Pitfalls in rewarding compliance performance

An interesting piece of early compliance program history concerned a monitorship where, according to the monitor’s reports, the defendant company sometimes responded harshly to even minor cases of wrongdoing.  The unintended consequence of this, the monitor found, was that some employees were hesitant to report wrongdoing for fear of causing their colleagues to be unfairly treated.

“Carrots,” as well as “sticks,” can also have an unintended consequence of discouraging reports of suspected violations. In a draft guidance document  issued in November for comment, Protecting Whistleblowers: Recommended Practices for Employers for Preventing and Addressing Retaliation, the Occupational Safety and Health Administration  advises companies to “[e]liminat[e] all formal and informal workplace incentives that encourage or allow retaliation or discourage reporting. Examples of problematic incentives include rewarding employee work units with prizes for low injury rates or linking supervisory bonuses with the benefits of working with a workers comp attorney to lower reported injury rates.”

Given the great interest these days in both incentives and metrics, it is inevitable that many companies will seek to find ways to quantify C&E performance of various kinds and give rewards based on the numeric results. By and large, this is a positive development, as it is harnesses in support of C&E the force of two powerful truths: what’s measured is what counts and incentives work.   But OSHA’s experience also suggests a need to keep an eye out for unintended, undesirable consequences as companies explore different approaches of this kind.