Feature Article - November/December 2011

Beyond R.O.I.

Incentive & Reward Benefits Surpass Hard Numbers

By Rick Dandes

Given the unpredictable nature of world affairs in both the private and public sectors, organizations everywhere are casting a critical eye inward toward their business investments and the bottom line. Everything, it seems, is under the microscope throughout the value chain in difficult economic times, from the way companies engage with their upstream and downstream partners to the methods for engaging their employees, as well as customers. This has caused a proliferation in organizational demand to understand the return on their investments in engagement, in terms of people, processes and enabling technologies.

To calculate a simple return on investment, you subtract the program cost from the program benefit and then divide by the program's cost, "but it is in intangible areas, such as those that emphasize energizing employees toward outstanding performance—or customer service—where human resource and C-suite business leaders still do not realize the number of ROI benefits that can be derived from a rewards (or recognition) plan," said Derek Irvine, vice president of client strategy and consulting for Globoforce, a company with North American corporate offices in Southborough, Mass.

Those benefits include building and maintaining a strong global corporate culture, increased employee morale and engagement, and finally, the more tangible results in employee productivity and business performance.

Typically, organizations are looking for financial returns, and many times employee reward and recognition programs are measuring softer skills such as teamwork or when workers go above and beyond their normal job duties, agreed Beth Schelske, vice president, Performance Solutions Group, for the ITAGroup in Des Moines, Iowa. "Even so, as incentive and recognition program planners, we still try to create some kind of financial metric around that. But it is harder than a sales incentive program, where you can look at what list is being created by incentives and tie that back to a financial impact."