Feature Article - January/February 2013

Smoother Sailing Ahead

Adapting Incentives to the New Economy

By Rick Dandes

The volatile nature of the current recovering economy has left many business executives and HR professionals uncertain about what is the "new normal" in employee recognition.

But one thing seems fairly clear, according to Mike Ryan, senior vice president of marketing and strategy for Madison Performance Group in New York. "People have settled into the idea that they need to do more with less. For employees, that means working longer hours and, in many cases, for less pay or stagnant wages. But for HR professionals focused on the whole emotional and intellectual relationship that their employees have with the brand, it means they not only need to be more efficient with their recognition budgets, but also more effective. And that's where I see the effect of the downturn on incentives."

Executives in the C-suite are looking for ways to keep their employees focused, motivated and engaged, but realize they don't have the economic tool kit that they used to. They don't have a lot of money for raises and bonuses. As a result, they've become more interested in what non-cash awards can do for them.

This, in a way, poses a challenge for HR executives, Ryan said. "They are being green-lighted to do more with recognition, to be creative, and to not only be more efficient and economical and get the most bang for it, but also to align it with where the organization needs to go in terms of meeting some of its contemporary issues."

Ira Ozer, founder and president of Motivation Partners in Chappaqua, N.Y., agreed with Ryan that, "In the new normal, companies have to make do with fewer resources, which means a continuing push to improve people's productivity. Since almost all employee engagement research studies conclude that approximately 60 percent of employees are disengaged, and the main reasons are not for lack of adequate compensation, but rather a lack of respect, recognition and collaboration, there will be a continuing need for incentive and recognition programs."

This is especially true, Ozer said, for programs that are designed to directly improve productivity, such as sales, service and innovation incentive programs and for those that can prove a measurable return on investment.