Understanding incentives.

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Featured Article

The Safety Tipping Point

Incentive and Recognition Programs
Help Improve Safety, Protect People, and Save Money.

By Brian Galonek

Creating a good safety culture in the workplace is the collective result of every employee's conscious and subconscious efforts to build a safe work environment and foster safety awareness. Companies with a potentially high risk for accidents invest significant resources in employee screening, worker training, drug testing, equipment training, safety meetings, and more. Yet many continue to struggle with reducing their accident frequency rates and containing expenditures. In most companies, the problem is not insufficient training or commitment; it is the failure of individuals to pay attention.

Improving safety frequently depends on increasing individual awareness. Incentive and recognition programs help increase safety awareness and thus reduce the frequency and cost associated with accidents, lost time, claims, etc. In fact, a safety incentive program is a corporate investment that can transition a good safety culture into a great safety culture, producing a significant positive return on investment - characterized by well- defined safety initiatives and infused with management support and employee participation.

A SAFETY CULTURE

Where work and hazards are an unavoidable mix, employers need to take safety very seriously. The primary goal is to create a permanent safety culture throughout the organization. According to the Bureau of Labor Statistics, in 2004 there was a disabling workplace injury every 7.8 seconds, and a fatal workforce injury every 96 minutes.

Creating a safety culture is no simple task. Safety programs tend to be most effective when they build awareness through frequent reinforcement, team building, group interaction, positive peer pressure, and constant communication.

The quest for an effective safety culture must be based on individual awareness and attention to detail. People, not policies, prevent accidents; they do so day-by-day and moment-by-moment. Fewer accidents mean lower costs, both in human terms and on the balance sheet. So the goal is to motivate employees to adopt safety as a personal issue.

While a safety incentive program is a vital element of a company's overarching safety strategy, it will not be successful if it is deployed in an organization with a poor safety culture. Following is a listing of elements that typically comprise a robust safety program. Many of these elements should be in place before an incentive program is layered on top, others can be added in conjunction with the launch of a new incentive program.

SAFETY PROGRAM ELEMENTS

Good safety programs typically contain a variety of elements that overlap and interact. It is the weaving together of these elements that will create the foundation for a successful safety culture. According to Joshua Williams from Safety Performance Solutions, in his ASSE presentation titled "Using Behavioral Safety to Improve Culture," the characteristics of a successful safety program include: employee driven, positive reinforcement, management support, and satisfaction with training.

These characteristics and others can be achieved through the adoption of the appropriate safety program elements, many of which are listed and briefly outlined below. For the most part, companies should plan to utilize outside resources to address these issues since many of them require a significant level of expertise to complete properly.

Employee Screening & Background Checks - Used to check on previous employment, driving record, education claims, credit history, criminal background issues including felony and misdemeanor history, etc.

Training/Education - For employees and supervisors, training includes driver, equipment, industrial hygiene, emergency response, OSHA compliance, hardware/software, etc. Training and education are ongoing and should be updated and refreshed regularly.

Drug & Alcohol Policies - 77% of all illicit drug users are employed! (source: OHS Health & Safety Services, Inc.). Write a policy for your drug and alcohol testing program that outlines the goals, details who is to be tested, explains the consequences, and delineates the type of assistance that may be available.

Safety Meetings - When executed properly, no communication element is more powerful than safety meetings. Face-to-face discussion of the safety challenges, along with past success and failures are critical elements of any successful safety culture. Meetings should be scheduled well in advance and should occur on a frequent basis (monthly or weekly if possible, quarterly if necessary).

Suggestion Box Programs - This simple yet effective tool can be used to improve safety, lower costs, and engage a safety-sensitive audience. Many companies offer structured awards to individuals that make valid suggestions, and larger awards when those suggestions are adopted. A suggestion program can have the largest potential return on investment.

Safety Committees - Safety committees can be formed to design, enforce, improve, and/or implement new or existing procedures. They are also used to investigate accidents, write reports, or help with training. Committees should be inclusive, involving both managers and employees. Committee members should be rotated to expand reach, and orientation should be formalized to bring new members up to speed quickly.

Equipment - Personal protective equipment is mandated for certain tasks, and should be considered for other tasks even when not mandated. Every effort should be made to provide the proper equipment and equipment training to all safety-sensitive employees.

Accident Investigation Procedures - Proactive and standardized, it is important to follow established guidelines when investigating an accident. Any deviation can give rise to concerns about the fair application of company policies. Employees should be interviewed in a way that makes them feel comfortable sharing the truth, and multiple sources should always be sought.

Safety Audits - Use a risk-based model to determine which areas of operation are to be audited and to prioritize the list. Do not let managers and workers audit their own work areas. Use prior audits as benchmarks, and use audit results to develop future action plans. Consult your worker's compensation insurer before choosing an auditor; some insurers may provide an audit service at a low cost to clients.

Documentation - Previous accidents, safety procedures, near misses, safety suggestions, training policies, and performance records should all be documented and updated on a regular basis to create the detailed performance background necessary to measure and compare future results, and to comply with OSHA regulations.

Incentive & Recognition Programs - When incorporated into an organization with a good safety culture, a properly designed safety incentive program that features tangible awards will drive exponentially greater results. Much of the balance of this piece addresses the methods used to create superior safety incentive programs, and the theory behind the methods.

A SAFE FOUNDATION

Companies with a successful safety culture share several characteristics. First, they try to hire "safe" people. Their human resources professionals take background checks and drug screening seriously. Once an individual is hired, these companies actively promote safety throughout the training process and provide the proper equipment and ongoing communications. These are the baseline practices that lead to a workforce environment that is likely to take safety seriously. With these foundational elements already in place, companies can move from a good to a great safety culture through the introduction of a high-impact safety incentive program.

The recognition portion of incentive programs offers the unique ability to reward for leading indicators, an enormously important method of generating change. Jennifer Juergens, in her article titled "Safety First" which appeared in Occupational Heath and Safety, reinforces this fact; "Given that as many as 86% of all workplace accidents are triggered by unsafe behavior, it is no wonder the focus often has been on reducing the number of accidents by eliminating unsafe behaviors instead of on preventing accidents by rewarding instances of safe behavior."

The single most effective tool to generate synergistic improvement in safety performance is the use of an employee incentive and recognition program. According to a recent study conducted by Occupational Hazards targeting health and loss prevention professionals, 84.7% of the respondents said their company's safety consciousness increased as a result of their safety incentive program.

Companies with an average or good safety culture that use safety incentive programs to recognize and reward employees will find success, as it is human nature to desire praise and appreciation. The incentive program is the "glue" that can bind together a wide range of safety initiatives to ensure that they receive optimal attention.

BRANDED SAFETY

One key element necessary to ensure measurable success is to brand the incentive program and promote it as if it were an exciting new consumer product. Employees will respond most positively to the safety program when it has been given its own identity. Branding the solution and making it pervasive will ascribe a value to the program and cause employees to take notice and internalize the goals at a far greater level.

Branding works because we as people respond to symbols of success and accomplishment. Treating your safety program as a brand and promoting it as a symbol of excellence will add motivational power and boost top-of-mind awareness with employees. A strong safety brand is one with a distinctive name and slogan that is actively promoted in all employee communication including posters, catalogs, videos, websites, meetings, newsletters, and reports. To reinforce the company's safety commitment to employees and customers, Don Tullos, Senior Corporate Safety Advisor at FedEx, uses his award program website as a platform to reinforce their safety message (source: "Delivering Timely Safety Recognition" featured in Occupational Health and Safety).

With ongoing communications, employees quickly appreciate the high value their company places on workplace safety. When they understand that they will be recognized and rewarded for their efforts, they respond by proactively paying greater attention and as a result, adopt safer work practices. This process leads to a trust factor that is a keystone in the process of creating an appealing branded program. In his "Building Trust for Safety" article in Occupational Hazards from the February 2005 issue, Robert Pater cites the following trust builders:

Acknowledge Employees Concerns as Valid - let them know when you have made a mistake - practice tolerance for different learning and communication styles

Seek Out & Reply - don't avoid or squelch resisters, seek them out - make "thank you" your default for receiving negative feedback; don't let yourself become defensive - get back to people quickly on their concerns

Perspective - be straightforward about organizational realities - remind employees at all levels about the benefits of safety

Involve - activate safety committees by training them and give them real work with high expectations - enlist select workers as peer instructors and safety change agents

Persistent Patience - abandon the quick fix mentality and go for continuous improvements - weave safety into all communications

A TANGIBLE "THANK YOU"

Sandy Smith, in an article published in Occupational Hazards, points out that safety incentive programs often represent a "corporate thank you to employees" for their safety commitment. The incentive is a tangible symbol of that thank you.

In "Delivering Timely Safety Recognition," featured in Occupational Health and Safety, Don Tullos, Senior Corporate Safety Advisor at FedEx states, "The goal of our safety program is to reduce accidents and injuries to our employees and the general public." Tullos continued, "The goal of the award portion of the program is to thank them for doing that, and to provide an incentive for continuing that behavior."

Tangible incentive and recognition rewards are a powerful tool. When used properly, the results are as tangible as the incentive merchandise and travel that is awarded. Those who implement a safety incentive program should expect results and a clear return on their investment in a safety incentive program.

Tangible incentives increase work performance by an average of 22% - Highlights from recent studies by The Society of Incentive and Travel Executives (SITE) Foundation conducted to determine the effectiveness of tangible incentives are listed below.

• Incentive programs aimed at individual workers increase performance by 27%. Programs aimed at teams increase performance by 45%

• Incentive programs have an equal, positive impact on both quality and quantity goals

• Incentive programs structured with employee input work best; however only 23% of incentive systems are designed that way

• Long-term incentives are more powerful than short-term (44% gain vs. 20% gain)

• 92% of workers surveyed indicated they achieved their goal because of incentives

• 92% of corporations surveyed reported that their objectives were surpassed, met, or at least partially met using incentives

CASH AS A BAD MOTIVATOR?

There is a fact in the "cash vs. merchandise" argument that is as interesting as it is perplexing. That fact is that the vast majority of people will say that they prefer a cash award over a merchandise award, and yet an incentive program that offers brand name merchandise and travel awards will greatly outperform programs that award with cash. According to Chester Elton, author of Managing with Carrots, "Cash given in safety programs is great at first. We all love more money. But cash quickly becomes part of an employees expected compensation and fails to motivate the expected performance."

This fact is a primary reason why the merchandise and travel portions of the Incentive Industry continue to flourish. In the long run, people will work harder and smarter for tangible awards than they will for cash. The reasons for this are best explained in psychological terms. Scott Jeffery, Ph.D., a professor in the Department of Management Sciences at the University of Waterloo in Ontario, cites four psychological processes that affect the perceived value of tangible awards as opposed to cash; they are:

Evaluability - When properly presented, non-cash awards ignite the imagination in a way that enhances their perceived value.

Separability - Non-cash awards help distinguish the award from compensation; using cash invariably turns the extra reward into expected compensation.

Justifiability - Participants get a special satisfaction from non-cash awards because there's no guilt associated with spending money on them.

Social Reinforcement - Non-cash awards facilitate communication and alignment because people feel free to talk about them in a way that would be inappropriate for cash compensation.

Jeffery goes on to say that, "they [non-cash incentives] are less likely to be seen as an attempt to control behavior, which often leads to the association of the reward with the behavior and does less to internalize the value of the general behavior." In other words, the actions that are to be modified by an incentive program are not associated well with a cash award and often are forgotten as soon as the cash is used.

CHARACTERISTICS OF SUCCESSFUL INCENTIVE PROGRAMS

When a safety incentive program is structured to promote "top-of-mind" safety awareness, people respond with a measurable effort to change their behavior. Successful safety incentive programs tend to have the following important characteristics:

Goal-oriented - Goals are clearly defined and achievable based on past performance and a reasonable projected improvement. Goals are shared up-front with the target audience and performance updates are shared on a regular basis.

Excitement - High energy is invested in branding safety. Banners, posters, buttons, balloons, meetings - use anything and everything, to make participation fun, attractive and rewarding.

Recognition - Employees are honored, recognized, and rewarded publicly for achieving safety goals promoted as rewards for achievement. Timely face-to-face recognition is an essential element of every safety incentive program.

Enticing Awards - Nothing has proven more effective at motivating long-term behavior change than brand name merchandise awards and incentive travel. The awards that are chosen are often aspirational items that an employee desires but may not purchase on their own.

Customized - The branding of the program reflects the unique culture and demographic makeup of the workforce so everyone feels invited to participate and eligible for rewards.

Sustainability - Consistency, continuity and creativity distinguish well-run and successful programs. Since safety is day-to-day and moment-to-moment, incentive programs need leadership and strong administration. It is important to implement employee suggestions and address safety concerns as they occur.

Ease of Use - Online components such as an interactive website greatly improve access and participation, and make data collection and analysis much easier. Printed materials, web-enabled kiosks, help desks, toll-free numbers, and online chat are all ways to make a program easier to use.

Engagement - The most effective programs are both employee-focused and energized by employee participation. Credibility and value are also greatly enhanced by the full participation and support of management. A true safety rewards program does not stop and start, it is an ongoing entity that can be relied on by workers and management alike.

CHARACTERISTICS OF UNSUCCESSFUL INCENTIVE PROGRAMS

As important as it is to understand the elements of a successful program, it is equally important to focus on the potential mistakes that can lead to an unsuccessful program. It is essential to learn from the mistakes of the past, because, as the old adage goes "...insanity is doing the same thing over and over again and expecting different results." Decision makers should be sure to avoid the following list of "classic mistakes:"

In-House Design - Avoid building, launching, and managing your safety incentive program utilizing only in-house resources. You will be reinventing the wheel, and more than likely you will be creating a less effective wheel that will cost more to operate. There are a wide range of outside incentive solution providers that are well equipped to build and manage the right program to solve your needs. And when man hours and performance are factored in, the outside supplier will easily deliver a more successful program with a better return on investment.

Individual vs. Group Awards - Safety performance rewards should be tied either exclusively or primarily to individual performance. The risk of injury hiding increases when awards are tied to group performance, especially when the awards are of significant value. The best programs will reward strictly for individual performance, but will report overall group success. If it is deemed necessary to reward partially for group performance, then no more than 25% of the total award value should be issued for group achievements with the balance being awarded for individual achievements.

Short vs. Long Term Programs - Short term programs will generally produce short term success, and sometimes they won't even do that. In order for a safety incentive program to generate long term success, it must be an ongoing program. There is no way around this fact. People learn new behaviors by repeating them again and again until they are ingrained. Long term safety incentive programs encourage the correct behavior over and over again until the behavior becomes subconscious. Even after the behavior becomes subconscious, it is necessary to continue the program because of employee turnover and new safety challenges that may evolve.

Focus on Goals Not Awards - Many organizations get sidetracked immediately trying to determine what the awards or the point structure should be. While these are valid questions, they are secondary to determining the true goals of the program. Initially this is where all the attention should be directed, and it is important to be specific when delineating the goals. Stating a goal as "reduce accidents" will not work nearly as well as "reduce slip and fall, and trip and fall accidents at the Springfield plant by 25%." More specific goals will lead to a more targeted program that enjoys greater success. Rely on help from your chosen incentive house to help sketch out, and prioritize the true goals of your program.

Structured but Flexible & Fair - Programs in organizations with multiple management layers should be created with a structure that gives clear direction to the managers who will implement the program. At the same time, that structure should not be so rigid that it stifles creative implementations that may enhance the programs'use. Create a set of overarching rules that allow for some elbow room for managers. The part of the rule structure that should be rigid is that awards must be distributed fairly to all participating employees. Avoid creating an environment where managers can "play favorites."

Timely Recognition - Avoid creating long lead-times between the giving of awards and the doling out of recognition. Recognition and the issuance of awards (in the form of points, vouchers, tangible gifts, etc.) should be done on regularly scheduled frequent basis. The longest lead time that should be considered is quarterly, and monthly awards are more optimal. If the time frame is too spread out, the program is likely to lose its impact and begin to dissipate.

Don't Ignore Employee Input - It is essential to solicit employee input when designing a safety incentive program. Give employees a stake in the process and make sure that all employees know that their input was considered and appreciated. In larger organizations, form committees from the workforce and have them contribute ideas during brainstorming sessions. This is particularly important when it comes to unions, which by and large will accept and appreciate incentive programs if they have a hand in creating them.

Don't Let it Stagnate - Even the best conceived programs will begin to languish if they are not enhanced on a regular basis. A program is a living entity that cannot be ignored for long periods of time without experiencing "shelf life" stagnation. Conversely, programs that are reinvigorated on a regular basis can operate indefinitely with a consistent level of success. Use new suggestions, graphics, and awards to infuse excitement. Share success stories, create quizzes and surveys, and derive new bonus point opportunities throughout the life of the program.

INVESTMENT, NOT EXPENSE

Safety-sensitive companies are using incentives to support their safety programs and achieve safety goals by promoting individual initiatives that create a safer workplace. These companies view the cost of their safety incentive program as an investment and expect a measurable return in the form of reduced costs attributable to accidents. In some cases, a program may be considered successful if it simply staves off further increases. A flat year in terms of spending can be deemed very successful if safety expenditures have been spiraling out of control with double digit growth in previous years. All Star Incentive Marketing offers a cost-benefit analysis for the programs that it creates - referred to as ROI2 (Return on Incentive Investment). It is a key factor in justifying a safety incentive program.

Proving that ROI is a reasonable expectation, 68% of the respondents to a recent Incentive Magazine study reported the average ROI for their incentive programs, based on the initial investment, exceeded 10%. Thirty-eight percent of the respondents reported their ROI exceeded 25%, based on their initial investment.

Of course, a positive return on investment does not just happen. It must be a strategic goal with the safety incentive program structured accordingly. All Star Incentive Marketing has developed the following strategy to ensure a positive ROI2.

Map the Plan - Identify specific objectives and include what behaviors you want to drive. Benchmark the quantitative objectives for measurement.

Target & Customize - Design the program around those employee groups with the greatest potential for safety improvement. Look at the employee demographics and identify the rewards that these employees value to create a mix of recognition options.

Create Rewards - Tie meaningful incentives to achievable performance.

Engage & Communicate - Launch the program with enthusiasm, actively promote the program and maintain management support over the life of the program.

Fulfill Expectations - Deliver on promises made. Be sure to provide timely fulfillment and superior service.

Monitor, Measure & Improve - Evaluate objectively and measure against benchmarks. Raise the bar and repeat with a fresh program.

SUCCESS STORY: ALLIED WASTE NORTH AMERICA

With more than 26,000 employees, 10 million customers, and $5.7 billion in sales, Allied Waste, the second largest solid waste disposal company in the U.S., has large issues to deal with on a daily basis. One of the largest issues relates to creating a safer workforce and reducing the costs associated with workers compensation, liability insurance, and claims. The trash collection business is inherently dangerous and currently ranks as the 5th most dangerous industry in the country, according to the Bureau of Labor Statistics.

Nearly 20,000 of Allied's employees are in safety-sensitive positions, with most driving or working on moving dump trucks. Allied is organized into more than 600 independently managed divisions, and has thousands of heavy trucks on the road each day.

The challenge was to create a safety rewards program that would motivate long-term behavior change to contain and reduce Allied's growing safety budget. Other challenges to building a successful program were a bilingual workforce, a high turnover rate, and limited web access from work.

All Star Incentive Marketing created and launched a bilingual online plateau level reward program called the Dedicated to Safety (DTS) Rewards Program. Providing a turn key custom program for Allied Waste, All Star handled concept, design, print production, web hosting, award selection and sourcing, fulfillment and reporting. Participants earned, accumulated and redeemed safety vouchers at a custom award website or via a printed catalog. To kick off the program with enthusiasm and commitment, All Star produced comprehensive "launch kits" that managers used to introduce and promote the program during safety meetings.

The results? In its first year, the Allied Waste DTS Rewards Program helped reduce claims by 760 with the majority generated by divisions participating in the DTS program.

The divisions participating in the DTS program have almost doubled the education in claims than non-participating divisions (the average claims eliminated per DTS program division is 1.72 versus .87 for non-participating divisions). It is also interesting to note that although the program supports both online and offline participation, over 90% of all the award orders placed in the program have been online through the award website.

Success of the 2005 program with growing participation by divisions has lead to the indefinite continuation of the DTS Rewards Program with enhanced award options and communication tools. With an average claim cost in the thousands, Allied Waste's savings were in the millions!

Summary: Whether to improve a poor safety record, reduce turnover, generate safety suggestions, improve productivity, or reduce costs, incentive programs are a critical component to a strong safety culture and encourage an overall philosophy of safe behavior. A well-designed safety incentive program will transform good safety management into spectacular safety management.

Brian Galonek is President of All Star Incentive Marketing, a full-service incentive firm, and Education Committee Chairman for the Online Incentive Council. All Star develops, implements and manages custom incentive programs to enhance clients' business performance by targeting sales teams, employees, customers, and prospects. The success of All Star's clients with incentive programs can be attributed to All Star's "Proven Process," that takes clients from concept through reporting to ensure a maximum Return on Incentive Investment.