Question

For this problem, refer to the incentive programs for Companies A and B described below. Review each of the incentive programs and answer the following questions for each company:

1. What type(s) of incentive(s) does the company implement: outcome-based, behavior-based, and/or activity-based?
2. What rewards are distributed as part of the incentive program? Are the rewards tangible or intangible? Is the reward progressive or cumulative?
3. What metric(s) is used to determine distribution of the reward? What level of performance relative to the metric is rewarded?
4. Are the value and frequency of the reward appropriate for the level of performance rewarded? Explain your answer.
5. How do you think safety performance in the company is affected by the incentive program implemented? What changes would you make to improve safety performance?

Company A

This small-sized company installs coatings and linings for industrial construction projects. The company is 30 years old and employs approximately 60 workers. Its annual work volume ranges from $3-5 million. The incentive program employed by this firm is based on recognizing good safety performance and positive reinforcement. The company recognizes superior safety performance in a company newsletter that describes ongoing projects. The name of the employee who performed the act and a description of the safe act are published in the newsletter, which is distributed to all employees. Employees who go “above and beyond” that which is expected are recognized in a Safety Hall of Fame. Each month an employee is added to the Safety Hall of Fame for performance during the month. The monthly winner is heralded in the company newsletter. Additionally, each year one employee is recognized as the top safety performer for the year. The employee is selected for this award by his or her fellow employees. The yearly award winner is recognized at the annual Christmas holiday lunch, has his or her name added to a Safety Hall of Fame plaque, and is given a savings bond.

Company B

An electrical subcontractor with approximately 50 employees, this small-sized company has an annual work volume averaging about $1.5 million. It is a family-owned business with a 25-year history, specializing in electrical construction and maintenance services for the residential and commercial building industry. The company’s incentive program is multifaceted, based on the accumulation of points. Workers who accumulate points are able to exchange the points for gifts from a product catalog. The catalog includes gifts such as jackets, electronics, household items, and tools. More points are required for more expensive gifts. When ordered, the gifts are brought to the job site and given out by the supervisors. Points are accumulated in the following ways:

1. Hours worked. Each employee receives points for every hour worked as follows:
   1. craft employee: 0.25 points/hour
   2. foremen: 0.35 points/hour
   3. general foremen: 0.45 points/hour
   4. superintendents: 0.55 points/hour
2. Training classes. Participation and completion of training classes earns 150 points. The classes could be those offered by the company or an approved outside organization (e.g., CPR class, first-aid class). Before points can be earned, the classes must be approved by the employee’s supervisor.
3. Safety performance. An employee who exhibits outstanding safety performance receives 15 points. Outstanding safety performance is defined as the completion of a project without any accidents or OSHA-recordable injuries.
4. Safety recommendations. Employees who identify potential safety hazards and find ways to mitigate those hazards are awarded points as well. The number of points awarded depends on the situation. The greater the impact of the suggestion, the more points that are awarded.
5. Attendance. Employees can earn points for perfect attendance.

In addition to rewarding employees with points for positive behavior and outcomes, the company alsodeducts points in an effort to deter poor safety performance. Points are deducted for injuries sustained, near-misses, and safety violations. A poor score on a safety inspection and an unexcused absence will also result in deducted points. Generally, more points are deducted for more serious incidents. The same amount of points that are deducted from an employee’s total are also deducted from that of the foreman, general foreman, and superintendent who oversee that employee.

Answer 1

COMPANY A

1)Activity based incentive

2)The company recognizes superior safety performance in a company newsletter that describes ongoing projects. The name of the employee who performed the act and a description of the safe act are published in the newsletter, It is a progressive award and one person is selected every year based on overall performance

3)Based on performance award is distributed

4)The best employee is selcted by the fellow employees and monthly and yearly award can boost their morale and practise good safety norms. I think for a 60 employee company to folllow this is a great deal

5)Safety ensurance improves as a result of these efforts

COMPANY B

1)Combined Outcome and activity based incentives

2)The reward is tangible and based on accumulation of points one can exchenge the points to buy gift from a product catalog

3)A point system is used based on activity. Both +ve and -ve points are kept as a part of unbaised system

4)The points that are being obtained is purely based on efforts and its outcome

5)Quality of safety parameters increases. Employee become more vilgilant