Feature Article - September/October 2015

Rules of Engagement

State of the Incentive Industry, 2015

By Rick Dandes

Although many economists assert that the worst effects of the Great Recession of 2007 to 2009 are largely behind us, as evidenced by businesses increasing their budgets and hiring staff, the lessons learned during a six-year recovery period linger. And the benefits derived by having a nimble, cost-effective and highly engaged workforce are not lost on smart executives in the C-suite.

"The question of whether we are in a post-recession mindset depends on the company itself," suggested Mike Ryan, senior vice president, client strategy, Madison Performance Group, New York. In terms of a macro view of the industry, he said, the recession is definitely in the rearview mirror.

"I think organizations have challenges they still need to address," Ryan said. "There is a wide range of forces in play when it comes to an organization's ability to attract and retain top talent. Number one: There are population and generation considerations. Baby boomers are retiring at a rate of about 10,000 per day, which means there is a need to backfill headcount. And in terms of population trends, there are not the same amount of workers age-wise coming into the workplace."

There is going to be a gap, he continued. A void of available workers to companies in the future. For organizations that are looking to grow, let alone keep pace with where they are currently, there is a need to make sure they have strategies in place that allow them to attract and retain the younger workers that are coming into the system.

The other challenge is a need to develop leaders faster. When organizations think about growth plans, it often means they need individuals who are self-managed and self-disciplined, are at ease with the newest technologies, and understand all the nuances of doing business in an environment that is away from the traditional resources that might be available at headquarters. Clearly that means having solutions that are mobile, social and global in nature.

"So, how are things set up in the industry right now?" Ryan asked. They are set up very well for organizations that understand how the dynamics are changing, and how technology is changing, he said. "And they need to be willing and able to have conversations that are relevant and value-added and are willing to address all these issues."

Incentives and rewards are one piece of the puzzle, helping to drive business by boosting engagement and motivation among all of the stakeholders that are essential to business success, from employees at every level to sales professionals, channel partners and even customers.

When organizations think about growth plans, it often means they need individuals who are self-managed and self-disciplined.

Rodger Stotz, chief research officer, Incentive Research Foundation, McLean, Va., said, "One of the things we saw at the end of 2014 is that budgets were stable, and even going up. In the travel industry, we are seeing the number of room nights and number of individuals on trips stabilizing, and the reductions we saw during the recession are slowing down or stopping."

The IRF is also reporting that recognition programs are being acknowledged by organizations as a critical component of engagement. "That part of the industry business is in a growth mode," Stotz said. "If you include recognition, wellness and engagement, all of those factors in the employee market are a tailwind for the industry in terms of growing that business."

The incentive business has been quite strong this year, observed Bill Martocci, president, Carlisle Sales and Marketing of Oakdale, N.Y., and president of the Incentive Manufacturers & Representatives Alliance (IMRA). "As I say, as the economy goes, so go many of these incentive programs. They seem to be used less by companies when money tightens and when the stock market is not doing well. Executives are using these programs as a tool to evaluate their best employees and reward them. When times are good, employees are hard to come by; when times are bad, customers are hard to come by."

Budgets for incentives and rewards are definitely up, Martocci added. "Given economic stability, companies are more willing to venture out and fund these engagement and reward programs."