Feature Article - January/February 2011

Keeping It Fresh

Creating Effective Long-Term Programs

By Deborah L. Vence

Incentive programs have proven to motivate employees enough to help improve their individual performance and increase company productivity. They give workers the feeling of being valued and a sense of connection.

All the same, an incentive program can work for or against you, depending on its duration and what you put into it.

In a recent study by St. Louis-based Incentive Research Foundation (IRF), long-term incentive programs outperform short-term programs. The study found that incentive programs that run for a year or more produced an average 44 percent performance increase, while programs running six months or less showed a 30 percent increase. And programs of a week or less yielded a 20 percent boost.

Michelle M. Smith, CPIM, CRP, and vice president of business development for O. C. Tanner, a Salt Lake City-based company that specializes in employee recognition programs, said that the IRF research findings could be the result of the extended—and often better—planning and design that goes into a longer program.

"Even though we should all invest as much thought and attention in a shorter program as we do with a longer one, I find that some companies short-cut crucial design elements when a program is shorter. Invariably, this leads to less-than-optimal results and may account for the IRF findings," she said.

Rodger Stotz, chief research officer of the IRF, suggested that the reason long-term programs have a propensity to produce better results is because short-term programs tend to be more spurt programs.

"What I mean by that is that they are generally looked upon as that we have an immediate need, and let's do something quick, as opposed to a long-term program that tends to be more systemic. What you have is rather than looking at two exactly similar plans or programs, and one's just longer than the other, you are looking at two different objectives," Stotz said.

"With short-term programs [that run, on average,] from 30 days to six months, you tend to see a more, almost reactive approach to a unique situation people saying that we need to do this and we need to move this product, or address our downturn as quickly as we can. More short-term programs are focused on a specific area that needs to be addressed," he added.

Meanwhile, systemic, longer-term programs generally are tied to longer-term goals, and usually are looking at more of an overall performance rather than a narrow focus.

"You have to look at them being different in timeframes, but different in applications and specific objectives," Stotz explained. "Then you get into why you would see one of those longer-term programs yielding higher than a shorter-term."

Long-term programs require careful crafting in order to have a chance at success. Incentive industry experts discussed the main ingredients to a long-term incentive program, as well as some of the dos and don'ts of ensuring an effective program along with the main advantages and challenges of such a program.