In our blogs, we typically tend to focus on incentive program best practices by highlighting aspects of program planning, execution, and analysis that we believe are valuable to interested end-users of incentives. This includes program and event managers, curious company executives, and potential clients. While we always try to consider these topics from the end-user perspective, our goal is to share the insights and expertise gleaned from 35+ years of doing business in the incentive industry.
This week I want to do something a little different. I don’t want to talk about what end-users of incentives could or should be doing. Instead, I want to simply give a brief overview of what these invested parties actually are doing.
In other words, I don’t want to focus on the best practices so much as the common practices. In this way, perhaps some of our readers can start to get an idea of the decisions their peers—and competitors—commonly make.
The Study
Fortunately, the Incentive Research Foundation (IRF) recently released a study examining just this topic.
The two-part Signature Study, titled “Voice of the Market”, sought to “understand the program manager’s perspective: what buyers consider to be relevant and compelling to the topic [of incentive programs].”
For the study the IRF interviewed 50 “end users” who purchase and/or operate incentive programs for their respective organizations. These end-users (EUs) served primarily in one of three capacities:
- Executives responsible for performance or engagement of an audience (employees, sales, channel partners)
- Mid-level managers responsible for implementing and executing incentive initiatives for their particular business units
- Meeting or event managers responsible for designing and executing an incentive travel program and who usually worked in conjunction with other company executives
The Findings
Non-Cash Rewards
Overall, the study revealed that when industry insiders invoke the power of non-cash rewards, they are essentially preaching to the choir.
That’s because EUs are generally “strong believers” in the use of non-cash rewards, and they’re acutely aware of the different functions that cash and non-cash rewards serve.
Namely, they recognize that cash is viewed primarily as compensation—a part of the employer/employee business arrangement—while non-cash rewards are seen as celebratory, delivering a social aspect and impacting friendly competition, team pride, and a sense of organizational community.
Gift cards seem to lie somewhere in the middle between cash and non-cash rewards and can depend on the type of gift card.
For example, EUs indicated that branded gift cards were considered to be more effective motivators than open-ended gift cards, and that the effectiveness of various gift cards was dependent on the make-up of the workforce being rewarded.
At any rate, gift cards generally seem to be used as entry points for executives and EUs who don’t yet have a non-cash rewards component to their offerings but are looking to do so.
Incentive Travel
Incentive travel rewards continue to be popular among EUs and are seen as particularly effective when it comes to rewarding top performers.
Program managers acknowledged the excitement and enthusiasm generated by incentive trips, recognizing that while group incentive travel typically has a higher threshold for entry, it also offers a bigger payoff in terms of memorability and participant appreciation.
Perhaps most importantly, group trips are seen by EUs as being celebratory social events that help build and reinforce organizational culture.
This might explain why group incentive travel is often the first form of non-cash incentives that’s offered by bigger firms and why program managers often enjoy planning these types of rewards.
In fact, and somewhat surprisingly, EUs (and specifically those who could be considered program “owners”) indicated that the administration and reward fulfillment of incentive travel programs was considered a highlight of their job rather than a burden.
The study even suggested that “for many, this is the most fun they have at the office.” This could help explain why some program managers may be reluctant to outsource this task to a third-party, even if doing so would free them up to focus on other organizational endeavors.
In-House vs. Outsourcing
Enjoyment of the program planning process isn’t the only reason some EUs choose to build and internally operate their own reward systems and online platforms.
A number of survey respondents indicated that they chose not to employ a third-party because doing it themselves was cheaper and enabled them to better customize the program to fit their business needs.
However, EUs also noted that this can become problematic if the program is too multi-faceted, or if the corporation they work for is large and looking to accommodate multiple business units under a single, corporate-wide online platform or reward system.
These factors can result in program budgets that are overly distributed and decentralized, leading to limitations in coordination, sharing of best practices, and corporate guidelines between these organizational units.
In other words, a centralized incentive resource that can house multiple platforms, programs, and/or promotions while still remaining flexible may be seen by some program owners and corporate executives as worth the cost of hiring a third-party company to create and administer it.
Measuring Success
Finally, survey respondents indicated that participant feedback was a primary metric for measuring the success of their incentive programs. In fact, most EUs utilize some type of participant survey during or after their program.
For employee recognition programs in particular, this is generally considered to be sufficient, enough that this feedback often influences future program design.
For goal-based programs (e.g. sales incentives), the reporting of performance goals and achievements is also a determiner of program success.
However, EUs did mention data availability and reliable measurement as two chief limitations of their status quo programs, and aspects that third-parties should be able to address when called upon.
Conclusion
According to the study, “overall, program owners and their executive sponsors are highly satisfied with their programs.”
While this only represents a small fraction of the incentive programs that are run in the U.S.—the study puts market penetration of non-cash rewards in U.S. companies at about 80%—the widespread support of those who invest in them indicates that these principals do in fact see the value that incentives can bring to their organizations.
As these programs are viewed by EUs as social in nature, it’s no surprise that their primary concern when it comes to program design is audience engagement and satisfaction.
It also speaks to the core challenge faced by these EUs as they look to renew their programs: how best to keep programs fresh and energized year over year?
For this reason, EUs are always looking for more information that can help them improve their programs, be it through industry associations like SHRM, WorldatWork, or AMA, or through established organizations that feature award winners like SITE and the Incentive Marketing Association.
The study finishes by offering an interesting and compelling call-to-action for industry insiders:
“It is striking the degree to which program owners, spending enormous sums on rewards, are largely unaware of the resources, expertise, and suppliers available to them in the incentives marketplace. This gap is driven not from lack of interest, but from a missed opportunity for the industry to connect with front-line reward and recognition owners.”
Sources
Photo by Kalen Emsley on Unsplash
