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1 This article was downloaded by: [Indian School of Business] On: 10 September 2013, At: 20:26 Publisher: Routledge Informa Ltd Registered in England and Wales Registered Number: Registered office: Mortimer House, Mortimer Street, London W1T 3JH, UK Construction Management and Economics Publication details, including instructions for authors and subscription information: The effect of time on safety incentive programs in the US construction industry Manish Gangwar a & Paul M. Goodrum a a 151C Raymond Building, University of Kentucky, Lexington, KY Published online: 17 Feb To cite this article: Manish Gangwar & Paul M. Goodrum (2005) The effect of time on safety incentive programs in the US construction industry, Construction Management and Economics, 23:8, , DOI: / To link to this article: PLEASE SCROLL DOWN FOR ARTICLE Taylor & Francis makes every effort to ensure the accuracy of all the information (the Content ) contained in the publications on our platform. However, Taylor & Francis, our agents, and our licensors make no representations or warranties whatsoever as to the accuracy, completeness, or suitability for any purpose of the Content. Any opinions and views expressed in this publication are the opinions and views of the authors, and are not the views of or endorsed by Taylor & Francis. The accuracy of the Content should not be relied upon and should be independently verified with primary sources of information. Taylor and Francis shall not be liable for any losses, actions, claims, proceedings, demands, costs, expenses, damages, and other liabilities whatsoever or howsoever caused arising directly or indirectly in connection with, in relation to or arising out of the use of the Content. This article may be used for research, teaching, and private study purposes. Any substantial or systematic reproduction, redistribution, reselling, loan, sub-licensing, systematic supply, or distribution in any form to anyone is expressly forbidden. Terms & Conditions of access and use can be found at

2 Construction Management and Economics (October 2005) 23, The effect of time on safety incentive programs in the US construction industry MANISH GANGWAR and PAUL M. GOODRUM* 151C Raymond Building, University of Kentucky, Lexington, KY , USA Received 24 May 2004; accepted 23 March 2005 Recently, safety incentive programs have been under scrutiny by the US Occupational Safety and Health Administration for their effectiveness to improve construction safety performance. Most of the previous research on construction safety incentives focused on anecdotal evidence examining the merits and demerits of safety incentives. Meanwhile, the long-term effect of safety incentive programs on construction safety remains uncertain. This research examined how key safety performance indicators changed over time in the presence of safety incentive programs in the US construction industry using primary survey data. The paper s key finding is that the effectiveness of safety incentive programs does diminish with time, as suspected by earlier experts and managers in the US construction industry. Keywords: Construction, incentive, safety, personnel management, motivation Introduction Safety is a concern for everyone, particularly in the US construction industry, which chronically suffers from an exceptionally high number of fatalities compared to other US industries. According to the US Bureau of Labor Statistics Census of Fatal Occupational Injuries (CFOI), the total number of fatalities in the US private construction sector in 2003 was 1126, which equaled 11.7 worker fatalities for every 100,000 construction workers. This resulted in construction having the forth highest rate of fatalities per worker in the US behind agricultural, mining and transportation industries (BLS, 2003). The CFOI collects detailed data on all work deaths related to traumatic occupational injuries in the US. Recent research by the authors did identify that companies that have a safety incentive program do on average have lower lost-time and restricted accident rates than companies without safety incentive programs (Goodrum and Gangwar, 2004). Proponents of safety incentive programs will argue that the programs serve as a positive reinforcer that affects worker behavior and eventually jobsite safety (Krause and McCorqudale, *Author for correspondence. pgoodrum@engr.uky.edu 1996). However, what remains uncertain are the longterm effects of safety incentive programs on company safety performance in construction. A common concern of many organizations is that the benefits of behavior modification programs, such as incentives, diminish over time (Guastello, 1993). Although individual organizations have anecdotal evidence to support this theory, it is unknown whether diminishing effects of safety incentives occur over a significant population of construction firms. Kinds of safety incentive programs Workplace behavior modification programs have been shown to positively reduce the number of accidents (Lund and Aaro, 2004), and safety incentive programs are just one ends to the means of influencing a population s safety behavior. An organization s safety culture, which includes individuals personal motivation for safe behavior, risk justification, and optimism, has also been deemed important in improving workplace safety (Williamson et al., 1997). In one way or another, these factors can be influenced by incentive awards by recognizing errant work habits and motivating individuals to work in a safer manner (Laitinen and Ruohomaki, 1996). Safety incentive programs can be Construction Management and Economics ISSN print/issn X online # 2005 Taylor & Francis DOI: /

3 852 Gangwar and Goodrum divided broadly into two categories: (1) injury/illnessbased incentive programs and (2) behavior-based incentive programs (Krause and Hodson, 1998; Opfer, 1998; Flanders and Lawrence, 1999; Hinze, 2002). Injury/illness-based incentive programs Injury/illness-based incentive programs are based on the number of injuries and or illnesses as a criterion to reward workers and crews. Individuals or groups are rewarded for avoiding or lowering accidents over a predefined periods. These programs work on the underlying assumptions that: (1) facilities and equipment are safe and do not cause any accidents; (2) workers have proper training and knowledge to use equipment; and (3) accidents are primarily a result of a worker s negligence or compromise on safety (Smith, 1997). While there are certainly other measures of safety performance, such as behavioral measures, accident frequency is considered the most objective safety performance measure (Duff et al., 1993). One problem with injury/illness-based incentive programs is that they directly equate prizes with a number of injuries (Krause and Hodson, 1998). In the absence of injury/illness-based incentive programs, a gross temptation already exists to not report work related injuries and illnesses, especially less serious ones (McDonald and Hrymak, 2002). Injury/illness-based incentive programs tend to compound the temptation for workers not to report an injury, since workers do not want to lose individual incentives and do not want to be the reason for the whole group not receiving an award (Geller, 1996a). Furthermore, other studies have shown that organizational issues may influence the investigation and reporting of injuries by safety professionals (Woodcock and Smiley, 1998), which could also bias the effectiveness of injury/illness-based incentive programs. Another concern is that these programs can become trivial and hard to discontinue in the long run, because workers begin to view incentives as an entitlement; a discontinuation may cause significant negative impacts (Smith, 1997). Injury/illness-based incentive programs may also provide false feedback and may actually act as a demotivator if not administered fairly from the craft workers perspective (Krause and McCorquodale, 1996; Smith, 1997; Prichard, 2001). For example, one crew may actually make a substantial effort to avoid injuries but unfortunately experiences an accident and does not receive any incentive. Indeed, research has found that many accidents are a chance event occurring as a result of a combination of circumstances outside the control of a supervisor or crew (McDonald and Hrymak, 2002). Of course, another aspect to also consider in injury reporting is that companies with superior safety programs tend to be more likely to report the actual number of accidents compared to companies with lesser quality programs in safety (Goetsch, 2003). Behavior-based incentive programs Behavior-based incentive programs observe worker behavior as a criterion for awarding incentives. Previous research has identified the means of measuring individual behavior as a proxy for safety performance (Duff et al., 1993; Robertson et al., 1999). Examples of rewarded behavior include participation in activities such as safety meetings and training programs, suggestions about how to improve jobsite safety, the proper use of personal protection equipment and other behavior that can help avoid accidents. Although behavior-based programs solve the problem of erroneous feedback addressed in injury/illness-based incentive programs and improve attendance in meetings and training programs, the question of how to measure their effectiveness still remains (Geller, 1996b). Some programs handle this problem by gauging its effectiveness by regular tests and providing two-way feedback. Moreover, these programs are also helpful in eliminating the problem of underreporting of injuries by removing a direct link between an award and the number of accidents reported. Behavior-based observation can also provide data about equipment and facilities that put workers at risk for injury. A downside of behavior-based incentive programs is that they are comparatively difficult to measure and monitor, because worker behavior is inherently more complex and difficult to gauge (Geller, 1996a). In addition, workers behavior changes constantly in reaction to external factors like new equipment, new facilities, new work groups, and even behavior observation programs themselves. Research objectives Most prior research on safety incentive programs in construction has been based on qualitative data. Many claims of improved safety resulting from the use of incentives are based on anecdotal data or company specific cases. The overall impact of safety incentive programs on a large population has rarely been quantified. A greater unknown is the long-term effects of safety incentive programs. With this in mind, the research objectives were to: (1) identify whether the effectiveness of safety incentive programs diminishes over time; and

4 Safety incentive programs 853 (2) identify whether the long-term effectiveness of safety incentive programs varies with different performance measures. The scope of the study was limited to construction contractors in the southeastern United States. The project examined how safety performance related to the age of safety incentive programs using primary survey data. Methodology Data collection Based on previous findings and the research objectives, a pilot survey was created and administered to three general contractors located in Kentucky and Tennessee of the US. The pilot survey was a draft of the actual survey used in the study, and it asked the safety directors of the three participating general contractors a series of questions regarding their use of safety incentives and safety performance measures. Following completion of the pilot survey, the safety directors were interviewed by phone to solicit their comments and suggestions regarding the survey document, which were incorporated into the actual survey. Finally, the empirical data on the use of safety incentives and company safety performance over a 5- year period were collected. To collect the data, a survey questionnaire was developed for company safety directors and other safety professionals in charge of their companies safety programs in the US. In addition to identifying whether a company did or did not have a safety incentive program, the survey asked a series of questions about the safety incentive programs including: how long the safety incentive program had been in existence, criteria for awarding safety incentives, and types of incentives awarded. Finally, the survey collected various company safety performance data including the number of lost time and other recordable accidents along with the total number of employee hours worked each year from 1997 to Out of a total of 165 surveys received, 20.6% were collected from the state of Kentucky, 15.2% from North Carolina, 12.1% from Tennessee, 10.3% from Ohio, 9.7% from Virginia, 9.1% from each Georgia and Indiana, 7.3% from Florida and 6.0% from other states including Alabama, West Virginia, Michigan, Missouri, and Texas (Table 1). The average number of workers in 2001 for the sampled companies was 199 workers. Fifty percent of the companies had fewer than 67 workers in 2001, and 10% of the companies had more than 368 workers. Out of 165 sampled companies, 13.9% were engaged in both building and heavy construction, 41.8% were involved in only building construction, 29.1% were involved in only heavy construction, and 15.2% were doing specialty work in construction. Out of a total of 165 responses, 98 companies, which were 59.4% of the total, had a safety incentive program (Table 2). Sixty-six companies, 67.3% of the companies with a safety incentive program, awarded tangible items like cash, gifts, and prizes to their employees. No company reported to award only intangible items like trophies, certificates, time-off and parties to their employees. However, 29 companies, 39.6% of the companies with a safety incentive program, awarded both tangible and intangible awards to their employees. Thirty-eight companies, which were 38.8% of the companies with a safety incentive program, based their safety incentive program on injuries only. This is in comparison to 28 companies, which were 28.6% of the companies with a safety incentive program, based their safety incentive program on behavior only. Moreover, 23 companies, Table 1 Breakdown of sampled companies by state State Total responses Percentage with safety incentive program (in state) Percentage without safety incentive program (in state) Kentucky North Carolina Tennessee Ohio Georgia Virginia Indiana Florida Alabama Others Total

5 854 Gangwar and Goodrum Table 2 Breakdown of companies by trade With SIP Without SIP Total Building & heavy Count Percentage 17.3% 9.0% 13.9% Only building Count Percentage 39.8% 44.8% 41.8% Only heavy Count Percentage 27.6% 31.3% 29.1% Specialty Count Percentage 15.3% 14.9% 15.2% Total Count Note: SIP denotes safety incentive program. The categories of building, heavy, and specialty construction are the three major industry classifications as identified by the North American Industry Classification System, which is maintained by the US Census Bureau. 23.5% of the companies with a safety incentive program, based their safety incentive program on both injuries and behavior. However, nine companies, 9.2% of the companies with a safety incentive program, did not respond to this question. Although previous research by the authors (Goodrum and Gangwar, 2004) did find that construction firms with a safety incentive program also had lower accident rates than those did not, the study did not find statistical differences between companies that awarded tangible awards in their incentive programs and others that awarded intangible awards or between companies that based their safety incentive program on injuries and others that based their program on behavior. However, since the study only investigated 98 firms with a safety incentive program, the relatively small sample population may have attributed to the lack of statistical significance. The primary method of analysis used in this effort is analysis of variance (ANOVA), which determines the probability that two or more samples are drawn from the same parent population. The purpose of an ANOVA is to test for statistically significant differences between the means of two or more samples by determining if an independent variable is different enough not to have occurred by chance. In other words, if the group means do not differ significantly, it is inferred that the independent variable(s) did not have an effect on the dependent variable. The key statistic in an ANOVA is the F-test level of difference of group means. A significance level of 0.05 indicates that the chance of samples being from the same population is 5%. ANOVA analysis was used to identify whether various safety performance indicators were different for the categories under consideration or the difference in values was merely due to chance. A p-value of less than 0.05 is normally a good indicator that differences in value are not by chance but due to some other reason. The Statistical Package for Social Scientists (SPSS) was used to perform the ANOVA computations. Measures of safety performance In order to quantify the effectiveness of the safety incentive programs, three different measures of safety performance commonly used in the US construction industry were collected in the survey. These measures were: OSHA recordable cases, lost-time workday cases, and restricted workday cases. (1) OSHA recordable cases: cases when workers, due to an injury and illness sustained at work, have to visit a doctor for more than first aid are classified as a recordable case by the US Occupational Safety and Health Administration (OSHA). (2) Lost-time workday cases: cases when workers, due to an injury or illness sustained at work, are not able to perform work are classified as losttime workday cases. (3) Restricted workday cases: cases when workers are not able to work in their full capacity, due to an injury or illness sustained at work, and assigned a lower workload are classified as a restricted workday case. Recordable, lost-time, and restricted incident rates were calculated for each company using equation (1), which is the standard equation used by the US Bureau of Labor Statistics to calculate incident rates for all US industries. Number of cases 200,000 Incidence rate~ ð1þ Total employee hours per year The figure 200,000 is the base for 100 full-time employees working 40 hours per week, 50 weeks per year. Using equation (1), the 2001 OSHA recordable incident rate for the sampled companies was In addition, the 2001 lost-time workday incident rate was 2.90, and the 2001 restricted workday incident rate was By comparison to data from the Bureau of Labor

6 Safety incentive programs 855 Statistics, US Department of Labor (BLS, 2004), the overall 2001 recordable incident rate for the US construction industry was 7.9; the 2001 lost-time workday incident rate was 4.0, and the 2001 restricted workday incident rate was 3.9. It is noted that the sampled construction firms did have lower incident rates than the industry averages. There are two possible reasons to explain this difference. First, the distributions of building, heavy, and specialty contractors differ from industry averages, and specifically the frequency of specialty contractors, which on average have higher incident rates, are under represented in the sample. Second, contractors with higher than average incident rates may have chosen to not respond to the survey. Analysis OSHA recordable cases To begin examining the long-term effect of safety incentive programs on OSHA recordable incident rates, the mean 2001 OSHA recordable incident rate was compared among companies that implemented their safety incentive program (SIP) in a given year or afterwards to the rest of the companies who had implemented a safety incentive program previously to a given year. Since the number of companies that implemented an SIP in a particular year was less than required for a sound statistical analysis, all companies that implemented an SIP in or after a particular year were grouped together. For example, the mean 2001 recordable incident rate for the companies that implemented an SIP within 1 year, which were Table 3 Year OSHA recordable incident rates Age of program in years 2001 OSHA recordable incident rate of companies with row s age 2001 OSHA recordable incident rate of rest of the companies companies that implemented an SIP after 2000, was Next, the mean 2001 recordable incident rate for the companies that implemented an SIP within 2 years, which were companies that implemented an SIP in 1999 or 2000, was The increase in the mean from 2.41 to 2.70 could only be possible if the mean recordable incident rate of the companies that implemented an SIP in 1999 was higher than the mean recordable incident rate of the companies that implemented an SIP in Similarly, the mean 2001 recordable incident rate for the group of companies that implemented an SIP after a particular year was calculated and tabulated (Table 3, third column). There is a gradual increase in the mean 2001 OSHA recordable incident rate as more companies with older SIP program are included in the group. This trend, among this sample of construction firms, supports the theory that the positive effects of an SIP does diminish over time (Figure 1). It is important to note that this and other analyses in this paper examined the difference in rates only due to the presence of an SIP. The analyses do not delineate the different types of SIP that were used in each company, such as the use of tangible or intangible safety incentives for example, primarily because the sample size of the research population does not support this type of more detailed analyses, although such effort is worthy of future research. To further examine the effect of an SIP effectiveness over time, the mean 2001 OSHA recordable incident rate was compared among companies that implemented their SIP in a given year or afterward to the rest of the companies who had either never implemented a safety incentive program or had implemented a safety Difference df F-value Sig. Mean N Mean N 2000 Fewer than Fewer than Fewer than Fewer than Fewer than Fewer than Fewer than Fewer than Fewer than Fewer than Note: Since number of companies that implemented an SIP in a particular year was few, companies that implemented an SIP after a particular year were also included to calculate mean in the second column; for example, second column mean for 1998 denotes mean for all the companies that implemented an SIP in 1998, 1999, and 2000.

7 856 Gangwar and Goodrum Figure 1 OSHA recordable incident rates incentive program previously to the given year. For example, the mean 2001 OSHA recordable incident rate for companies that implemented an SIP after 2000 was 2.41, compared to 5.11 for the rest of the companies. Similarly, the mean 2001 OSHA recordable incident rate for the companies that implemented an SIP after 1999 was 2.70 compared to 5.25 for the rest of the companies. The differences in the mean 2001 OSHA recordable incident rate between two groups of companies that implemented an SIP after a particular year and rest of the companies were not statistically significant for 2000 and In addition, the differences in the mean 2001 OSHA recordable incident rate between mentioned groups were also not significant for 1996 and earlier. However, the differences in mean 2001 OSHA recordable incident rate were statistically significant for year 1998 and 1997 (Table 3). These results show that companies did not experience a significantly positive effect of SIP on OSHA recordable incidence immediately. Rather among these sample of companies, it took 3 4 years before an SIP became effective. In addition, the significant change in the OSHA recordable incidences was not permanent and diminished with time among the sampled construction firms. Lost-time workday cases Similar to the OSHA recordable incident 2001 rates, the mean 2001 lost-time workday incident rate increased as more companies with older SIP program were included in the group. When companies that implemented an SIP after 1996 were added to the group, the mean 2001 lost-time incident rate remained fairly constant but at higher levels compared to groups that implemented an SIP afterwards. Once again among this population of construction firms, the age of the SIP had a negative effect on its effectiveness. In the case of lost-time workday incident rates, the difference between the companies that implemented an Figure 2 Lost-time workday incident rates

8 Safety incentive programs 857 Table 4 Lost-time workday incident rates Year Age of program in years 2001 lost-time incident rate for companies that had implemented SIP after row s year SIP after a particular year and the rest of the companies in the sample did not show any statistically significant difference above the 95% confidence level even after adding more companies with older SIP in the group. Once again, the most noticeable change was recorded for the years 1998 and The lost-time workday incident rate for companies implementing an SIP after 1997 was 0.99 compared to 3.55 for the rest of the companies in the sample with a 94% confidence level. In addition, the mean 2001 lost-time workday incident rate for companies implementing an SIP after 1998 was 0.95 compared to 3.47 for the rest of the companies in the sample with a 93% confidence level (Table 4) lost-time incident rate for rest of the sample companies Difference df F-value Sig. Mean N Mean N 2000 Fewer than Fewer than Fewer than Fewer than Fewer than Fewer than Fewer than Fewer than Fewer than Fewer than Note: Since number of companies that implemented an SIP in a particular year was few, companies that implemented an SIP after a particular year were also included to calculate mean in the second column; for example, second column mean for 1998 denotes mean for all the companies that implemented an SIP in 1998, 1999, and Restricted workday cases In the case of restricted workday cases, there was again a general increase in the mean 2001 restricted incident rate as additional companies with older SIP were included in the group. In the case of restricted workday incident rates, the difference between the companies that implemented an SIP after a particular year and the rest of the companies in the sample did not show any statistically significant difference above the 95% confidence level, even after adding more companies with older SIPs in the group. However, the difference in the mean 2001 restricted workday incident rates become noticeably different for Figure 3 Restricted workday incident rates

9 858 Gangwar and Goodrum Table 5 Restricted workday incident rates Year 1996 to 1993; the most significant change was recorded for year The mean 2001 lost-time workday rate for companies implementing an SIP after 1993 was 0.95 compared to 2.32 for the rest of the companies in the sample with a 96% confidence level. In addition, the differences in the mean 2001 restricted workday incidence rates between the mentioned groups were also not significant for 1992 and earlier. The finding again confirms that SIPs take some time before showing effects on safety performance indicators, and their effect on safety performance indicators diminishes over time (Table 5). Conclusion Age of program in years 2001 restricted workday incident rate for companies that had implemented SIP after row s year 2001 restricted workday incident rate for rest of the sample companies The findings suggest that safety incentive programs do affect safety performances of companies, but these effects change over time. The findings suggest that as safety incentive programs grow older, companies accident rates increase over time as well. This confirms what others have found in separate research efforts using different methods of investigation (Guastello, 1993; Smith, 1997). The findings also suggest that incentives can take a few years before they have an impact on a company s OSHA recordable, lost-time workday, and restricted workday cases. Among the sampled construction firms, this time period was 3 4 years. However, the positive impact was not permanent and diminished with time. These findings adequately satisfy the study s first objective in terms of identifying if the effectiveness of safety incentive programs changes over time. In terms Difference df F-value Sig. Mean N Mean N 2000 Fewer than Fewer than Fewer than Fewer than Fewer than Fewer than Fewer than Fewer than Fewer than Fewer than Note: Since number of companies that implemented an SIP in a particular year was few, companies that implemented an SIP after a particular year were also included to calculate mean in the second column; for example, second column mean for 1998 denotes mean for all the companies that implemented an SIP in 1998, 1999, and of the study s second objective of identifying whether the long-term effectiveness of safety incentive programs vary with different performance measures, this study found no significant difference based on the study s three safety performance measures of recordable, restricted, and lost-time accident rates. It is acknowledged that the paper examined only the dichotomous occurrence of whether a company did or did not have a safety incentive program. These results could be different if the analysis differentiated between different types of incentive programs and their effectiveness over time. Although worthy of future research, this type of detailed analysis was not possible with the sample size of the given primary data source. The exact reason for the increase in accident rates over time even in the presence of a safety incentive program remains uncertain and was not studied in the research. However, anecdotal evidence suggests that incentives over time become less viewed as a motivation and more perceived as an entitlement. Furthermore, this research supports what many safety professionals have assumed regarding the long-term effectiveness of safety incentive programs in construction but had yet never been quantified. It is clear from these analyses that after a safety professional successfully introduces and implements a safety incentive program within their company the challenge does not end. The safety incentive program must be continuously reinvented within the company through new award schemes and measures in order to maintain the interest and motivation of the workforce to improve jobsite safety.

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