The Missing Link in Many Incentive Programs
By Ira Ozer, CPIM
Unfortunately, many of these programs do not achieve their full potential, because only a small percentage of the target audience engages in the program and accomplishes the actions necessary to earn the awards. It is common that only the top 20 percent of the audience actively engages in a program, with the middle 60 percent not engaging fully, and the bottom 20 percent disengaging and feeling cynical toward the program and the sponsoring company. This experience is consistent with employee engagement research that has been conducted for more than 20 years by major marketing research companies, including Gallup, Sirota Survey Intelligence and the Corporate Executive Board, among others, which concludes that for most companies only 27 percent of employees are engaged and 73 percent are disengaged to actively disengaged.
We can change this participation pattern by more effectively designing and administering incentive programs in accordance with the principles of intrinsic motivation.
Tangible awards are inspirational to be sure, but not motivational. True motivation comes from within each of us as individuals—it's personal. Incentive programs will not work to their full potential unless people are first intrinsically motivated to take the required actions and make the behavior changes necessary to turn their desires for the award into reality.
Fundamentally, there are two types of motivators: intrinsic and extrinsic. Intrinsic motivation is the enjoyment that a person feels by accomplishing the task itself and is driven by factors that people perceive that they can control themselves, based on their level of commitment and amount of effort. Extrinsic motivation comes from outside and can be either from positive influencers such as tangible incentives and recognition that is awarded if a task is achieved, or negative, such as the fear of punishment or ridicule if the task is not achieved.
According to David Sirota and his associates at Sirota Survey Intelligence, many companies are managed by 33 myths that have been passed down for years that create negative work environments. This research is presented in the book, The Enthusiastic Employee, which was published in 2005 to critical acclaim. The basic myths that apply specifically to motivation include:
- People don't like work, especially non-professionals.
- If they aren't watched, people will steal from the company.
- People are unhappy if they have too much to do.
- People will never be happy with their amount of pay.
- Cultural and generational differences exist.
Sirota research concludes that people want and need respect, fair compensation and camaraderie, and demonstrates that companies with high employee motivation indexes are more profitable than ones with low scores. These findings are also supported by other studies and papers, such as the article, "Putting the Service Profit Chain to Work," published in the Harvard Business Review. It states that "people are a company's greatest asset and that a 5 percent increase in employee retention can generate a 25 to 85 percent increase in profitability."
The business world has changed quite significantly from the days when companies could manage with just an "iron fist." We now have a more fast-paced competitive global marketplace, with consumers and channel partners armed with robust information on products, pricing and service levels. This creates increased margin pressures, especially in these recessionary economic times. Companies need to work with fewer employees, who need to be more productive, and since companies can no longer offer "jobs for life," or even guarantee increasing compensation or benefits, we have a workforce of "free agents." On top of this, all marketing initiatives must produce a measurable return on investment, including incentive and engagement programs, so that no dollars are wasted.