Safety incentive programmes have their intended effect: a reduction in the loss due to accidents. They also have positive side-effects. For one thing, they are a profitable proposition in industry, as the savings usually exceed the costs. For another, they may lead to better company morale. Incentive programmes can help improve the general organizational climate and, therefore, make a positive contribution to productivity over and above the gain due to accident reduction. Group-based safety incentive programmes give workers a common cause with each other as well as with management. Reinforcing safe acts “removes the unwanted side effects with discipline and the use of penalties; it increases the employees’ job satisfaction; it enhances the relationship between the supervisor and employees” (McAfee and Winn 1989).
Cost-Effectiveness of Incentive Programmes
There have been many cases, in manufacturing, construction and other industries, in which the accident rate per employee was reduced by 50 to 80%. Sometimes the results are better still, as was the case in two mining companies in which the total lost days dropped by 89 and 98% respectively (Fox, Hopkins and Anger 1987). Sometimes the results are more modest. A cable plant reduced the accident costs per employee by 35%; a manufacturer of tobacco products by 31% (Stratton 1988); a grain processing and transportation company by 30%; a Pacific resort complex by 39%, and a manufacturer of food products by 10% (Bruening 1989).
These favourable effects continue to last over long periods of time. Incentive plans in two American mines were studied over periods of 11 and 12 years. In one mine the number of days lost due to accidents was reduced to about 11% of baseline and in another to about 2%. Benefit/cost ratios varied from year to year between 18 and 28 at one mine and between 13 and 21 at the other. There was no sign that the effectiveness of the incentive plans diminished over time at either mine (Fox et al. 1987). A high benefit/cost ratio—about 23 to 1—has also been observed for incentives for safety in the resort hotel business.
The ratios between benefits (savings due to accidents prevented) and programme costs (bonuses and administration) are usually greater than 2 to 1, meaning that companies can make money on such accident-prevention efforts. This is largely due to reduced fees to workers’ compensation boards and other insurance, as well as to increased production, reduced downtime and a lesser need for replacement workers.
Requirements for Effective Incentive Programming
Incentive programmes, when properly designed, carry the approval of the people to whom they are addressed, and in this respect they compare favourably with the other forms of safety motivation such as laws, rule books and policing, which are much less popular. To put it plainly: a small carrot is not only much better liked than a big stick, it is also much more effective. Only one negative side-effect has been noticed so far, and that is the tendency of people to under-report accidents when incentive programmes are in effect. Fortunately, such under-reporting has been found to occur with respect to minor accidents only (McAfee and Winn 1989).
Past experience with incentive programmes also shows that some programmes have had much greater effect than others. For instance, a German incentive plan which promised professional truck and van drivers a bonus of DM 350 for each half-year of driving without being at fault in an accident, produced a reduction in direct accident cost to less than one-third in the first year of application and remained at that level for over three decades (Gros 1989). In the California “good driver” experiment, where drivers in the general population were offered free extension of their driver’s licence by one year in return for each year of accident-free driving, the accident rate dropped by 22% in the first year of the programme (Harano and Hubert 1974).
An attempt has been made here to cull the ingredients of the most effective incentive plans from published reports. This has by necessity largely been based on inference, because to date there are no well-controlled experiments in which one particular incentive characteristic is being varied and all other factors are kept constant. For obvious reasons, such experiments are not likely to be forthcoming; industry is not in the business of running such experiments. Never the less, the items that appear in the checklist below would seem to make very good sense (Wilde 1988; McAfee and Winn 1989; Peters 1991).
The introduction and long-term maintenance of incentive programmes should be conducted with managerial vigour, commitment and coherence. Workers or drivers should not only be informed of the programme in existence, but they should also frequently be reminded of it in attention-catching ways. In order to motivate and to inform the relevant audience, those in charge of incentive programmes should provide clear and frequent knowledge of results to the audience (Komaki, Barwick and Scott 1978).
Rewarding the “bottom line”
Incentive programmes should reward the outcome variable (the fact of not having caused an accident), not some process variable like wearing safety glasses or seat-belts, being sober or obeying shop-floor safety rules. This is because rewarding specific behaviours does not necessarily strengthen the motivation towards safety. A potential safety benefit due to an increased frequency of one specific form of “safe” behaviour may simply be offset by road users less frequently displaying other forms of “safe” acting. “The risk is here that while the rewarded behaviour may improve, other related safe behaviours may deteriorate” (McAfee and Winn 1989).
Attractiveness of the reward
Incentive programmes can be expected to be more successful to the extent that they widen the difference between the perceived benefit of not having an accident and the perceived disadvantage of having an accident. Rewards for accident-free operation in industry have taken many different forms, ranging from cash to public commendation. They include trading stamps, lottery tickets, gift certificates, shares of company stock, extra holidays, promotions and other privileges. While the flexible use of money prevents satiation from occurring, merchandise, especially customized merchandise, may constitute a lasting reminder of the value of safety. Merchandise items also have a “value-added” component in the sense that they can be obtained at a lower price than the recipients would likely have to pay if they bought the items at retail. In the United States, a substantial industry has sprung up to provide the merchandise for safety prizes. Gift certificates hold a middle ground between cash and merchandise; they can be put to flexible use and yet be personalized and imprinted with a commemorative message. Drivers have been rewarded with cash, automobile insurance rebates and free licence renewal.
Awards do not have to be large to be effective. In fact, a case can be made for relatively small recognition awards, such as 1- and 5-year safe driving pins, these being preferable in some cases. Small awards make it possible to hand out awards more frequently, they are probably less conducive to under-reporting of accidents, and they may foster the internalization of pro-safety attitudes through the process of cognitive dissonance reduction (Geller 1990). When a small reward changes a person’s behaviour, that person may justify the change by reasoning that the change was for safety’s sake rather than due to the insignificant inducement. No such internalization of pro-safety attitudes is necessary when the external inducement is large, because in that case it fully justifies the behaviour change.
It should be noted, however, that the attitude-shaping effect of modest awards can take place only after the operators have changed their behaviour for whatever minor external inducement. So, the award should be desirable enough to achieve some behaviour change to begin with. Rewards should have “perceived value” in the minds of the recipients. In some cases, a small material reward might imply a major social reward because of its “symbolic function”. Safe behaviour may thus become the “right thing to do”. This might help explain why a modest incentive such as free licence renewal for one year produced a major reduction in the accident rate of California drivers. Moreover, analogous to earlier studies that found that accident rates in dangerous tasks (such as piece-work) were exponentially related (to the power of three) to higher wages, it may be suggested that relatively small increments in wages for having no accidents should reduce the accident rate by a larger amount (Starr 1969).
Progressive safety credits
The amount of the incentive should continue to grow progressively as the individual operator accumulates a larger number of uninterrupted accident-free periods; for example, the bonus for ten uninterrupted years of accident-free operation should be greater than ten times the bonus for one year of accident-free performance.
The operational rules of the programme should be kept simple, so that they are easily understood by all persons to whom the programme applies. It is of paramount importance that the incentive programme should be developed in cooperation and consultation with those people to whom it will be applied. People are more likely to actually strive for goals they have helped define themselves (Latham and Baldes 1975).
The incentive programme should be perceived as equitable by those to whom it is addressed. The bonus should be such that it is viewed as a just reward for not causing an accident in a given time period. Similarly, incentive systems should be designed such that those workers who are not eligible for the (top) award do not resent the system, and that those who are rewarded will be seen by others as justly receiving the award. As chance plays a part in having or not having an accident, the actual receipt of the award may be made dependent on the additional requirement that the accident-free worker in question also maintains cleanliness and safety in his or her workstation. In the event that disincentives are used as well, it is necessary that the public view the penalty imposed as justified.
Programmes should be designed such that the bonus is viewed as within potential reach. This is of particular importance if the bonus is awarded in a lottery system. Lotteries make it possible to hand out greater awards, and this may enhance the attention-getting appeal of an incentive programme, but fewer among the people who have accumulated the safety credit will receive the bonus. This, in turn, may discourage some people from making an active attempt to accumulate the safety credit to begin with.
Short incubation period
The specified time period in which the individual has to remain accident-free in order to be eligible for the bonus should be kept relatively short. Delayed rewards and penalties tend to be discounted and are thus less effective in shaping behaviour than more immediate consequences. Periods as short as one month have been used. If longer periods apply, then monthly reminders, status reports and similar materials should be used. In the California experiment cited above, those drivers whose licenses were coming up for renewal within 1 year after being informed of the incentive programme showed a greater reduction in accident rate than was true for people whose licenses were not to be renewed until two or three years later.
Rewarding group as well as individual performance
Incentive programmes should be designed to strengthen peer pressure towards having no accident. Thus, the plan should not only stimulate each individual operator’s concern for his or her own safety, but also motivate them to influence peers so that their accident likelihood is also reduced. In industrial settings this is achieved by extending a bonus for accident-free performance of the particular work team in addition to the bonus for individual freedom of accidents. Team bonuses increase the competitive motivation towards winning the team award. They also have been found effective in isolation—that is, in the absence of awards for individual performance. A dual bonus plan (individual cum team) can be further strengthened by informing families of the safety award programme, the safety goals and the potential rewards.
Prevention of accident under-reporting
Thought should be given to the question of how to counteract operators’ tendency not to report the accidents they have. The possibility that incentive programmes may stimulate this tendency seems to be the only currently identified negative side-effect of such programmes (while occasionally moral objections have been raised against rewarding people for obtaining a goal they should aspire to on their own, without being “bribed into safety”). Some incentive programmes have clauses providing for deduction of safety credits in case accidents are not reported (Fox et al. 1987). Fortunately, only those accidents that are minor remain unreported at times, but the greater the safety bonus, the more frequent this phenomenon may become.
Reward all levels of the organization
Not only are shop-floor workers to be rewarded for safe performance, but their supervisors and middle management as well. This creates a more cohesive and pervasive safety orientation within a company (thus shaping a “safety culture”).
Whether or not to supplement rewards with safety training
Although educating towards safety is different from motivating towards safety, and a person’s ability to be safe should be clearly distinguished from that person’s willingness to be safe, some authors in the field of incentives in industrial settings feel that it may be helpful to safety if workers are told through what specific behaviours accidents can be avoided (e.g., Peters 1991).
Maximizing net savings versus maximizing benefit/cost
In the planning of an incentive programme, thought should be given to the question of what actually constitutes its primary goal: the greatest possible accident reduction, or a maximal benefit/cost ratio. Some programmes may reduce the accident frequency only slightly, but achieve this at a very low cost. The benefit/cost ratio may thus be higher than is true for another programme where the ratio between benefits and costs is lower, but which is capable of reducing the accident rate by a much greater degree. As distinct from the issue of the size of the benefit/cost ratio, the total amount of money saved may well be much greater in the latter case. Consider the following example: Safety programme A can save $700,000 at an implementation cost of $200,000. Programme B can save $900,000 at a cost of $300,000. In terms of benefit/cost, A’s ratio is 3.5, while B’s ratio equals 3.0. Thus, judged by the benefit/cost criterion, A is superior, but if net savings are considered, the picture is different. While programme A saves $700,000 minus $200,000, or $500,000, programme B saves $900,000 minus $300,000, or $600,000. In terms of net savings, the larger programme is to be preferred.
Like any other accident countermeasure, an incentive plan should not be introduced without evaluating its short-term and long-term feasibility and its best possible form, nor without provision for scientifically adequate evaluation of its implementation costs and its observed effectiveness in reducing the accident rate. Without such research the surprising effect of one particular reward programme would never have come to light. Although there seems little chance for a safety incentive to actually have a negative effect, there is one variation of a series of California reward/incentive programmes for the general driving public that did produce worse driving records. In this particular programme component, a benefit was given to drivers with no accidents on their records without their prior knowledge of that benefit. It took the form of an unexpected reward rather than an incentive, and this highlights the importance of the distinction for safety promotion. The term incentive refers to a pre-announced gratification or bonus extended to workers or drivers on the specific condition that they do not have an accident of their own fault within a specified future time period.