Incentive Industry – Fact, Figures and Focus

Here at Incentive Intelligence we take a much broader view of the incentive industry.  While we agree that non-cash awards are effective and conducting performance programs are important, we don’t always agree that the non-cash award is the only option.  Too often the industry is blinded by the fact that there are other ways to engage employees outside of the traditional industry point of view.

That said, there are a couple of resources I ran across recently that may be of value to those that subscribe to Incentive Intelligence.  Both can be found at Incentive Central.

A short white paper on the value of incentive programs during a down economy.  The focus of the white paper is on why incentives make more sense during a downturn than other potential marketing tactics.  Specifically they highlight:

1. Incentive programs typically have low fixed costs and the variable costs (awards) are driven by performance (depending on structure)
2. Incentive programs typically target specific audiences versus a mass approach
3. Most programs use existing tracking mechanisms at the sponsor company so they are relatively easy to measure, track and report
4. Because most incentive programs are not compensation-based they can remain flexible and target very specific needs at specific times. 
5. In addition, the results from programs typically have extended benefits outside the length of the program

All very good points – but contingent on the appropriate structure designed.  As the article states: 

"The Incentive Performance Center recommends that any organizations seeking to maximize results through incentive programs employ either internal or external resources trained in incentive program design."

(Hint:  That would be us!)

A recent study on how the downturn may affect companies’ use of incentives and
rewards.  16.7% response rate to 600+ invitation (80 respondents.)  Some summary information:

1. 81% say the economy has affected the way they plan their incentive programs that use travel as the award by choosing domestic over international destinations, reducing the length of the program and eliminating some of the "normal" inclusions.
2. 48% say the economy negatively impacted their merchandise programs – increasing the use of debit cards versus merchandise
3. 73% say the economy is changing how they look at the ROI by including different and more precise measures
4. 61% say they are reducing their budgets

Thoughts

I don’t think any of this surprised me but I don’t really understand the shift from merchandise to debit cards as a response to the economy.  There really wouldn’t be any cost savings by switching – if anything, the additional fees associated with debit cards would increase their budgets – unless they reduced the payout by a like amount.

The focus on ROI and the need to look at additional measures is a good thing.  While I know that measuring the impact of any marketing initiative is tough at best – anything we can do to increase the robustness of our measurement is welcome.

Unfortunately, as I recently posted, now is not the time to be necessarily cutting expenses, but the time to really look at the expense of programs and to ensure they are aligned with the business goals of the times. (Hint again – that’s us!) 

I find the dichotomy interesting – the first article explains why incentives are one of the best options during a down economy and the research shows that companies are cutting them. 

Again, our work at Incentive Intelligence is never done – sisyphean maybe – but never complete.