Continue reading »]]> How much time and money do you spend on safety training?  On safety communications? How much effort and money do you spend on all the pieces that make up your safety initiative?  How much time and money do you spend on safety awards? 

Safety awards should be designed to reinforce good safety behaviors and change bad behavior.  A well designed safety award system will act as an insurance policy to motivate your employees to follow all the pieces of your safety initiative.  Don’t just look at them to recognize the results at the end, look at them to help drive results along the way.

For safety awards that are very easy to implement and will give your employees the award they really want, see the Award of Choice.

Continue reading »]]> For as long as we can remember there has been a strong argument from many in the corporate world, especially in the C-suite, about using non-cash or cash as incentives to improve performance.  Cash has always been used as an award in safety incentive programs.  However, with the criticism that OSHA has given to programs that pay out awards based only for a reduction in incidents, cash awards have decreased in their popularity.  Non-cash awards are becoming more and more popular in safety award efforts designed around improving the leading indicators to safety.   

An article in Incentive Magazine discusses this topic and mentions data being published  from giants in the business world like McKinsey & Co in conjunction with the Harvard Business Review, The Aberdeen Group and Price-WaterhouseCoopers, and World at Work compensation and benefits association that indicates that non-cash is a better option than cash to achieve certain objectives. 

In the last year or so, several studies on the subject have been published.  While some research doesn’t specifically cite travel, gift cards or merchandise, they do speak of the same types of motivational techniques such as recognition and about showing appreciation, all great vehicles for non-cash incentives.  

Conclusions from a few studies were:

•  Pay-for-performance has not been effective as the expected 
•  Performance management in sales found that organizations that used non-cash spiffs outperformed the ones that didn’t use them. 
•  Best-in-class firms were more than twice as likely (21% vs. 10%) to use non-cash incentives as industry average or laggard firms 
• Year over year increase in annual revenue for firms that used non-financial rewards and/or recognition was triple that of firms that didn’t use them (9.6% vs. 3%) 
•  For people with satisfactory salaries, some non-financial motivators are more effective than extra cash in building long-term employee engagement 
•   In a global CEO survey when asked to what extent they intended to change their strategies in nine human-management categories the biggest change they planned was to use more non-financial rewards to motivate the staff…47% planned some change and 18% planned significant change

What happened to get thought leaders to more readily recognize the benefits of non-cash rewards than in the past?  Well, for one thing in bad economic times companies are realizing that non-cash awards are less expensive.  Not only do they cost less to deliver, you need less of it than cash to motivate the same performance level.   As noted in a past White House on Productivity, it takes $3 in cash to produce the same results as $1 in non –cash.   

Decades of experience by the incentive industry has shown that non-cash awards like gift cards, merchandise and travel are both more motivational and cost-effective than cash.  Now the C-suite is starting to realize the same thing. 

Continue reading »]]> Safety managers have long debated whether cash or non-cash make the best safety awards. While we haven’t uncovered any statistics that shed any light on how much of each is used, if it follows the historical trends of employee incentives in general, there is undoubtedly more is invested in cash awards than in non-cash awards.

However, does that make cash a better award to motivate safety performance than non-cash?  If so, how much cash do you need to use to make a difference, and does that provide a good return on your investment?  Those are questions you need to answer before you decide to use cash as a safety award.  In our experience, we have seen that by consistently and continuously reinforcing safety behavior change with small amounts of awards, you will change behavior.  We have also seen that examples where clients have trimmed their cash safety award budgets by over 50% and actually improved safe work performance. 

Over the years, safety award programs have evolved and changed a great deal.  When end of the year safety bonuses were once the rule, today they aren’t looked upon favorable by OSHA, and most companies that have one would love to discontinue them.  OSHA has taken the stance that you shouldn’t have any safety incentives based on solely reducing lost time accidents or injuries because programs like that often lead to under reporting of incidents, especially when large amounts of cash are involved.  Because of peer pressure team based programs can increase non-reporting even more. 

Cash and non-cash awards have different uses and should be looked upon differently, not as alternatives to motivate performance.  While cash is obviously our method to compensate, it doesn’t necessarily make it the best to motivate change. 

The award industry has compiled many white papers that speak to the cash v. non cash question.  If you have an interest in the subject, here is a white paper that compares the two from many different perspectives

Continue reading »]]> This article from Lucky Magazine caught our attention not so much for the subject and what it said, but for what it didn’t say.  It talks about giving a gift card, the pros and cons and whether we are a “lazy” shopper if we do.  Wouldn’t it be nice if we could offer several gift cards to choose from and then let the recipient pick the one that suits their needs?   But you can’t realistically purchase a dozen or so cards, let them choose the one they want and then bring the rest back, can you?  That’s just not practical. 

The ubiquitous gift cards from Visa, MasterCard or American Express have become popular safety awards because they have true choice.  They give the employee who performs in a safe manner the option of using them where ever they choose to shop.  But for that flexibility you have to pay exorbitant fees, (sometimes as much as 10-20% of the face amount of the card (a $25 card with a $4.95 fee is almost 20%).  That’s not practical when you’re trying to manage your safety budget.

But with new technology that’s all changed.  There is a new safety award system that allows for ultimate choice without a fee, the Award of Choice.  This safety award allows the employee to choose from hundreds of different gift cards making them almost as flexible as a bank card.  

Gift cards have become the number one gift year after year and they have become the number one employee award as well simply because they are the least expensive to use, provide a tremendous value to the issuing person or company and do provide a much greater choice than simply giving them a gift that you choose yourself.  Because of this, hundreds of thousands of businesses, small and large alike use gift cards as safety.  That’s what your employees want. 

Unfortunately the majority of businesses have not caught on to this new safety award system that offers so much choice.  Many businesses simply purchase a bunch of the same gift cards and assume that will do the trick.  Unfortunately, they’re wrong.  It may be easier for them to do that and just supply one card, but one size doesn’t fit all and never will.  

An entire new industry has sprung up around buying and selling unwanted gift cards.  Places like Plastic Jungle will give you a discounted rate of cash in exchange for your unused card, the rate determined by the popularity of the card.  Then they sell those cards at a lower rate than what they paid for them.  It’s simple arbitrage.  But it starts with folks receiving a gift card that they didn’t want.

So, as mentioned in the blog, you can spend lots of time thinking of what card to give like favorite hardware store in town, a sports catalog, or a credit to those things that they really need or want (sounds like cash to me).  Or, you can give them a safety award like the AwardofChoice where they can choose the card that really fits their own lifestyle.  What would you rather have?

Continue reading »]]> One of the biggest misperceptions in effectively managing safety programs and gains is that improvements to safety behaviors cannot be easily measured or cannot be measured at all. This is unjustified and untrue! What needs to happen to measure Safety ROI is for a safety manager to first get the active support and commitment they need from the leadership of the organization.

When leadership at all levels demonstrates their dedication to safety behaviors both on-the-job and off-the-job, the organization is positioned to declare the quantitative and qualitative measurements that will demonstrate a sound measurement of Safety ROI. Studies clearly indicate the distinct relationship between effective safety behavior, safety recognition programs, and an organization’s ability to achieve and sustain safety excellence in productivity gains and financial outcomes. 

According to Jervis and Collins in their article “Measuring Safety’s Return on Investment” in the American Society of Engineers publication, they site elements that must exist to effectively measure safety behaviors and outcomes.  We view their findings and the following behavioral based elements, as critical in guiding and supporting all employees in the quest to operate in a safe, healthy, and environmentally responsible manner. 

The critical safety elements necessary to be able to measure safety performance are: 

1. Management Leadership and Collaborative Employee Involvement

2. Proactive Worksite Awareness and Analysis

3. Accessible Hazard Prevention, Controls, and Standards

4. Safety, Health, and Environmental Training and Active Participation by All

5. Persistent Safety Communications, Documentation, and Review / Measurements

6. Appreciating and Recognizing the Right Safety Behaviors, Successes, and Lessons Learned 

With these as the basis for living safety as a “way-of-life” within an organization, measuring safety behaviors and outcomes becomes the cultural bedrock for HS&E performance and behavioral improvements. Measuring safety behaviors and performance does not mean just staying compliant with state and federal regulations. It means measuring and recognizing all of the day-to-day successes, lessons learned, and specific behaviors that contribute to sustaining a “zero” safety record. 

When measuring behaviors and performance, it is important to involve a cross section of the leadership team, middle management, and frontline personnel in the development and design phases of determining what should be included.  The ultimate goal is to identify with clarity the quantitative elements that are to be measured and the qualitative elements that must be discussed and agreed to in measuring behaviors that directly affect safety improvements in support of the bottom line quantitative measurements.  Hard measurements (quantitative) and soft measurements (qualitative) work in tandem with one another to positively impact safety outcomes and bottom-line performance.

Common baselines must be established between all parties that are logical, agreeable, and provide consensus concerning acceptable and unacceptable safety behaviors. With this as the baseline, specific criteria can be established that compliments the existing systems within the organization. Measurements are best based on the current information available within the organization. If it is deemed necessary that new measurements be developed, it is only best to do so after all existing internal measurement possibilities are exhausted. It is counterproductive to place new measurement systems on top of existing measurements systems, when the existing system will provide the necessary information required to support the measurement process. 

An analysis system can be logically established with relevant safety behavior and performance criteria that ties into the financial aspects of safety that influence the bottom-line of the organization. The quantitative elements normally correlate to the existing financials and operations of the organization. The qualitative elements focus on those specific behaviors that directly and / or indirectly affect the quantitative elements. This is where it is so important to involve a cross section of the leadership team, middle management, and frontline personnel in the development and design phases … and to keep this collective team involved on a continuum!  

Typically, organizations perceive that there is no surprising information to be learned. Management leadership and employee involvement are what drives a safety culture and improves safety behaviors. While this is true, a few new concepts are revealed by a continuous assessment of “How are our safety behaviors impacting our Safety ROI?” What is uncovered is how essential it is that safety, as a “way-of-life,” requires an extensive amount of commitment, time, effort, and continued involvement by the entire workforce! To achieve a sound Safety ROI … Safety must be lived by everyone 24/7. 

This information is a starting point for an organization and can be a valuable beginning for safety professionals responsible for identifying Safety ROI to maximize safety and financial outcomes. Establishing a sound and simple benefit-to-cost relationship and ratio will assist in identifying which safety programs and behaviors contribute the greatest return to the organization by improving safety behaviors and tangible results. 

Bob Farmer, Manager Safety Solutions

Continue reading »]]> First, we are not tax experts and you should consult with your tax attorney or accounting department before you decide on whether you should or shouldn’t tax an employee for safety awards.  That being said, let’s begin by making a simple factual point…according to the IRS, all awards you give to your employees are considered taxable income.  End of point.  

Now, there are occasions when safety awards would not be taxable and these are mentioned in section 274(j) of the Internal Revenue code.  By and large many safety award companies quote this section of the code and try to convince their client that their program is not taxable, and by and large almost all of these award companies forget to tell their clients that to really qualify they must not give awards in the aggregate to more than 10% of their employees.  Somehow that point is often conveniently left out of the conversation, and consequentially that client is vulnerable to IRS audit.  It should be noted here that gift cards can be included as awards that qualify for favorable tax treatment if they are “non-negotiable certificates conferring only the right to receive tangible personal property.”

The tax argument between traditional merchandise safety awards companies and gift card safety award companies regarding taxation has been around for a while.  Frankly, from our perspective it is a conversation that is a waste of time.  In fact, the actual tax that might have to be paid on gift cards, even if you think it is taxable, is often minuscule.  And your employee will always receive far more value from gift cards than a traditional merchandise award, not to mention far better choice.

Let us explain.  For awards to be taxable in the first place, the recipient who receives the award must be in a taxable situation.  Did you know that 46% of working Americans don’t pay any Federal Income tax at all? This article from USA Today shows how few folks actually pay income tax, and that number is growing.   Having done research on many of our past clients we have seen that the vast majority of employees who are in safety sensitive jobs in the country are usually in the lower effective tax brackets or might not be paying taxes on the awards anyway.   

But let’s just say they will be paying taxes, what then?   Interesting data from this article from the Tax Policy Center shows that the effective tax rate for individuals for the last 20 years or so has been hovering around 10%.  So if you awarded and employee a $100 gift card they would pay $10 in tax for that award.  Of course the sponsoring company can decide to pay that tax for them which would increase their program budget, but would that make sense?  

We have research that shows that traditional merchandise awards are ridiculously overpriced.  We have shown client after client that their merchandise awards are at least 50% more than retail, and often much higher than that.  Even paying their own taxes your employee gets a much better deal with gift cards than the actual merchandise item.  With gift cards, the sponsoring company can reduce their budget by 25% and still give their employees a much better overall value.   

Look at it this way.  What good does it do for your employees when they receive a traditional merchandise tax free award that cost you $200 that they can find at everyday retail for $95?  What will the employee think when they see the disparity?  With the internet finding that disparity is not hard to do.  Don’t you think your employees would much rather have gift cards valued and priced at $150, than the $200 item?  What would you rather have?   

Continue reading »]]> Don’t confuse a true safety incentive award system with various other safety recognition efforts, games or contests

Any of these safety award efforts can be effective but are often misunderstood and not necessarily interchangeable in changing behavior and producing the sustained results you might be looking for.   A well designed and implemented safety incentive system can be effective and remain in place for years, with minor changes on a periodic basis. 

 Understanding the differences between them will make it easier for you to determine which type or which combination to implement within your organization.  Read more.

Continue reading »]]> While this is not necessarily the most important question to consider when you want to implement a safety incentive program, it is a significant one.  If the awards you decide to use do not appeal to the vast majority of your people, your program will have less chance for success.  Do you use the awards that your award company wants to sell you?  Do you give your employees the award that you want them to have?  Do you ask your employees what award they want?  Within reason, you should provide the award that you employees really want, the one they would choose for themselves.  Read more.

Continue reading »]]> Have you ever wondered how much you are paying for the actual merchandise awards you receive in those “all inclusive” safety award games? These types of safety award programs have been around for years, and they have a common element. They are very strong on communications, but don’t really tell you how much you are paying for the merchandise awards that you receive. Would you believe that these items might be priced substantially above retail? Read More

Continue reading »]]> There are differences of opinion on this question.   Some experts insist that rewards should be based solely on individual performance, to maximize innovative safety solutions, highlight individual performance and avoid peer pressure and the un-reporting of incidents.  Others believe that in some cases groups or small teams can work best especially in organizations that stress teamwork.  Read more.