OSHA Guidelines, Incentives, and the Win-Win-Win-Win Scenario

Improving employee engagement will greatly enhance the effectiveness of your safety training and meetings, increase participation in voluntary programs, improve two-way communications between employer and employee, and raise morale companywide.

• By Brian Galonek
• Oct 01, 2016

I can only imagine that the Occupational Safety and Health Administration has scores and scores of things on their "to do" list at any given time. Those of us in the business of creating safety recognition/reward (incentive) programs have been trying to help them check one item off that list permanently. That item relates to their desire to issue useful guidelines related to safety incentive programs that truly benefit all parties involved. As part of this effort, late last year they began to update their document titled OSHA Safety and Health Program Management Guidelines. In doing so, they opened up a public commentary period on a variety of topics, one of which is safety incentive programs.

The great news for OSHA (and labor unions, and safety managers, and workers) is that what they all want can be achieved in a true win-win-win-win scenario! What OSHA should be doing with its guidelines is to provide clear information to corporate America on how to create effective safety incentive programs that provide all the upside benefits without any of the downside problems. To do that, they just need to listen to the companies that create these programs and that have accumulated scores of detailed information about how and why they work so well.  Deploying the program structure described in this article allows companies to improve employee engagement and safety without inducing workers to hide accidents or injuries. If you think that is too good to be true, I promise it is not, and I encourage you to read on.

I and others have submitted information to OSHA during the public comment period. Below is a summary of that information, and I ask again that OSHA consider placing this information into this next version of the Guidelines to help employers make informed decisions about how best to structure their programs. I have distilled and summarized the information below in three simple sections titled "Introduction," "What to Avoid," and "Proper Structure."

Introduction
Safety Incentive Programs are effectively employee engagement tools and, when deployed properly, they can have a lasting and powerful positive effect on safety, health, and the overall wellness of employees.

Studies (Gallup's State of the American Workplace Study) repeatedly show that only about 30 percent of U.S. workers are engaged at work and that the other 70 percent are either passively or actively disengaged. It is very difficult to get any message through to workers when they are not engaged and so, properly viewed, safety incentive programs are great ways to ensure that the safety messaging makes it through to workers and is internalized by them.

Improving employee engagement will greatly enhance the effectiveness of your safety training and meetings, increase participation in voluntary programs, improve two-way communications between employer and employee, and raise morale companywide. And the most effective and proven way to improve engagement is through the use of well-designed incentive programs featuring tangible awards.

What to Avoid
To create effective safety incentive programs, it is beneficial to first consider what not to do. Avoiding the things mentioned below is a great place to start:

• First, don't reward entire groups of workers for group behavior.
• Second, don't use a sweepstakes structure with high-value awards.
• And third, don't ever reward with cash (or cash-like alternatives).

This list may be short, but it is nonetheless a fairly comprehensive accounting of the vast majority of mistakes that have been made in past decades when companies first began looking for ways to encourage safer work habits. It was not uncommon in the past (and in some cases still today) to see companies create a contest with rules along the lines of, "If everyone in the plant is safe for the next three months, everyone will have their name put in a hat and we will pull out one winner who will receive a new pickup truck." These program structures are wrong for many reasons:

1) Tying everyone together in a sweepstakes creates negative peer pressure that can result in accident/injury hiding. A worker won't risk his job to hide an accident if it only means he won't get a modestly sized monthly award for being safe; however, he may if it means that everyone in the plant won't be rewarded that month.

2) It creates a false "award" (disincentive) for the vast majority of safe workers. If there are 800 people working in that plant and you tell each of them they have a 1 in 800 chance of winning, none of them will think they are going to win, and 799 of them will be right and disappointed when their name is not pulled.

3) It is a waste of resources because the time and effort that went into creating the contest and the cost of the pickup truck (or some other cash award) could have been used far more effectively on a comprehensive safety recognition/reward program that benefited all. 

Proper Structure
Properly designed programs are those that improve employee engagement as a precursor to a final goal (in this case safety), and when structured correctly, they produce remarkable results. In addition to creating an environment with fewer accidents and injuries, they also improve morale, reduce turnover, induce idea sharing, and advance team building, which in turn further sustains future safety initiatives—and so the process becomes self-supporting and cyclical.

Incorporating the following elements into your safety recognition/rewards program will be a great way to ensure its success:

• Create a brand name that represents your safety mantra and promotes your "safety brand" like the valuable asset that it is. Engage your workers to help define your safety brand.
• Communicate constantly by using every method possible (online and offline) to engage with workers, and use your safety brand to help promote initiatives old and new.
• Use face-to-face recognition whenever possible to deliver the message of safety in the most powerful and engaging way.
• Use tangible, brand name awards that are memorable and stay away from cash and cash-like alternatives that are easily forgotten and that blend in with base compensation.
• Set group goals but reward individual behavior. It is empowering for workers to know what the company goals are and for them to help set and reach those goals, but reward only for individual accomplishments to avoid any negative peer pressure.
• Measure program results and make changes and improvements frequently to create a dynamic program that can evolve along with your changing work environment.
• Reward for both proactive behavior and for ongoing performance to create the most powerful solutions possible. A rise in overall employee engagement will produce a proportionate rise in awareness and safety program success.

Keeping in mind that the first goal is engagement, you can see that creating a safety brand, communicating it continuously, and using face-to-face interactions wherever possible are really all about connecting better at a human level. This is where it all starts.

The last point on the list, "Reward for both proactive behavior and for ongoing performance," is enormously important. Rewarding for ongoing performance ensures that a program reaches maximum levels of employee engagement. Programs that recognize and reward only for proactive behavior will reach only 10-25 percent of a workforce, on average. Which is to say that if programs are built strictly on what is typically referred to as the "Above and Beyond" behavior, things such as making a safety suggestion or joining a safety committee, only a relatively small percentage of workers will ever qualify. As all safety managers will confirm, effectiveness comes when programs are 24/7/365/X, where the "X" represents all workers.

Rewarding for performance, again, should only be done at an individual level. While it is advisable to have publicly stated group goals such as, "Our goal is to improve our safety training scores by 10 percent this year…," it is important to reward the individuals for their specific accomplishments in achieving those goals.

Utilizing this simple structure makes it easy to avoid the concerns that OSHA and labor have expressed about deploying safety incentive programs. Just be sure that your program rewards individuals for their specific behavior even when it is part of a larger group goal.

I focus on this point because it ties in directly to the major concern that safety managers have when they cite their perception of OSHA’s stance on incentive programs. While I wish OSHA would heed more of our advice on how best to state their position on these programs, it is important to note that they are issuing "Guidelines" and that the document mentioned at the beginning of this piece includes an introductory statement that reads, "The guidelines are advisory and informational in content. They are not new standards or regulations; they also do not create any new legal obligations…." I note this because, time and time again, I have safety managers asking me if OSHA is about to ban safety incentive programs. The answer unequivocally is "No."

It is also important to note that there are other areas of public policy, namely section 274(j) of the tax code, which provide tax preferences (tax incentives) for both workers and companies that utilize these programs. That is the section of the U.S. Tax Code that ties safety and service award programs together and in doing so makes the value of the awards in those programs tax free to the recipient and the cost of those awards tax deductible to the employer (up to certain limits). Many companies I talk to are not even aware of 274(j), so finding out it exists is undoubtedly good news for them. While I am glad it exists, the code should be adjusted to allow for all participants in a qualified safety incentive program to receive these benefits, and a separate provision should be added that offers the same benefits for wellness programs.

The Tax Code provision for adding wellness has already been suggested by the Incentive Federation in our proposed wording for 274(p), but Congress has not acted on this suggestion to this point. The reason why lawmakers should consider both these requests seriously is that in both cases, it will improve the lives of U.S. workers and deliver more tax revenue to Uncle Sam.

Safety and Wellness are flip sides of the same coin—safety professionals know this, but for others it is a more foreign concept. Here are two easy-to-grasp examples: 1) Obese drivers have a higher incidence of sleep apnea, which leads to more tired driving and accidents, and 2) Smokers are more likely to call in sick, requiring other people to cover their shift, which is inherently more dangerous. It is easy to see that we can further improve safety by incentivizing companies to also improve wellness. As a result, companies that deploy properly designed safety and wellness incentive solutions not only have more highly engaged workforces that are safer and healthier; they also enjoy greater profitability and, as a result . . . pay more in corporate taxes!

For more information on the benefits of properly structured programs, please see my article "Engage to Go from Good to Great," which was published in OH&S in October 2011. For more information on the tax code issues, please see my article "Hands Off 274(j)!" (published in OH&S in May 2012).

This article originally appeared in the October 2016 issue of Occupational Health & Safety.