Incentive Programs and VPP

John Newquist

ASSE September 16, 2010

What Are Incentives?

• A formal scheme for inducing someone (as employees) to do something

• Lower DART, No Lost Time, etc

• Dr. Michaels – “Unfortunately, it appears that there are many employers, particularly in high-hazard industries, that have implemented programs, inadvertently or by design, that discourage injury reporting.”

How Popular?

• Used for sales, advertisement, frequent flyers, and even safety

• Approximately 70% of large companies have them for safety from my experience

• A majority of these rewarded employees if there was no lost time or a rate below a certain number

• Some companies, it was the only measure for a safety director to receive a bonus

Safety Incentives Gone Wrong

• In a Missouri food warehouse, 150 workers load and unload trucks, lift boxes, drive fork trucks, and move endless pallets

• Each month that no one reports an injury, all workers receive prizes, such as $50 gift certificates

• If someone reports an injury, no prizes are given that month

• But it gets worse….

Safety Incentives Gone Wrong

• Last year, management added a new element to this “safety incentive” program: – If a worker reported an injury, not only would

co-workers forgo monthly prizes but the injured worker had to wear a fluorescent orange vest for a week

– The vest identified the worker as a safety problem, and alerted co-workers: he lost you your prizes

GAO – Recordkeeping Disincentives for Companies

• 10/15/09• Many factors affect the accuracy of employers' injury and

illness data:– Disincentives may discourage employers from recording them – Afraid of increasing their workers' compensation costs – Jeopardizing their chances of winning contract bids for new work– Disincentives pressure occupational health practitioners to provide

insufficient medical treatment that avoids the need to record the injury or illness

• From its survey of U.S. health practitioners, GAO found that over a third of them had been subjected to such pressure 

• http://www.gao.gov/products/GAO-10-10 • But there are other factors too…..

Dr. Michaels

“If accurate injury records are not compiled because workers believe they will be fired for reporting an injury, or supervisors fear they will lose their bonuses or even their jobs if workers report injuries, real safety is not being achieved.”

Disincentive – Pride – Origin?• 01/31/1984

• Large chemical company in IL

• Planned Health Inspection

• No Injuries/illnesses on all logs, yet…

• Broken leg fall from ladder discovered

• Not Recorded

• Max $1000 Willful cited, later dropped

• Company focus was on keeping the million hour worked w/ no accidents streak intact

Disincentive – OSHA?• 02/04/1986 • A large food company in IL• OSHA Record Review program in effect

based on DART • Company missed comprehensive from

partial complaint inspection 05/17/1985 • 49 violations found• Max $1000 Willful cited. Over 20 examples

in company’s investigations that said it was recordable

Disincentive – OSHA?

• 2006 - MO

• 50 alleged safety and health violations

• Proposed penalties totaling $788,000

• Numerous serious machine operation injuries, including seven finger amputations

• OSHA 300 log was not completed correctly

• Had it been completed, it would have got an SST inspection

GAO - Disincentives for Workers

• Disincentives may discourage workers from reporting work-related injuries and illnesses to their employers

• Workers may not report a work-related injury or illness because:– They fear job loss – Disciplinary action – Fear jeopardizing rewards based on achieving

low injury and illness rates

Dr. Michaels

“Depending on the environment, workers may fear being fired if they report an injury, or may be pressured by co-workers not to report in order not to jeopardize a group reward.”

Disincentives for Workers

• OSHA found that the company issued a train conductor a notification of formal investigation in January last year and disciplined him with a letter of censure after the employee reported a work injury

• Chilling Effect?

Another Example• Injured employees are put on restricted

work through the Nurse’s Clinic • Then they are restricted to working only 36

hours per week • This causes the employees to lose money

while they are on restricted work • In addition to losing hours and

consequently, money, the employees cannot work or earn overtime while on restricted work

• So the employees counter by…..

Another Example cont.• Employees on restricted work tell the

company doctor they are feeling better when they are not so they can go back to full time and their regular pay

• It was also learned during employee interviews that employees have made deals with their supervisors to go on restricted work without telling the Nurse’s Clinic so they do not have to lose hours and, therefore, money because they cannot afford it

Are We Getting Results? • Dr. Michaels – “Past injury rates are a poor

indicator of future catastrophes. BP presented a plaque on the very rig that exploded for 7 years no lost time - the same day of the explosion.”– Dale Burkeen, 37– Donald Clark, 49, Newellton, Louisiana– Roy Wyatt Kemp, 27– Jason Anderson, Bay City, Texas.– Stephen Curtis, Georgetown, Louisiana.– Gordon Jones, 28, Louisiana.– Karl Kleppinger, 38, Natchez, Mississippi– Blair Manuel, 56, Gonzales, Louisiana– Dewey Revette, 48, State Line, Mississippi– Shane Roshto, 22, Franklin County, Mississippi– Adam Weise, 24, Yorktown, Texas

Rewarding Achievement-Based Safety • Managers can recognize and reward employees

with award points or cash for contributions that positively effect XXX. Managers will be looking for employees to demonstrate:– Innovation and creativity– Superior customer service– Cost-savings and cost-avoidance practice– Leadership and initiative– Courage and accountability– Operational excellence– Safety and environmental actions– Teamwork– Community/local site involvement– Continuous learning and skill development

Root Cause If you really want to prevent future similar accidents,

you need to go further and look for the root causes. The simplest way is to keep asking "why?"

– Someone used the wrong equipment, or pressed the wrong button?

– Were they told to do it by a supervisor who had a quota to fill?

– Did they feel rushed by the constant drive for more productivity?

– Were they not well trained for the job? – Were they tired from too much overtime? – Were the controls on the machine unnecessarily

complicated or not logically located? – Was there an unexpected confluence of unexpected

problems caused somewhere else in the system that no one knew how to handle?

Root Cause Continued• If you answer "yes" to any of those

questions, you ask "why" again and keep asking why -- until you run out of clear answers and you've reached the root cause

• Generally, the closer you get to finding the root cause, the more likely you are to finding solutions that will prevent similar accidents

• Every job be thoroughly analyzed via Job Safety Analysis

Leadership• Sets tone of what is important

• Participation in Site Audits

• Participates in training with staff

• Percentage of Job Safety Analyses (JSA) completed for critical activities

• Contractor audits

• # of Hazards identified and corrected

• Implementation of action plans resulting from findings

Safety/Quality Relationship • Many principles in quality management apply in

safety:– Zero regulatory enforcement actions– Zero late recalls and zero late regulatory reportable

events– Zero overdue orders– Establish baseline metrics for top defects– Determine root cause for defects– Product reliability – 100% on time training for Ops– Develop Ops compliance strategy – audit readiness– Zero findings for import/export compliance

An Old Tradition Continues, But At What Price?

• The large companies involved in the construction project were rushing to complete the plant, OSHA officials said, and some stood to collect millions of dollars in bonuses for an early finish.

• The rush was not specifically pinpointed as the cause of the ill-fated gas blow, but Solis said some victims' family members raised concerns about it when she talked with them.

• “They were alluding to the fact that (the workers) were exhausted and that they were overworked, and there wasn't a good explanation except to hurry up with the work,” Solis said. “In some instances, I was led to believe that safety may not have been the highest priority.”

– Raymond Dobratz

– Ronald J. Crabb, 42 

– Peter Chepulis 

– Roy Rushton

– Chris Walters

Other Real World Applications • MI Construction site – no disincentives• OFI – Opportunity for Improvement• Workers bring any improvement to designated

management – safety, quality, production, housekeeping

• They get a raffle ticket, company gets duplicate• An OFI accepted is in a pool to win $25 for the

week, also $100 for month• 892 OFI recognized as improvement• $8000 spent• Over $500,000 in saved in just comp. alone• 75% less accidents

Behavior Based Safety• Term used for programs focused on changing

the behavior of workers in order to prevent occupational injuries and illnesses

• Some programs rely on the belief that most workplace safety and health problems are the result of “unsafe acts”

• Often blames workers for their injuries and illnesses

• Ex: The worker was not careful and fell into the hole in the floor. So worker needs to be disciplined, cautioned, etc….

Labor vs. Behavior-Based Safety: No Love Lost

• UCFW - Behavior based safety programs generate fear and conflict amongst members. By shifting the focus away from workplace hazards, such programs leave significant safety and health problems unaddressed.

• USW  - When we investigate accidents, we search for root causes. What we find is very different from the unsafe acts that behavior-based safety proponents say cause accidents. We do not find unsafe acts as a prevalent root cause of accidents.

USW Accident Causation Factors• Equipment not Available• Contact Causing Burns • Faulty Equipment • Increased Production

Quotas• Being Caught Between or

Struck By • Increased Contracted Work• Known Hazards NOT

Corrected • Safety & Health

Management Failure • Inadequate Working

Environment • Exposure to Energy

• Lack of Training • Hazards Not Identified • Inadequate Training • Falls • Electrocution • Missing or Faulty Safety

Devices • Process and Equipment

Design • Chemical and/or Toxic

Material Exposure • Lack of Maintenance • Human Factors (fatigue,

layout)• Out of Compliance

Another Manager’s View

• “What I see is a whole lot of employees working the system (back strains which are hard to prove or disprove) as work nears the end. Those folks don’t care about incentives they want the free ride.”

Do Incentives Work… Or Not? • You often get what you measure -

especially when there are large financial incentives

• One Plant Manager received $250,000 for achieving a lower DART rate at the plant

• Several safety managers report it is the only criteria for bonuses up to $25,000

• Management by Objective is dominant in all aspects of business

• Quality, Sales, Production, Safety

Whose Behavior: Management, Workers or Both?

• Lines get gray……

• Perfect Attendance Award Policy at one company

• You get one of three cash prizes if you have perfect attendance and miss work only for approved vacation, military duty, jury duty, or paid bereavement leave

• Perfect Attendance does not include leave for Approved Family Medical Leave

Our VPP Keys To Success • Employee & management commitment• Adequate resources and time for meetings• Workers identify hazards without fear of retaliation• Periodic audits of workplace safety, programs, training

completion• Rapid process of identifying and correcting hazards• Employee access to information• Employees develop an conduct safety training monthly• Employees involved with incident investigations• All employees must complete training• Collaboration in the design and oversight of all aspects

of safety and health programs• OSHA standards are only a starting point• Issues like workplace violence, suspicious packages,

wellness, off the job noise, contractor safety and orientation

Another Successful Process

Simple, easy to participate, virtually no bureaucracy

Forms all over the plant

Two drop off locations

IDEA IMPLEMENTATION RECOGNITIONCOACHING

• Who can participate?

– All Full-Time Shop Employees

– All Support Employees (xxx, Engineers, Administration)

• Who cannot participate?

– Program Coordinator (M.Miller)

– Senior Management (staff) Members

– Temporary Employees

Eligible Participants

What is an Eligible Idea?

• Implemented ideas that will align with this company’s vision and mission: – Improvements in

enhancing safety in the workplace

– Increase efficiency– Improve quality– Reduce costs– Eliminate waste

• Increase sales• Result in tangible

savings – Labor, material, energy,

etc.

• Intangible benefits – Fire protection, quality,

environmental, space savings, community service etc

Examples of Eligible IdeasIdea in Action Type of Improvement

Maintenance tightened rung on a ladder because it looked unsafe

(not a W.O.)

Safety

Filed sharp edge on fixture to avoid accidents

Safety

Labeled raw stock rack for incoming part numbers to organize the area

and reduce part confusion

Quality

Developed setup instructions to standardize all shifts

Productivity/Cost

Had a tool made to back the eyebolts out, helping to speed up the process and eliminate the potential

for injury

Safety

What Kind of Ideas are NOT Eligible?

• Ideas which concern conditions of employment and/or benefits, policies, or procedures which may be legally mandated

• Specific assignments given by your immediate supervisor or manager, or tasks that are a part of your normal job responsibilities

• Ideas related to housekeeping are not an eligible idea for this improvement program since it is already a part of what we do

• Consider quick and easy improvements and implement a solution. Most ideas should only take minutes per day to implement

• Program is designed to reward the actual ideas as well as the implementation. More than one person can work on an idea and still submit a form separately, but they must be able to explain what part of the idea they implemented

• Consider the pros and cons of your ideas, including cost of implementation

• Consult with your coach (TL or immediate supervisor) if you need assistance deciding the steps to take in order to implement the idea

• Idea implementation must follow existing systems where required

More About an Improvement Idea

Managers Role in the Program• Get involved and encourage participation • Provide direction to support employee idea implementation

as well as allow time away from their normal job duties (minutes per day)

• Prior to implementation direct supervisor will approve the idea by ensuring that all affected employees signed the form and that the proposed improvement idea will not interfere with any other policies or procedures

• After implementation, verify the idea has been implemented, and input into database and return form to employee so they can place in program weekly drawing box

• Give recognition to employees who have implemented ideas in department meetings (if desired)

Safety

QualityDeliveryCostPeople

Implemented Idea Weekly Drawing

50Points

Draw several tickets because of facility size

OFI Form Sample

Drawing Drop Boxes

• The drawing boxes will be located – In the West campus employee entrance area

by the phones – In the hallway near the East campus cafeteria

• Make sure you put them in the right box– Safety/Ergonomic Improvement– Cost, Quality, Delivery, Work,

Environment/Conditions

Old Beliefs Die Hard?

• 9/4/10 – New Haven Register

• Worker error caused flash fire in Hamden

• “He had put gasoline into the machines thinking they were receiving diesel fuel because the can he used was labeled as a diesel gas can. It’s unknown how the gasoline got into the diesel can, Badamo said.”

Two Managers View

“Having been both a ‘worker’ and in management, I would say the worker is responsible for the accident or contributed significantly to the cause of the accident.”

Another: “Most of the root cause we discover is employee unsafe act ultimately behavior based either by the person who left the hazard (one type of bad behavior) and another who put their selves in harm’s way because it was quick or easier. Both are behavior based.”

Root Causes?• Program address this?

• Job Hazard Analysis?

• Training of worker?

• Warnings on can? On generator?

• Gasoline in diesel can:– Why?– How?– When?

• What is the preventive measure?

Unpreventable Employee Misconduct

• All of the following elements:  – Established a work rule to prevent the

violative behavior – Adequately communicated the rule to its

employees – Took steps to discover noncompliance– Effectively enforced safety rules when

violations were discovered

• (See New York Electric State & Gas v. Secretary of Labor and OSHRC, 88) 

Paradigm Shift?

Large VPP Corporation response to a disincentive that needed to be removed for VPP:

“The intent was not to discourage reporting of any injuries or illnesses, but rather a tangible endorsement of XXX's safety culture and commitment to safety and employee recognition of employee safety performance.”

Measuring Process Performance

0

20

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120

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510

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51/

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3/06

4/14

/06

Week Beginning

Number of Safety

Inspections

90%

95%

100%

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052/

18/0

54/

1/05

5/13

/05

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/05

8/5/

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/9/0

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20/0

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3/06

4/14

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Week Beginning

Safety Inspection

Scores

Incentive or Recognition Program?

• Random yearly drawing if you worked 12 months without an unsafe act to win prizes worth $1500-$3000.

• A $500 prize is available for those having 6 months and only one unsafe act

Benefits of Positive Incentives • Promote concern and near miss reporting; near misses

are free lessons

• First aid and recordable cases are reviewed for potential programs problems, training gaps, PPE and other root causes. One lockout review of all written procedures found 700+ errors and issues

• Audits - completing regularly scheduled audits and closure rates of 95% or higher within prescribed time periods of either 30 or 60 days

• Reduced our carbon footprint - 5% waste reduction goal as well as reducing our green house gas emissions; support environmental programs

• 100 % Training completion for all EHS assigned courses

Leading Indicators

• If performance indicators show poor or unacceptable performance, modifications or changes can be made before injuries actually occur

• Focus is on the process, not the end result

Lagging Indicators

• Unable to measure what “has not happened”

• Casual acceptance of the risks that have not lead to a loss event

• Doesn’t tell us if we are doing the right things to prevent injuries / manage safety

• Too many ways to impact reporting of lost times or days

• Can drive reporting underground

Global Risk Pyramid

Catastrophic

Multiple Fatality

Fatality

Serious Injury (M)

Minor Injury

Property Damage

Close Call

Behavior

EffortEffortFree Free lessonslessons

Employee Motivation

“Employees do things for their own reasons, not

necessarily yours.”Frank Blasi

ConclusionResearch beliefs for managers and employees before you implement an incentive program.

Change safety culture from the top down and the bottom up EVEN if it is one person at a time.

You can make an excellent pitch to upper management, but will field people care?

Recognize people for innovative ideas and mentoring.

Good Luck!

Questions?

Resources and Thanks• Wayne Pardy was invaluable in the preparation of this

presentation. His 1999 book, Safety Incentives: The Pros and Cons of Award and Recognition Programs (Osha Compliance) is highly recommended. He is willing to share incentive information and assist anyone. His email is pardyw@gmail.com

• Dr. Michaels has lead webinars in 2010 on this issue and the impact on recordkeeping.

• Michael Connors has pushed the issue in VPP nationally and many have changed their programs.

• Thanks to Jan for proofing work. • Thanks to Lisa for providing balance on this difficult subject.

• John Newquist– Newquist.john@dol.gov