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Company uses safety awards to lower injury rate and reduce premiumsA few years ago, we were called upon to help a small company that remanufactured auto parts. This 40-person firm was experiencing a high injury rate. Its workers compensation premiums had just doubled and were expected to double again in a year due to the frequency and severity of its claims.

American Safety implemented its 15-point Total Safety Management program and quickly got things under control. One of the more effective initiatives was a safety awards program. Every 50 days the entire plant worked without a lost time accident, all employees were awarded a small gift such as a ball cap with the company logo, a tape measure, fire extinguisher, smoke alarm, first aid kit, etc.

We like this type of program because it is a great way to reward good performance, maintain awareness by building a positive safety culture, and add a dimension of fun to the program. The program also creates peer pressure to discourage the reporting of fraudulent and abusive claims and encourages cooperation with light duty programs for legitimate claims.

One day, as the plant was nearing another 50-day milestone, an employee approached the company’s owner on the plant floor and privately told him, “Just thought you would like to know, but Joe Brown is going to have an accident tomorrow.” Now Joe Brown (not his real name) was scheduled to be terminated from the company at the end of the week due to performance issues. The owner of the company moved up the termination and avoided a certain fraudulent claim.

Safety award programs, if properly designed, create peer pressure that encourages employees to behave in an appropriate fashion. Normally, the peer pressure manifests itself in a very low-key fashion. In extraordinary situations, such as the one discussed above, employees will step forward and apprise management of inappropriate behavior. But it will not happen unless the employee has “some skin in the game.”

For some time now, OSHA and many safety professionals have claimed that safety awards (or incentive) programs are inappropriate in a safety and health program because they discourage the reporting of injuries. Recently, OSHA has intensified its objection to safety awards programs that are tied to injury rates. (The agency has also increased the number of inspections and the size of fines.)

We do not believe OSHA’s position is realistic or well thought out.

Sure, there are ruthless employers that try to discourage the reporting of accidents. Some might use safety incentives for this purpose. Others simply use intimidation. That is not only wrong; it is also illegal. We would not work for anyone that uses those tactics.

There are many positive reasons to have a safety awards program and we have always said it really depends on how the program is designed. To avoid negative criticism, we have always recommended that programs be designed around the lost time accident or significant accident (either a lost time accident or when the claim reaches $1,000 in cost).

By definition, a lost time accident is one in which the employee physically cannot come to work. You could give away as much as a million dollars and it would not “change the stripes on that tiger.” If you use the significant accident, you have to reach $1,000 in cost before the game ends. Obviously, at that point, the claim has already been reported and processed.

So, if you use the lost time accident or significant accident for a game-ending event in your safety program, OSHA would have a tough time proving that you are trying to discourage employees from reporting accidents.

We are also aware of OHSA’s feeling that, if you must have a safety awards program, it should reward people for positive behaviors instead of low claims. The problem with that approach is that it is nearly impossible to administer. You could reward Employee “A” today for a positive behavior. Tomorrow Employee “B” will come to you and tell you he behaved in a similar fashion and he wants the same reward. So, that system is inherently inequitable as well as an administrative nightmare. Also there is no dimension of peer pressure to control abuse.

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