Incentive Schemes Increase Risky Behavior in a Safety-Critical Working Task: An Experimental Comparison in a Simulated High-Reliability Organization

Sebastian Brandhorst,Annette Kluge

doi:10.3390/safety8010017

Abstract

As financial incentive schemes have the tendency to increase risky behavior, we analyzed their effect on rule-related behavior in a safety-critical task. We compared risky behavior (in terms of the amount of rule violations) between three payment condition: continuous, up-front, and bonus pay. Fifty-nine participants were trained as production personnel to conduct a start-up procedure of a simulated wastewater treatment plant, representing a high reliability organization. During the 5-h experimental study, risky behavior could have been applied 48 times while building a simulated production year. The results show that the conditions with an incentive scheme (up-front and bonus pay) led to significantly more rule violations than the condition with continuous payment without an incentive scheme. Our study highlights the general increased risk effect of incentive schemes and provides a starting point for industries to assess their implicit and explicit incentive schemes.

Highlights

Some Evidence on Incentives and Risky BehaviorIn 2010, the oil rig Deepwater Horizon exploded, and the board members of the operating company, Transocean, received multi-million-dollar bonus payments for the safest year in the company’s history
For hypothesis 1, we found that bonus pay (M = 4.50, SD = 6.81) leads to significantly more risky behavior than continuous pay (M = 0.67, SD = 0.80), with an average difference of 3.82 (SE = 1.53), p < 0.05, and a large effect size with d = 0.81
For hypothesis 2, the analysis shows that up-front payment (M = 3.33, SD = 4.68) leads to significantly more risky behavior than continuous payment (M = 0.67, SD = 0.80), with a mean difference of 2.67 (SE = 1.12), p < 0.05, and a medium to large effect size with d = 0.56

Summary

Introduction

In 2010, the oil rig Deepwater Horizon exploded, and the board members of the operating company, Transocean, received multi-million-dollar bonus payments for the safest year in the company’s history. There is some empirical evidence from the financial sector of the influence of incentives on risk-taking behavior, which we will touch upon . The individual operating steps were put together to start up the plant successfully. Two stages of exploratory operation of the plant followed with the support of the test supervisors and a manual.

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