Brooke Wisdom

December 1, 2010

The carrot and the stick

By Therese Dunphy

Which tool works better — the carrot or the stick? It’s a dilemma that managers face every day as they try to encourage the best performance from personnel. The correct answer usually depends on the circumstances, with each type of incentive suited to different applications.

This concept was on my mind during a recent tour of Volvo’s newly expanded Shippensburg, Pa., plant, where the company underscored the steps it is incorporating to improve the work environment as it increased square footage. The plant is working toward LEED certification for its environmental efforts, as well as VPP (Voluntary Protection Programs) designation from the Occupational Safety and Health Administration (OSHA). It is going beyond minimum regulatory requirements and merits recognition for its efforts.

I was particularly intrigued by the VPP program which recognizes employers and workers “who have implemented effective safety and health management systems and maintain injury and illness rates below national Bureau of Labor Statistics averages for their respective industries.” Through the program, companies work with OSHA to prevent fatalities, injuries, and illnesses through a focus on hazard prevention and control; worksite analysis; training; and management commitment and worker involvement. The VPP status is gained only after rigorous evaluation, and participants are re-evaluated every three to five years. Once they achieve the designation, they are exempt from OSHA inspections. It’s the ultimate carrot for workplace safety.

As the Mine Safety and Health Administration (MSHA) works to improve safety, it might be time to borrow a chapter from OSHA’s book. While citations and fines certainly work as a stick to discourage unsafe behavior, they are most effective with those who do not already emphasize work place safety. The other spectrum of operators — those who implement behavior-based safety programs and achieve significant progress in their injury rates — can be discouraged by a continuous diet of the stick. This provides little incentive to achieve a higher level of safety and is unlikely to yield the goal of zero fatalities. By implementing a VPP-based program, MSHA could appeal to the entire industry, not just one segment of it.

“Companies are just people, and people respond to incentives,” says Louis Griesemer, president and CEO of Springfield Underground and AggMan of the Year for 2010 (see page 14). “The incentives make us reach higher because there’s no limit to how good you can be. (Regulators) want a limit on how bad you can be, and you have to have that limit for some people, but the really good companies respond better to the positive incentives.”

As MSHA considers its options for improving safety in the mining industry, an enticing carrot such as the VPP may just be the way to balance our regulatory diet.

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