A friend of mine–with a long history of Lean and Toyota Production System knowledge and practice–recently shared a troubling story about a relative who works at a manufacturing plant. I'll call this factory team member “Guy.”
Call me cynical, if you must, but I totally believe this story, so I'm sharing it here. And my friend has zero reason to make this up.
Guy's factory has a bonus system in place that's supposed to reward employees for hitting key performance targets each month. That might sound like a good idea on the surface, but here's where it gets dysfunctional:
If there are any reported injuries, the entire bonus goes unpaid for the month.
I've shared this story verbally with a few people, and they always start smirking or chuckling. They know the answer to this question:
What could possibly go wrong?
To be fair, It's easy to see the good intentions behind this policy. The company likely believes that tying safety to financial incentives will encourage safer behavior and fewer accidents. But as the legendary Dr. W. Edwards Deming often emphasized, focusing too much on targets can lead to unintended consequences. In Guy's case, the unintended consequence is a dangerous one: people find it easier to hide injuries rather than report them. This way, the bonus remains intact, but at what cost?
Guy shared that the pressure not to report injuries is immense. After all, no one wants to be the person who costs everyone their bonus. So, minor injuries go unreported, and in some cases, even more serious incidents are downplayed or hidden. This is a classic example of what the late, great Peter Scholtes described: when faced with incentives, people have three choices–
- they can improve the system,
- distort the system, or
- distort the numbers.
Sadly, in Guy's factory, distorting the numbers has become the path of least resistance.
This isn't safety; it's a cover-up operation–fueled by cash. And when cash is involved, people will do just about anything–like keeping their mouths shut when they get hurt, because, again, who wants to be that person who costs everyone their bonus?
The problem here isn't the concept of incentives itself. The real issue is that the incentives are misaligned with the true goal, which should be ensuring a safe work environment. The Toyota Production System, which many Lean practitioners admire, emphasizes safety first–always. Safety comes before quality, delivery, and cost. There's no question about it. In a truly Lean organization, the order is Safety, Quality, Delivery, Cost (SQDC). Not just in words, but in practice, every single day.
Because if your workers aren't safe, what's the point of any of the rest? How can we expect them to be engaged in improving anything if they're not engaged in improving safety?
When safety is prioritized in the right way, the focus shifts from simply avoiding accidents to building a culture where workers feel empowered to speak up about potential hazards without fear of retribution. A safe environment is one where every injury is an opportunity for learning and improvement, not something to be hidden.
Deming argued that management's role is to create a system that helps workers succeed–to be a coach, not a judge. When the system is flawed, like the one in Guy's factory, even well-intentioned workers can be driven to make poor choices. True improvement happens when management understands this and works to improve the system itself, not just the numbers.
If Guy's company truly wants to reduce injuries, they need to rethink their approach. They should focus on creating an environment where safety is genuinely prioritized, not just in their policies but in their everyday actions and decisions. That might mean decoupling the bonus from injury reporting and instead, creating incentives that reward proactive safety behaviors–like identifying and addressing hazards before they cause harm.
When you incentivize silence, you don't get safety. You get a whole bunch of people playing a dangerous game of “let's not talk about what's really going on here.” And that's not just bad management–it's reckless. Guy deserves better. Heck, everyone deserves better. So here's hoping his factory gets its act together before something serious happens.
The lesson here is clear: When you align incentives with the right goals–like a genuinely safe workplace–everyone wins. When you don't, you risk creating a culture of fear and concealment, which is not just counterproductive, but potentially deadly. Guy and his coworkers deserve better, and so does every employee working under similar conditions.
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