Lagging vs. Leading Indicators: Success with safety incentive programs

Shutterstock / Talaj
Shutterstock / Talaj
Published On
May 14, 2021

All employers aspire to have a safe work environment, free from job-related injuries and incidents. To achieve this, they can create a safety incentive program. There are pros and cons associated with such programs, as well as nuances and challenges to be aware of.

Safety incentive programs initially came to prominence in the 1970s and, until recently, were largely based on lagging indicators. Employers calculate the total number of accidents, incidents and near-misses; if the rate falls below a predetermined threshold, workers receive an award. Rewards range from recognition, prizes, gift cards, bonuses, pizza parties and everything in between. Incentives can be issued to individuals, teams, departments and even the entire company, depending on the program.

Lagging indicators

Many safety experts have a problem with incentive programs based on lagging indicators because these are counter-productive to the goal of achieving a safe workplace. While well-intended, the argument is that these programs encourage employees to under-report accidents, incidents and near-misses in an effort to keep the total number down for the sake of the incentive.

It also creates an environment where co-workers and even supervisors pressure employees to keep quiet about mishaps. Failure to report these scenarios completely defeats the purpose of attempting to create a safer work environment. Additionally, incidents occur, at times, through no fault of the worker. So, is it fair to penalize workers when that occurs?

OSHA also doesn’t look favorably on lagging-indicator-based incentive programs. In fact, the agency has indicated in the past that it would be more thorough when conducting inspections of companies that use these types of programs.

Leading indicators

As a result, employers started implementing leading-indicator-based safety incentive programs. Leading indicators are proactive, preventative and predictive. Such programs are behavior-based rather than rate-based and incentivize workers for safe behaviors and practices instead of results.

Some examples of rewarded behavior include alerting management to safety violations, suggesting ways to improve safety, correcting hazardous situations and participating in volunteer safety committees. While some companies still use lagging-indicator-based safety incentive programs, the trend continues to move toward behavior-based ones.

In 2016, OSHA issued a memorandum clarifying the agency’s position on workplace-safety incentive programs: “The Department believes that many employers who implement safety incentive programs and/or conduct post-incident drug testing do so to promote workplace safety and health. In addition, evidence that the employer consistently enforces legitimate work rules (whether or not an injury or illness is reported) would demonstrate that the employer is serious about creating a culture of safety, not just the appearance of reducing rates. Action taken under a safety incentive program or post-incident drug testing policy would only violate 29 C.F.R. 1904.35(b)(1)(iv) if the employer took the action to penalize an employee for reporting a work-related injury or illness rather than for the legitimate purpose of promoting workplace safety and health.”

In this clarification, OSHA indicates that employers cannot retaliate against employees for reporting work-related injuries and illnesses. In this case, retaliation may include withholding a prize for missing a safety target. Such action is prohibited if the employer did not have adequate precautions in place to encourage workers to report hazardous situations, injuries and illnesses.

Although OSHA has gone back and forth on whether both types of incentive programs are permitted, the agency recommends using leading indicators to avoid potential negative side effects of a lagging-indicator-based program. Employers considering modifying or implementing a safety incentive program should understand that, statistically speaking, recognition incentives have been proven to be more effective than financial rewards and badly designed programs result in underreporting of accidents, incidents and near-misses.

Challenges

There are some challenges with implementing a safety incentive program. It can often be difficult to see an immediate return on investment, and programs are often seen as a band-aid approach to safety that can result in reward entitlement among employees. The programs can also fail to reward workers who make safety a priority regardless of incentive. However, it is estimated that organizations with a safety incentive program in place experience more than a 40% lower average lost-time, workday-injury rate.

About the Author

tom o’connor

O’CONNOR is safety and regulatory affairs manager for Intec, a safety consulting, training and publishing firm that offers on-site assistance and produces manuals, training videos and software for contractors. Reach him at toconnor@intecweb.com.

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