Feature Article - September/October 2011

A Seat at the Table

Getting Buy-In for Incentives & Rewards

By Rick Dandes

The importance of senior executive involvement in employee engagement and performance initiatives can't be overemphasized in today's economic climate—particularly given Corporate America's unsteady recovery from The Great Recession.

As the economy slowly improves, the most forward-thinking companies understand that a well-designed and well-executed incentive and recognition program can be a cost-effective way to help employees understand they are appreciated. This is especially true when management is asking everyone to do more in less time. Incentives are also a great way to help retain top talent in an organization, which helps companies compete more effectively.

"The evidence is overwhelming that these programs, when well-conceived and well-designed, offer enormous opportunity to drive revenue, capture market share, reduce costs and gain a competitive advantage," said Michelle Smith, vice president of business development for O.C. Tanner, based in Salt Lake City, Utah.

But Smith also knows that such programs have "very little opportunity for success" if they are not fully supported by the company's leaders.

"My favorite research data point to convince senior leaders that engaging employees through incentive programs merits their attention is from a study conducted by Towers Watson," Smith explained. "They found that over a three-year period, companies with engaged employees grew their operating income by 19 percent. Over that same period, organizations without engaged employees experienced an operating income decline of 30 percent. The 49 percent growth variance is something no chief executive officer or chief financial officer can afford to ignore."

Involvement of upper management is vitally important to the establishment of incentive and recognition programs in the earliest phases of their development, and having senior-level executives involved provides an important energy and early influence, which carries down through the organization.

It is the level of senior executive involvement that allows reward programs to maintain executive-level support, even in hard economic times, said Melissa Van Dyke, president of the Incentive Research Foundation (IRF).

For management to truly support recognition programs, Van Dyke said, "they need to be truly involved. This translates into management's active critique of the program's reward structure and active involvement in reviewing the program's participants, earners and winners."

Besides building management ownership in the program, she explained, the halo effect of visible executive involvement is three-fold. First, it ensures the program is tightly aligned with management's goals and objectives. Second, it allows senior executives to have first-hand experience with the above-and-beyond activities happening within their organization. Finally, it proves to the organization that senior management truly supports the program.

Without senior-level involvement, reward and recognition initiatives are prime targets during mandated cost-cutting eras.

Studies conducted by the IRF found that in order for an organization to be fully engaged with a reward and recognition program, the program must have open, visible support by upper management. This creates a symbiotic relationship: In order for employees to engage with a program (and make it successful), they must see that management visibly supports the program. Likewise, management must continuously see and experience a program's impact first-hand if they are to truly support it.

One other salient point brought up by several motivation program experts: Without senior-level involvement, reward and recognition initiatives are prime targets during mandated cost-cutting eras.