Tangibly Rewarding

Emotionally and psychologically, non-cash incentives can mean more and last longer.

• By Ira Ozer
• Sep 01, 2006

THERE are two conflicting factions of safety professionals: those who believe it is important to motivate and reward people to achieve specified safety results by offering tangible incentives, such as merchandise and travel, and those who believe that tangible incentives are not necessary because safety results are part of their job and regular compensation.

It is well known that costs of worker's compensation and health care insurance are skyrocketing due to accidents, as well as lost time and productivity labor costs, and that effective safety improvement programs can reduce these costs. Clearly, when the workplace, equipment, and processes are safe, it is up to people to follow proper procedures to achieve safety results.

Integrated Motivation
The performance improvement industry knows that tangible incentive programs work because they motivate and recognize people on an emotional level, above and beyond compensation. Tangible incentives are used effectively for sales incentive and customer loyalty programs because they motivate people to focus on goals, change their behaviors to achieve them and, as a result, improve performance and earn the specified reward.

According to the most recent industry survey by the Incentive Federation, U.S. corporations spend more than $27 billion per year on non-cash incentive programs.

A research study conducted by the International Society of Performance Improvement shows that properly structured tangible incentive programs can increase business results by 20 percent or more for individuals and 40 percent or more for teams. It follows that tangible incentives should work to improve results for safety programs as well.

According to Doug Klein, director of corporate safety for Schwan Foods, tangible incentive programs work if they drive measurable goals and objectives and include leading indicators of safety, such as training completion and having no preventable accidents or lost time events for a specified period of time. Schwan's program tracks five measures and involves its manufacturing and warehouse employees and drivers in 600 locations nationwide. Over five years, Schwan has cut its losses by 50 percent due to its complete, integrated safety program.

Brian Galonek, president of All Star Incentive Marketing, reports that a tangible safety incentive program All Star ran for a major solid waste management company had extremely positive results. The program involved 20,000 truck drivers in 600 divisions and awarded points for the promotion of safe work habits, reinforcement of safety training, and improving the safety culture overall. Divisions participating in the program doubled the reduction of claims versus non-participating divisions, and Galonek says that this is attributable to rewarding individuals, not teams. He also noted that 90 percent of the awards were redeemed online, even though a mail-in alternative was available. The company had originally assumed that many of the participants might not have Internet access.

Why Some Safety Incentive Programs Fail
According to Richard Pollock, CSP, president and founder of Comprehensive Loss Management Inc. and VP of professional development for the American Society of Safety Engineers, tangible incentives can work and should be included within safety programs, but most fall down because there are several "disconnects":

1. Many programs don't reward individuals for specific behaviors; instead, they offer groups of people rewards when collective goals are achieved. These types of programs often reward people who have not demonstrated improved safety behaviors; rather, they are just lucky.
2. When the group goal is not achieved--for example, a lost time accident occurs--then the program is stopped and no rewards are given, even to the people who have worked hard to demonstrate safe behaviors. So one bad apple can spoil it for everyone. Worse, when these programs offer increasingly greater rewards for the more months that go by without a reported incident or lost time accident, then peer pressure encourages people to hide and not report injuries. This can result in increasingly dangerous behaviors and work environments, which concerns OSHA and many safety professionals.
3. Programs often don't involve supervisors, who are the most influential people to directly encourage and coach employees to achieve safety results through improved behaviors.

Pollock emphasizes that tangible incentives are an important part of the mix to motivate people--however, it is essential to ensure that the company has a solid safety program in place to begin with, one that:

• recognizes the hazards of the workplace and knows how to control them;
• develops control systems that employees need to know and follow, including processes, equipment, machinery, etc.;
• trains employees and supervisors;
• audits inspection processes to ensure controls are being followed; and
• has an effective safety communications campaign.

Why Tangible Incentives Work
Why use tangible rewards and not just give people more cash as incentives? It seems easier just to include more cash in an employee's paycheck and, if surveyed, most will say they would prefer cash as opposed to tangible merchandise. The reality, however, is that as long as compensation is adequate, tangible incentives work better than cash to motivate people. According to the 2005 book "The Enthusiastic Employee: How Companies Profit by Giving Workers What They Want," by David Sirota, et al., which is based on employee attitude studies over 30 years and inclusive of hundreds of companies and millions of employees, most employees feel that their compensation is good or at least fair for their jobs. The keys to employee motivation are that people need to be treated equitably and with respect, to feel that they can take pride in their work, and to have camaraderie with other people.

It is important to understand the psychological processes of why tangible rewards work more effectively than cash to motivate people. According to a white paper published in 2003 by Scott Jeffrey, Ph.D., people will engage in incentive programs according to their perceived value of the award and the effort they must go through to earn it, and there are four psychological processes that explain why:

1. Evaluability--People evaluate tangible merchandise and travel experiences differently than they do cash. Because they are not buying the reward, there is an ambiguity that leads people to perceive that a tangible award is worth more than the actual cost. Industry case studies show that it can take four times as much cash to motivate someone than the equivalent amount of tangible rewards.
2. Separability--People separate tangible rewards from cash in their minds and, therefore, they stand out more. Cash tends to get lumped together with compensation and bills.
3. Justifiability--Many people cannot justify taking a cash award and buying a luxury item that is "nice to have" versus spending it on a "must have"; however, if given the opportunity to work toward a tangible reward, they feel comfortable because it is perceived as "something above and beyond."
4. Social Reinforcement--Recognition, social acceptance, and the feeling of significance are extremely important to people. Tangible rewards provide the opportunity for a company to promote them publicly and for the recipients to brag about receiving them; this is commonly known as "trophy value." By contrast, people will not discuss the amount of money they have received.

In addition to these, another factor is that tangible rewards provide ongoing usage from the time of the award, well into the future. The TV that someone redeems in an incentive program today will be used on a daily basis for many years to come, providing an ongoing reminder of why he or she received it, for what, and from whom. Also, from a financial perspective it is good to note that in qualified safety programs, tangible rewards can be tax free, while cash awards are taxable.

Long-Term Rewards
Saro Hartounian, CEO of Harco Incentive Solutions, summarizes that the key best practices for incorporating tangible incentives within a safety program are:

• Reward individuals who can achieve results. Depending on your company, work process, culture, and other factors, rewards can be for achieving a specified period of time with no lost time incidents, no traffic violations, etc.
• Identify, track, and reward safe behaviors, which are the "leading indicators" of safety--not just results, which are "lagging indicators." Reward for participating in safety councils, "drive-a-longs," safety training courses, and other activities that will help change behaviors.
• Accumulative programs offer the best results, in which participants can earn increasingly greater amounts of reward points over time, versus programs that offer a selected gift for a short burst of activity. This strategy has proven to be effective with the incentive programs with which we are all familiar and in which most of us participate, from airline "frequent flyer programs" to banks, hotels, restaurants, and telecommunications companies.
• Team behaviors should be reinforced as part of the program but not be the overall measure.
• Select rewards that are motivational and relevant to the participants. Consider points-based online programs that offer vast choices of merchandise brands and price points, from small awards to big ones that are inspirational.

Seven Steps to Follow
To develop the most effective program, I also recommend following the seven steps to structuring an effective incentive program in accordance with incentive industry best practices as published in "Incentives, Motivation and Workplace Performance," a white paper from the Society of Incentive & Travel Executives Foundation (www.sitefoundation.org). The best programs generally are long term, with rewards and rules that are positive (something appealing to the participants), immediate (the reward will be given soon after the achievement), and certain (people will definitely earn a reward if they achieve the result).

I also suggest that you include safety incentives within an overall "umbrella" employee involvement system that includes other programs, such as employee recognition, suggestion/innovation, service awards, referrals, lead submissions, and even sales. Often, employees who are involved in safety programs, such as drivers and customer service personnel, have direct contact with customers. And in today's competitive business environment, the concept should be considered that "everybody sells."

This article appeared in the September 2006 issue of Occupational Health & Safety.

This article originally appeared in the September 2006 issue of Occupational Health & Safety.