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CONTROLLING INJURY COSTS WITH EFFECTIVE SAFETY INCENTIVES

CONTROLLING INJURY COSTS WITH EFFECTIVE SAFETY INCENTIVES

CONTROLLING INJURY COSTS WITH EFFECTIVE SAFETY INCENTIVES
January 31
08:48 2017

Risk Managers’ Forum

Encourage clients to use incentive programs that reward safe behavior as
opposed to avoiding accidents

The best way to control worker injury costs is to not have injuries in the first place. So, what can your agency do to help clients encourage workers to be safe? On the surface, this seems like a silly question; after all, who wants to injure him/herself?

Unfortunately, many workers do not correlate safe working habits with injury prevention. Therefore, employers are left to figure out how best to convey to workers the importance of following safety procedures, in order to prevent workplace injuries and control the associated financial impact of claims on the organization.

The simple solution is to discipline employees who fail to follow safety rules. Sure, that works, but if you write up or terminate every employee who did not use personal protective equipment or committed other safety infractions, you might not have many workers left to do the job. The other issue with discipline is the difficulty of administering unsafe work behaviors. Would you write up or fire a worker for not using three points of contact when getting off a piece of equipment or not using proper lifting techniques? Rules and discipline are vital for holding staff individually accountable for critical safety issues, but they must be supplemented with other methods of encouragement in order to maintain a safe work environment.

Integrating safety into performance appraisals and the overall accountability system for each worker is an excellent way to demonstrate the importance of safety. Incorporating safety measures as part ofannual bonuses or salary increases also is an effective way to demonstrate the value of safety, and it can be the foundation for an effective safety culture across the organization. What message does it send to workers if you tell them to work safely throughout the year, but that subject is not even part of their annual performance review?

OSHA’s rule

The Occupational Safety and Health Administration (OSHA) recently issued a final rule to “Improve Tracking of Workplace Injuries and Illnesses,” which affirms the statutory prohibition on retaliating against employees for reporting work-related injuries, and also addresses injury-based incentive programs. The rule does not specifically prohibit safety incentive programs; however, employers must not create incentive programs that will discourage an employee from reporting an injury or illness.

OSHA has clarified that an incentive program that is based purely on recordable injuries or lost-time injuries is in violation of the statute. This would include prizes, monetary rewards, or recognition functions like a BBQ lunch for going a quarter without a lost-time injury. So, if a worker complains that he or she did not get the BBQ because Joe cut his finger last week, it will be difficult to defend in the eyes of OSHA. OSHA believes that these systems discourage workers from reporting injuries. Even the sign on the billboard showing “483 days without an injury” could be considered a deterrent.

In addition to OSHA compliance issues, the other significant problem with injury-based incentive programs and accountability systems is the potential for suppressed claim reporting. This practice can have an adverse impact on claims development due to injury reporting lag time. For example, I worked with a multi-location food service organization that designed an “incentive system” that measured claims by location on a quarterly basis. If a location reported a lost-time injury in a given quarter, it was allocated a percentage charge of total payroll. If the location had no lost-time claims for the quarter, there was no charge. The intent was to incentivize each location to reduce the number of injuries and claims costs for its facility.

Integrating safety into performance appraisals and the overall accountability system for each worker is an excellent way to demonstrate the importance of safety.

What actually happened was that management would hold claims until the subsequent quarter in order to avoid the charge back or, worse, injuries were not reported at all, with location management trying to adjust claims on their own. In reviewing the claims data, over time many locations would have no claims in a given quarter and then five or more in the first week of the next quarter. Despite their best intentions, the “incentive program” led to extremely high average claims costs for the organization. This provided a good lesson in looking closely at the incentive programs and identifying the actual behaviors that are impacted by the process.

What about lost-time injuries? OSHA has an issue with employers that have incentive programs designed to measure lost-time injuries because they, too, may discourage reporting or discriminate against individual workers. Supplementing the proactive safety measures with a specific goal for lost- time injuries can be an effective way to address the financial aspect of workplace injuries and encourage an active return-to-work process within the organization.

Incentive programs

Many employers have opted to develop safety incentives to address the issue of keeping safety front of mind every hour of every day. The key to these incentives is to develop key indicators that “lead safety” rather than “measure failure.” Creating incentives based on not having accidents is an example of measuring failure.

An effective safety incentive program should measure and recognize workers for safe work habits. If properly structured, it can improve safety awareness, reduce incidents, and have a positive impact on the bottom line, without encouraging non-reporting of incidents. Safe work habits, like completing training, wearing proper personal protective equipment, and using proper, safe work procedures are good ways to measure safety. Reporting a near miss or unsafe conditions, participating in stretch exercises and in a safety audit, and good housekeeping also are proactive measures that will lead to a safe work environment. It will take a bit of due diligence, but encouraging your clients to review operations and develop specific ways to reward andrecognize safe work habits will createa much more effective system for encouraging workers to “be safe” on a daily basis.

The types of rewards provided can also be a vital component of long-term success. Everyone loves cash, but how long does the money last? How can your clients ensure that recipients understand that the purpose of the “cash payment” was to reward safe performance? Many organizations have discovered that the impact of purely monetary rewards can be short lived and may either be insignificant if spread out over the entire organization or perceived as winning the lottery if there are only one or two “winners.” As mentioned earlier, integrating safety into the job performance review may be a more effective way to show a monetary benefit. Physical rewards like hats, shirts, jackets, or even a sticker for the hard hat with a safety slogan can be effective ways to reward the individuals, with the added benefit of marketing the safety success for all employees to see.

Sometimes it seems like an uphill battle trying to encourage workers to be safe, when it is really in their best interest. Each employer has an obligation to develop systems that provide a safe work environment and encourage safe work habits every day. The key is to find the right buttons to push that not only encourage employees to be safe, but help control injury costs for the organization.

The author

Mark Gaskamp is a managing director of Wortham Insurance & Risk Management in Austin. He is part of the Wortham Construction Industry Practice Group, where his responsibilities include partnering with clients to manage safety and risk management exposures to reduce their cost of risk. He is actively involved in the ABC and AGC safety committees, and is a national faculty member of The National Alliance’s Certified Risk Manager’s (CRM) program. For more information, contact Mark atmark.gaskamp@worthaminsurance.com or visit www. worthaminsurance.com

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