Safety Awards Programs, Advantages and Disadvantages - Article Example

Safety Program Management, Advantages and Disadvantages and rubric number: Safety Program Management; OSHT 2309 FreddySustaita Jr. Name: Date: Safety Program Management, Advantages and Disadvantages At present, the construction and manufacturing industries are constantly looking for innovative ways, to maintain the safety of their employees. Such industries must act in accordance with ISO (International Standards Organization) controls, state OSHA (Occupational Safety and Health Administration) regulations, strict federal regulations, EPA (Environmental Protection Agency) regulations, NFPA (National Fire Protection Association) guidelines and other safety regulations (Charles, 2008). Some industries find it difficult to enable their employees appreciate the importance of working safely. Simple injuries; for instance, a muscle or a cut may end up costing the industry significant costs incurred in medical care, workers compensation, production loss, and lost time. According to the injury calculation cost tool of OSHA often referred to as Safety Pays, a laceration may cost approximately six thousand dollars, a muscle strain may cost approximately thirteen thousand dollars, while injuries that are more serious such as carpal tunnel may cost approximately eighteen thousand dollars. One technique of industries trying to enhance safety compliance can be through the utilization of safety award programs. This paper will discuss the advantages and disadvantages of safety awards programs, the actual costs (indirect or hidden) that go into safety award programs and the effects of these safety awards programs on performance standards such as OSHA lost and recordable time accidents, severity and incident rates, or costs incurred during workers compensation. Advantages of Safety Awards Programs Awards maintain and build employee awareness in working safely, and operate as a motivator among employees for working in a safe manner (Prichard, 2001). According the president of Peavy Performance Systems, Buck Peavy, "in theory, we ought not to have awards programs to motivate employees to work more safely; however, in actuality, recognition and rewards motivate employees and boost safe behavior" (Smith, 2002). Nevertheless, for various companies it may be easier to recompense employees for ninety days operating without a lost-time injury than to gauge what workers did to improve or support safety. One of the most imperative goals of safety awards programs is to reduce fraudulent compensation claims by workers. One advantage of recognition and rewards may be that they proactively discourage numerous fraudulent claims. Flanders and Goldberg (2001) state that, if a worker is injured at home, it may be to his advantage to account it as an injury that took place at the work place. There may be no co-insurance or deductibles to deal with such compensation for safety awards by workers. Moreover, lost work days may be paid for, and there may also be a potential possibility for payments for disability (Flanders and Goldberg, 2001). Safety awards programs offer an advantage of reducing lost time injuries, OSHA recordable injuries and costs of workers’ compensation and are often the central reason behind a company decision to put into practice the safety awards programs (Goetsch, 1999). According to Cable, one corporation was able to trim down their workers’ compensation costs in the year 2000 from over three hundred thousand dollars to approximately twenty thousand dollars in the year 2004. A different company that also put into practice a safety award program saw their occurrence rate fall from 18.97% in the 1999 to 0.83 in the year 2004 (Cable, 2005). A good example of safety award programs that has worked successfully is the restaurant gift card that is very popular. One of the major positive aspects regarding restaurant gift card may be its capability for recipients to share its benefits with family or friends. This also have a tendency to lead friends or family encouraging the participant with the award program (Expand the Menu, 2006). Disadvantages of Safety Awards Programs According to Prichard, most people perceive safety awards programs as bribery and they believe that they begin when safety professionals don’t actually know how to trim down the number of accidents so they resort to these programs as a type of bribery (Prichard, 2001). This can be termed as a scheming attempt to "grill the books" and habitually may do little to alter actual behavior in the field. These awards often only secure impermanent compliance provided that employees see a direct link among the action and the award. Workers can swiftly learn the regulations of the safety award program and maneuver to minimize the alterations needed whilst making the most of their gains at the cost of the award program. Research on human behavior has indicated that as soon as people are led to imagine what they would gain for carrying out a task, they normally lose interest in it or even do it less well (Prichard, 2001). The main concern with safety awards programs may be the injuries that are not reported. Safety awards may discourage incident-reporting stipulated that they are not administered in the right manner. Workers may feel anxious not to report injuries for the reason that by doing so they would mess up other coworkers opportunities of winning the awards (Atkinson, 2000). Flanders and Goldberg state that underreporting may typically be a symptom of management that is not devoted to a workplace that is safe (Flanders and Goldberg, 2001). This can prove that management is basically apprehensive in reducing employees compensation costs at the cost of health and safety of their employees. For such programs to work effectively, the management has to be involved (Expanding the Menu, 2006). A number of companies have taken this into thought when coming-up with their awards programs and require their employees to sign a waiver, showing that they recognize the possibility of losing their jobs if they fail to report an injury that is work-related (Cable, 2005). Another problem can be attributed to focusing stringently on decreasing accident rates through getting rid of unsafe behavior which makes it reactive as opposed to being proactive. The management has a tendency to cut funding for award programs, once the rates start decreasing; hence, causing a reoccurrence of the problems and causing a cyclical outcome. Through the use of a problem-solving or proactive approach involving the management and employees, this cycle may be eliminated. Moreover, a company ought to have a good safety program to embark on (Downing and Norton, 2004). Costs of safety awards programs It may be estimated that to cope with effective safety award programs, companies must reduce workers compensation claims by 8% to 10% (Smith, 2002). Awards experts propose spending no more than 50% of the investments that an award program generates (Toomey, 1999). Costs of such safety awards programs ought to consider cost of awards, cost of promotion, the program objectives, costs of training, the number of partakers, tracking and cost of administration. Some companies expend millions of dollars on prizes like large cash prizes cruises, or cars on safety awards programs (Smith, 2002). Administrative costs may be lofty for the reason that a lot of detailed work has to be done to sustain smooth functioning of these programs. The administrator of the program and the corporation need to be acquainted with the potential costs involved (Expanding the Menu, 2006). Additionally, there may also be a hidden cost of safety awards programs that numerous companies often overlook. The corporations or the workers ought to pay taxes on awards that are awarded to them. Smith (2002) provides a good example where a South Carolina life-insurance company rewarded workers over 65,000 million dollars worth of 10 dollars and 5 dollars gift certificates, supercilious that they would not be taxed since it was not cash. The IRS stated later the gift certificates were hidden compensation, and the corporation had to pick up the tab for the legal fees, interest and penalties adding up to an extra 180,000 dollars. A different company had awarded workers with 100,000 dollars gift certificates and soon after had to pay an additional 90,000 dollars in taxes. Bill Sims Jr. the proprietor of Bill Sims Co. Inc affirms that the typical amount per worker ought to be in the 100 dollars range. Bill states that “you really cannot expect to transform behavior through spending 2 dollars per worker per year" (Smith, 2002). Another grave cost of awards programs is the repetition of preventable accidents because of failure to correct and identify problems, also referred as the “charge of non-conformance” by quality managers (Goetsch, 1999). Failure to account for an injury, suggests that the grounds of the accident remain uncorrected and uninvestigated and consequently, the grounds of "hidden accidents” that may generate more severe problems in the future. Industries that are in fact committed to tumbling health and safety costs and exposures rely on each and every injury report data to proactively make alterations and recognize trends, to thwart any reappearance (Atkinson, 2000). Employers that make use of traditional awards programs more often than not see a decrease in their OSHA recordables; however, their fatality rates and serious injuries continue to be the same. The solitary thing that may change is a reduction in the reporting of less severe injuries. Stipulated that more severe accidents do take place, because of failing to recognize hazards, the costs might possibly be much worse than if they had the hazard eliminated or fixed. Employees who do not right away report injuries may have staid difficulty getting compensation benefits paid to workers, including both lost wages and medical costs, when the injury turns out to be worse and later on reported (Frederick & Lessin, 2000). These costs may then be transferred to the personal health insurance, and nowadays employees are shelling out elevated and high shares of these personal health insurances. With less claims, this may render to lower employees compensation premiums from their employers. Various employers may see this as an excellent thing; however, it is simply faceting the problem. Industries that deject the reporting of injuries may perhaps also face lawsuits in future by workers for medical compensation for unreported injuries and later denial of compensation to these workers (Prichard, 2001). Hiding injuries may also result to hefty OSHA fines. For instance, Flanders and Lawrence (1999) state that an Ohio firm was cited for coercing workers to pay no attention to medical advice so as to misrepresent records which was illegal under the recordkeeping standard 1904.2(a). The firm had an additional benefit pool that awarded workers with outstanding safety records and in response they were forcing workers not to report injuries. OSHA may be trying to convey a tough message that “result-based awards programs” ought to be structured in a manner as to discourage workers to under report their injuries (Flanders & Lawrence, 1999) Conclusion Safety awards programs offer an advantage of reducing lost time injuries, OSHA recordable injuries and costs of workers’ compensation and they proactively discourage numerous fraudulent claims. From another perspective, the principal concern regarding safety awards programs may be the injuries that are not reported since these programs discourage incident-reporting. Obviously, there are numerous costs linked to these awards programs. Some companies expend millions of dollars on safety awards programs. These costs include cost of promotion, costs of training, the number of partakers, tracking and costs of administration. This paper has discussed the advantages and disadvantages of safety awards programs, the actual costs (indirect or hidden) that go into safety award programs and the effects of these safety awards programs on performance standards such as OSHA lost and recordable time accidents, severity and incident rates, or costs incurred during workers compensation. Because of the intensity of effort necessary to properly execute and establish safety awards programs, and the augmented level of uncertainty concerning the ROI (Return on Investment); economically, it makes much more sense to devote resources to actions that have a clear and explicit positive result on safety of workers. References Atkinson, W. (2000). The dangers of safety incentive programs. Risk Management, 47(8), 32-38. Cable, J. (2005). Success dispels skepticism for companies with incentive programs. Occupational Hazards, 67(4), 27-31. Charles D. (2008). Occupational safety and health management: A Practical Approach, (2nd Ed). Boca Raton, Florida: CRC Press. Downing, D. & Norton, J. (2004). Safety incentives: myths and realities. Occupational Health & Safety, 73(1), 62-66. Expanding the menu. (2006). Occupational Health & Safety, 75(1), 68-72. Flanders, M. E., & Goldberg, A. A. (2001). Incentive programs control fraudulent injuries. Occupational Hazards, 63(6), 47-50. Flanders, M. E., & Lawrence, T. W. (1999). Warning! Safety incentive programs are under OSHA scrutiny. Professional Safety, 44(12), 29-3 1. Frederick, J., & Lessin, N. (2000). Blame the worker: The rise of behavioral-based safety programs. Multinational Monitor, 21 (1 I), 10- 17. Goetsch, L. (1999). Occupational Safety and Health for Technologists, Engineers, and Managers. (3rd Ed). Columbus: Prentice Hall. Goldberg, A. T. (1998). How many stitches are boots worth? The true effect of safety incentive programs. Professional Safety, 43(7), 37-38. Prichard, R. (2001). Safety incentive programs: A critical assessment. Retrieved from http://www.irmi.com/expert/articles/2001/prichard04.aspx Smith, S. (2002). Safety incentives: It is not just a breakfast anymore. Occupational Hazards. Retrieved from http://ehstoday.com/safety/incentives/ehs_imp_35557 Read More