Implementing the right workplace safety incentive program

August 15, 2017 / 4 min read

A workplace safety incentive program can be positive and something an insurer should support, but it depends upon the program and how it’s implemented. However, an improperly created safety incentive program can cause more harm than good, and employers need to carefully design them.

Underreporting incidents

Traditionally, many safety incentive programs were tied to reductions in reported injuries and illnesses. Unfortunately, while that sounds like a good thing, it can lead to the underreporting of incidents by employers and workers who don’t want to lose incentive awards. That type of program influences reporting behavior—not safety behavior—and may have negative consequences that:

eliminate opportunities to intervene and correct the causes, which can lead to more injuries or illnesses that are potentially more serious
lead to delays in medical attention, resulting in more lost work time and higher medical expenses due to the worsening of an injury or illness
provide distorted views of a program’s effectiveness because the important incidence metric is underreported

OSHA'S view on reporting

The Occupational Safety and Health Administration (OSHA) takes a dim view of safety incentive programs tied to reporting of workplace injuries and illnesses. In addition, there’s been little research to demonstrate the effectiveness of safety incentive programs. Most of the evidence is based on anecdotal data, and there are conflicting conclusions.

For example, although a study of carpenter apprentices by HJ Lipscomb et al, concluded that “reporting of work-related injuries was 50 percent less prevalent when workers were disciplined for injury experiences,” the researchers “saw minimal evidence of association between injury reporting practices and safety incentive programs.” In the construction industry, a 2005 study by Gangwar and Goodrum showed that the programs can have a positive effect on safety performance, but accident rates rise as the safety incentive program ages. That may be because employees start to view program awards as a worker entitlement rather than a safety incentive. In addition, it may take several years before the positive effects of implementing a safety incentive program manifest lower accident rates.

Conversely, the U.S. Government Accountability Office (GAO) reviewed six studies that evaluated the effect of safety incentive programs, two of which assessed the potential effect of the programs on the reporting of injuries and illnesses. The GAO report concluded there was no relationship between the programs and injury and illness reporting.

The findings of these studies suggest that basing incentive rewards on the reporting of less incidents conflicts with the goal of having less injuries and illnesses. In recent years, some employers have shifted to behavior-based safety incentive programs that reward employees for safe behaviors rather than lower incident rates.

Appropriate workplace initiatives and activities might include:

submitting safety suggestions
participating in safety audits and inspections
implementing job improvements
serving on a safety committee
completing a company-wide health and safety training program
identifying workplace hazards
participating in accident or near-miss investigations

Avoid unintended consequences

Organizations need to carefully implement a safety incentive program to avoid unintended consequences. Improperly designed programs may influence employees to underreport injuries and illnesses, impede communication and assistance between employees, or cause employees to focus on behaviors or tasks at the expense of other safety-related activities, especially ones not in the incentive program. For example, an overemphasis on housekeeping to win an incentive award might mean other activities, such as maintenance, suffer.

OSHA may initiate recordkeeping inspections, increase the severity of citations, or disqualify participants if the agency believes a safety incentive program isn’t properly implemented. OSHA information on workplace safety programs can be found on their website.

Encouraging your insureds to adopt an effective workplace safety incentive program is an important step in a comprehensive plan to identify risks, minimize injury, and control insured losses. For workers' compensation carriers, Verisk offers highly effective tools for determining risk for underwriting purposes—on-site underwriting and loss control surveys. We perform site inspections on virtually every type of commercial policy and business to help identify risks and provide you with surveys customized to your underwriting specifications. For more information about our workers comp inspection service, please visit our Survey Service website. In addition, our Engineering and Safety Service provides client handouts and reports related to many loss control issues.