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The Prize Predicament

Federal regulators concerned about underreporting of injuries take a long hard look at incentive programs. Does ‘paying’ for safety help produce safer sites?

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Lonnie Schock learned long ago that safety can’t be bought. A decade ago, while working as a safety professional on a job in Oregon for Intel, he got a tough lesson in how incentive programs intended to lower incident rates actually can unravel a project’s safety culture. The company used a popular lottery system, seen on many construction sites over the years, in which workers who reported solid safety statistics earned chances to win a new pickup truck; anyone injured on the job was ineligible for the prize. Workers driving to the jobsite saw the truck parked in front of the project’s gates, reminding them of the possible payoff.

The Prize Predicament
Illustration: Peter Hoey
The Prize Predicament
Illustration: Peter Hoey
While Redwood City, Calif.-based DPR Construction rewards good jobsite results, it is focused on building a company-wide culture of safety.
Photo: Michael Toporkoff, UCSF Project Manager
While Redwood City, Calif.-based DPR Construction rewards good jobsite results, it is focused on building a company-wide culture of safety.
----- Advertising -----

At the end of the project, the workers were gathered together and a random name was drawn. The winner chuckled as he gave a brief acceptance speech: “I can’t believe I won this. I broke my foot four months ago and hid it so I would still have a chance to win this. Good thing I did,” Schock recalls him saying.

Schock, now a consulting manager with JMJ Associates, a safety consultant in Austin, Texas, says the lesson was clear: If you want to work the system, cover up recordable incidents. “Talk about the ultimate driver of bad behavior,” he says. “Those [who] were following safe practices felt cheated. The takeaway wasn’t about how to have a safe worksite, but it was about how not to follow safety procedures. It was a worst-case scenario come true.”

Similar stories of well-intentioned safety incentive programs gone wrong have raised red flags within the U.S. Occupational Safety and Health Administration for a long time. For years, OSHA has warned against incentive programs, particularly those that it deemed could promote underreporting. While banning incentive programs is an idea that has percolated for some time, the agency now appears poised to take its strongest stance against them.

At industry forums around the country this year, David Michaels, assistant secretary of labor for OSHA, has shared his concerns about underreporting and how incentive programs could contribute to the problem or cover it up. Recent agency research suggests underreporting across all industries is rampant. A 2007 study of traumatic injury rates in Michigan showed that although 170 work-related incidents in all industries were reported to OSHA, surveys of emergency-room statistics revealed roughly 800 such incidents occurred.

Against that backdrop, Michaels focuses a critical eye on incentives tied to lowering injury rates. At a June meeting of the Construction Users Round Table, he talked about jobsites at which construction-company executives threatened employees who reported injuries and other jobsites at which workers pressured their peers not to report injuries so they could earn free pizza at week’s end.

With a note of apparent irony, Michaels says, “That’s going to be very effective in discouraging people from reporting injuries. We see more and more of that, and we think it’s a bad idea. … If someone reports an injury and they are told they can’t have that piece of pizza because they report that injury, that’s a violation of the 11c clause of the OSHA act. We take that very seriously.”

Michaels’ comments echo those of other OSHA officials. In November, Jordan Barab, deputy assistant secretary of labor for OSHA, told attendees at a Voluntary Protection Programs Participants’ Association National Board of Directors meeting in Washington, D.C., that the agency will scrutinize incentive programs that discourage workers from reporting injuries and illnesses. These programs may discipline workers who are injured or institute safety competitions that penalize workers when someone reports an injury or illness. “Let me be absolutely clear,” Michaels said. “It’s one thing to reward workers for doing their jobs safely, but OSHA will not tolerate programs that discourage workers and managers from reporting injuries and illnesses.”

Launched in October, OSHA’s new National Emphasis Program on record-keeping includes a section that questions incentive programs, specifically addressing cases in which “prizes, rewards or bonuses to supervisors or managers … are linked to the number of injuries or illnesses recorded on the OSHA log.”

OSHA’s strong stance on incentives comes at a time when the agency and the Obama Administration are stepping up enforcement efforts. Some in Congress also want stronger enforcement. The Protecting America’s Workers Act, introduced last year by Rep. Lynn Woolsey (D-Calif.), includes a provision that would “prohibit the adoption or implementation of policies or practices by the employer that discourage the reporting of work-related injuries or illnesses by any employee or in any manner discriminate or provide for adverse action against any employee for reporting a work-related injury or illness.” Two hearings were held in the House Subcommittee on Health, Employment, Labor and Pensions in the spring, but there has been no further action since.

“There are bad apples out there, but OSHA takes the stance that we are all bad apples. I don’t agree with that. There area lot of good companies … who have their heart in the right place. They care about safety. It’s not just about numbers.”
— Kristi Barber, vice president, GBA Inc., a Rapid City, S.D., contractore

Although the OSHA campaign specifically targets incentive programs based on lowering recordable incidents, the definition remains fuzzy for many in the industry. While many safety professionals are opposed to programs based on lagging indicators, such as injury rates, others focus on leading indicators, such as injury prevention, with the ultimate goal of lowering injury rates.

Still, OSHA’s recent actions are having a chilling effect. Billy Miller, assistant vice president of risk engineering for Zurich Services Corp., Schaumburg, Ill., says the company advocates well-designed incentive programs that promote prevention. He sees many top companies using some form of incentives effectively. However, he recognizes there are risks as well.

“We’ve seen where these can be misused,” he says. “We ask those [companies] that put incentive programs in place to be vigilant to help any program keep people from suppressing claims.”

But for some companies the risk may be too high. At a recent safety conference with more than 150 safety professionals, the topic of incentive programs was energetically debated, Miller says.

“A lot of people said they wouldn’t put a lot of energy into defending their incentive programs [to OSHA], and they would discontinue them,” he says. “They were worried they would get caught up in a government dragnet. [Roughly 60%] said they have a [safety incentive] program and it works well, so they would maintain it the way they have and keep the performance they have today.”

Chris Williams, safety director at Associated Builders and Contractors, says he sees many contractors using incentive programs effectively and that ABC would come out against any ban of incentive programs. “We see these as incentives to practice good behavior,” he adds. “Contractors should benefit...

 

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