Feature Article - May/June 2017

From Here to ROI

Long-Term Goals, Sound Program Design Are Essential

By Deborah L. Vence

What Are the Returns?

It can be difficult to quantify the benefits of incentive programs beyond financial gains, Adams said.

"We know that companies with an engaged workforce have healthier bottom lines, but also see increases in retention, reductions in absenteeism and an increase in customer service," she said. "These effects can be measured year over year, as part of an overall review of engagement programs."

However, Wenthe said, VOI is just as important.

"VOI, or Value on Investment, is defined by Gartner as 'intangible assets that contribute heavily to an organization's performance. These intangible assets include knowledge, processes, the organizational structure and ability to collaborate. Where ROI is the measure of the tangible benefits of a project or activity, VOI is the measure of the intangible benefits of a project or an activity. VOI includes ROI,'" she said.

In addition, other factors that are important, Wenthe suggested, include:

  • Customer feedback, employee feedback, channel partner feed-back, whatever method you use (survey, online forums, social, etc.) What are they saying about your initiative?
  • Knowledge. Do your reps, employees and partners truly understand your products and services?
  • Steps-to-the-sale, deal registration, client retention, implementation success. These are all other things that are indicators of success that lead to revenue, she said.

For example, in a July 2016 blog post, Wenthe stated that when an employee has done a good job, you present them with a certificate. ("Great job on your performance the past few weeks," it says.)

"While that certificate is no doubt a kind act—and it probably stirs some happiness in the recipient—the issue of concern here is not with the award, but with the concept of traditional recognition itself," she said in the blog. Driving great performance through recognition and incentive programs doesn't stop with a certificate.

Her blog also stated that traditional recognition programs "can often be seen as reactive—not proactive—and fail to have the same cut-and-dry focus and results that others do."

"Still, more and more companies are adopting formalized recognition programs. But the best among them—the companies that view recognition and incentives as investments, not as expenses—are evolving to use these programs to incent employees in a unique way," she stated.

Meanwhile, Siewert said there are "returns that we call intangible returns (returns that do not provide quantifiable financial results).

"These types of returns," he said, "are not measured in financial dollar value, but they do provide an intangible value to the program or project. One should consider the intangibles when evaluating a program."

Influencing the C-Suite

Convincing C-suite executives of the value of programs beyond the dollar amount can be challenging. But, it helps to show past success.

Driving great performance through recognition and incentive programs doesn't stop with a certificate.

"We have found that most C-suite executives today realize the positive value of an incentive or recognition program or project," Siewert said. "What we have seen is if the ROI is quantified using The ROI Institute's methodology, the CFO—sometimes called the CF-NO!—becomes the CF-YES!, since the financial ROI backing is there for the program or project. For all other C-suite executives we are constantly reviewing all of the intangible benefits of offering a reward and recognition program."

"In the end, the results of past programs do the convincing. Facts convince C-suite executives more than hyperbole," he said.

Wenthe agreed that it can be hard to persuade C-suite executives, especially at first.

But, "Using what you've learned through your VOI research, they'll start to understand the multitude of ways your program impacts your business," she said. "It can't be only about revenue. That's a single thread to your tapestry."

But, what have emerged as essential to a business strategy are recognition, engagement and incentives.

"Success is achieved through the efforts of people, whether employees, channel partners or even customers," Adams said. "Programs that inspire the top 20 percent of an organization's performers will always have value.

"Programs that help the important 'middle 60 percent' to refine their efforts and achieve more will have significant impact on the business overall. This is well understood in the C-suite," she said. "Additionally, in the current regulatory environment, it is increasingly important to root incentive programs in the right behaviors in many industries."