Feature Article - September/October 2017

Positive Direction

State of the Industry Shows Continued Growth

By Deborah L. Vence


Neuroscience is the study of the brain and nervous system, and Behavioral Economics explores why people sometimes make irrational decisions, and why their behavior does not always follow traditional economic models.

"Over the past few years, interest in these topics has grown significantly as incentive professionals sought a scientific approach on how to effectively motivate people and modify their behavior," Smith noted.

"The conventional approach (that rewarded behaviors are repeated) supposes that tangible rewards and punishments are solely sufficient to drive the desired employee performance or consumer choice," Smith said. "While an extrinsic approach is serviceable and relevant, Behavioral Economics posits that an overreliance or sole focus on extrinsic motivators is based upon an in incomplete understanding of human motivation and therefore inefficient."

"Because behavioral economics recognizes that 70 percent of human decision-making is emotional (as opposed to rational), it proves to be a more useful tool than traditional economics in helping program designers understand what actually motivates people, why some incentives are more effective than others, and how they can strategically apply these principles in their programs," she said, adding that incorporating proven techniques from behavioral economics into motivation programs produces a competitive advantage and higher levels of employee productivity, engagement and retention compared to programs that rely solely on monetary incentives.

Companies have a variety of types of people in their employment—multiple generations, cultures, ethnicities, beliefs, styles, opinions, etc.

"Programs are about inclusion and addressing the individuality, team dynamics and subtleties of 'the person' in programs," Blabolil said. "Therefore, the design and then award mix is about addressing choice and variety, but at a level that makes decision-making by the award-winner plausible, inspiring and rewarding, rather than complicated and ominous."

All awards have merit—from merchandise, gift cards and prepaid cards to travel and experiential events.

"The IRF studies are integrating science and intellectual components with the emotional appeal of awards," Blabolil said. "Creativity and accelerated performance comes from program design, trusted intent and meaningful, relevant rewards."

Significant Awards

Experts say various types of non-cash awards are important in incentive programs today.

"Our research shows that all types of non-cash awards including travel, gift cards, award points, merchandise and electronic cards are all important parts of an organization's non-cash rewards strategy. Eighty-one percent of all businesses using non-cash rewards use more than one award type," Van Dyke said.

Over the past 20 years, according to the Incentive Federation, there has been a dramatic jump in the number of U.S. businesses using non-cash rewards, rising from 26 percent of all U.S. businesses in 1996 to 84 percent of all U.S. businesses in 2016..

Over the past 20 years, according to the Incentive Federation, there has been a dramatic jump in the number of U.S. businesses using non-cash rewards, rising from 26 percent of all U.S. businesses in 1996 to 84 percent of all U.S. businesses in 2016, as indicated in the IRF's 2017 Trends Study.

Awards support the integrity and intent of the incentive program.

"The design of the program builds on the trust and authenticity of the relationship between the company and the employee," Blabolil said. "The awards amplify this by being meaningful and relevant to the recipient. The mix of merchandise, gift cards, and individual travel delivers the 'last mile' of the experiential journey."

Today, there are fewer incentive designers who rely solely on tangible rewards in driving behavior and optimal performance.

"Instead, program designers recognize the importance of both intrinsic and extrinsic motivation, and this is what's driving the increased interest in Neuroscience," Smith said.

"In a single instance of giving an award, an organization allows the recipient to acquire status (and potentially goods or services), to bond with their team or the person giving the recognition, to more deeply comprehend what's important to their employer, and to defend the very deeply held belief that they're good at what they do and have chosen the right organization for employment. These are all powerful drivers of engagement and reinforce the basic principles of recognition and incentive program design.

"But," she noted, "How do incentive and recognition professionals decide which rewards to use and how exactly to use them?"