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08/31/2016

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About the time of the oil spill by Exxon in Alaska, we were developing variable pay for the captains of an oil company's fleet. There are few objective measures of any kind that are safe to incentivize on an oil tanker. You can imagine the implications of a focus on 'speed'. for instance.

We included safety in the variable pay plans for oil tanker captains to focus on how important it is. The criteria were obvious and easily observable at the time. The outcome was a heightened focus on safe sailing. Other than that we never used 'safety' as a metric for the reasons you mention. It seems a likely target for a performance metric but did not make sense in any situation we uncovered.

The folks who develop metrics such as 'safety' and 'environmental impact' and the like are often not in the stream of the operations of the organization. We were shocked to find out that nobody from human resources in this organization had ever taken a trip on an oil tanker. We learned a bunch from doing so.

What a great example and cautionary tale, Jay. And what a critical lesson for ALL of us - choosing metrics and designing incentives without immersing oneself in the "stream of operations" of an organization amounts to reward malpractice. We can and must do better.

Thanks for sharing!!!

Ann, you are a strong editor for this blog. I want to say how good it is to have something like this and I attribute it to you and the 'gaggle' of posters you have attracted. For my part I believe it is important for professionals in our field to contribute whenever they can to the body of knowledge in our field. You certainly are an effective catalyst for that sort of thing.

I don't believe safety metrics should attract rewards as Ann states and from my own experience they tend to get ignored or underreported and unsafe practices continue. I much prefer to see some structure that rewards safety procedure or activity rather than outcomes. The former will lower the latter or result in a change in practice.

Thanks Jay for the kind words. Luckily for all of us, the people who write here have such strong voices and vision that the editor need only get out of the way!

Paul, thanks for sharing your thoughts and experience on this tricky topic. Agree that this is one area where rewarding outcomes can be dangerous - and procedure/activity may offer us a safer alternative (no pun intended).

I believe there is a spot for safety incentives but not in the traditional sense of performance. I was once tasked with designing a safety incentive plan and while conducting my research, found that OSHA provided interesting guidance on the topic.

OSHA strongly suggested paying incentives when employees followed the guidelines of the safety plan, weekly safety meetings, wearing safety equipment, following procedure, continuous improvement after accidents etc.

In this incentive plan, no payment was deducted or eliminated for accidents. Payment hinged upon doing the right thing and so there was no incentive to cover up accidents.

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