Health and safety at work: the role of awards

A fundamental principle of modern economics is that people respond to incentives. Like much in economics, this principle is applicable far beyond the world of finance. In fact, people respond to incentives in a variety of contexts, and those incentives need not all be monetary in nature.

Most businesses are already well-aware that awards, even those that come with merely a certificate and a handshake in recognition, can provide powerful motivating forces to encourage workers to do their best at a job. Many companies, however, have yet to extend the idea of awards into the realm of health and safety at work, even though they already recognise employees for accomplishments such as perfect attendance or a marked increase in sales.

Establishing an awards programme that revolves around health and safety issues offers businesses two powerful benefits. In the first place, it will raise general awareness of the need for health and safety. This alone will tend to have a positive effect as it will remind workers of the importance of following all safety procedures and guidelines. Secondly, it will explicitly recognize those in the company who are doing the most to promote a safe work environment, therefore encouraging them to do more in this regard.

Watch out for perverse incentives

Businesses, however, must be very careful not to inadvertently create what economists call “perverse incentives.” For example, if the division with the fewest accidents per quarter is to be rewarded, this creates a reason for division heads to neglect their duty to report such incidents. This is doubly true if the recognition will carry any kind of tangible reward such as a bonus.

Instead, companies can use incentives to their advantage by structuring awards around the identification of unsafe conditions. This will encourage workers to go looking for hazards that in other circumstances, they might well have overlooked.

For more information on creating a safe work environment, attend the Winter & Company course Introduction to Managing Workplace Health, Safety & Welfare.