push our customers as far as possible for detailed performance numbers. We calculate an estimated ROI no matter what; the only question is whether or not we're privy to the information that will allow us to make accurate statements. We ask our customers to provide us with their claims rates, OSHA incident rates, insurance rates, and we help translate those numbers into dollars and projected savings. If they're spending $200,000 on an incentive program and saving $500,000, you know that program is a success and not one that should be pulled, even in tough economic times.

Having that information and analysis ready is obviously great for case studies and for landing more business. But in this particular case, where the economy went south so fast, if you didn't already have [the data], you might be behind the eight ball desperately trying to prove ROI in the eleventh hour in order to save your program.

You probably know J.J. Keller. They have a service called KellerOnline. They do a benchmarking survey, and they asked their 19,000 members to renew their participation in that survey beginning this month. Particularly interesting to me in the latest data I saw: Among almost 4,000 respondents, 25 percent have no annual safety budget at all. It made me wonder not only what your advice is to a safety director whose budget is going down 10-20 percent this year, but also one who has no budget and needs to justify some spending.

Galonek: I've run into this, even among some larger companies, but most of the companies that don't have a specific safety budget are on the smaller side and might just pluck those dollars out of operations as needed. For the larger companies that All Star deals with, most of them do have a safety budget.

The question really is, are they willing to commit some of that budget to something other than the old standards of training and PPE? Will they try a safety incentive program? For far too many companies, the answer has been no, despite the fact that their current spending choices are not delivering the improvements they are looking for. I go back to the old definition of insanity: doing the same thing over and over again and expecting different results.

When we talk to safety managers at these companies, they have a voracious appetite. We've exhibited at ASSE and NSC; we've done webinars with OH&S and are about to do another one. A thousand people signed up for the first one, and 650 or so listened to it either live or recorded.

There is a huge interest out there among the safety crowd to move the needle, but they need to know how. They need to understand that, first and foremost, a properly designed incentive program improves employee communications and engagement. It is far easier to motivate them to work smarter and safer once you have them engaged.

Back to the definition of insanity: My experience is that most safety managers have tried certain things over and over and over again—from hanging posters on the wall to reinforcing training, spending more money on personal protective equipment, take your pick. And they've seen limited to no results, maybe even negative results. My first attempt is typically to say, "Listen, you've tried this, you've tried that. Everything you've done collectively is by definition getting you the results that you're getting. Now, have you tried an incentive program of this type?"

What I get over and over at these trade shows is, "Oh, yeah, we give away a pickup truck every year. Everybody who's safe every month, we throw their name in a hat." Typically, what they rattle off breaks two or three fundamental rules of what not to do when designing an incentive program.

You've got to detox them a little bit. You say, "I know your people tell you they want cash. I know your people get really excited about possibly winning that pickup truck. But you're not seeing improvements. I can show you how we can get much better results doing it differently."

Do you get into health incentives? Employers are very concerned about employees' health and health care costs.

Galonek: Yes. Wellness is the golden goose right now. Everybody's talking about it. Nine months ago, I was still pitching retention programs; companies were desperate to hold onto their talent.

Wellness is the one that everybody is buzzing about now, and for good reason. You've got the Baby Boomers getting older, and their health challenges are only going to grow. We know what obesity rates are in the country, and we know the direct correlation between losing weight, being healthy, and doing a good job.

Absolutely, we are pitching over and over again that a safety program can really be a safety, security, and wellness program. Wellness just dovetails in there nicely. We know we can support that with a rewards program. It just makes a great adjunct to an existing program.

It makes sense. Even in a recessionary environment, people obviously see the wisdom of encouraging better health.

Galonek: If you were to go out and survey U.S. corporations now about whether they are currently offering a wellness program to their employees, you would find that very few are. I predict that inside of five years wellness programs will become very popular, especially among large companies. Our challenge will be to show that any wellness program can be greatly improved by the inclusion of an incentive component that rewards them for their efforts.

Smoking cessation would likely be a component of any wellness program, and last week, The Wall Street Journal ran a story that showed that smokers at GE that were offered an incentive to quit were 294 percent more likely to quit within the first year. The only problem with the study, from my perspective, is that the incentive they offered was cash. Imagine how much better the results would have been with a properly designed incentive program.

This article originally appeared in the June 2009 issue of Occupational Health & Safety.

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