Feature Article - September/October 2017

Positive Direction

State of the Industry Shows Continued Growth

By Deborah L. Vence

Factors such as a person's age, profession and background all play into the impact a reward has on them. However, Smith added, for an effective campaign, incentive professionals also should give careful consideration to these subtle but significant variables adapted from "How to Effectively Harness Behavioral Economics to Drive Employee Performance and Engagement" by the IRF:

  • Ease of Selection: Incentive programs should focus on using nudges to make the reward system user-friendly and to maximize the program's emotional impact. Emotionally compelling rewards hit the mind harder, are remembered longer, produce quantifiably better results and influence the internal brand the most.
  • Reward Type: Employers need to move beyond programs that rely solely on monetary rewards, but instead use a variety of rewards in strategic combination to complement each other. Award programs should offer tangible awards and formal recognition more frequently, while using experiential rewards (trips or spa treatments) more sparingly. The latter tends to deliver more intense happiness, while the former serves as a permanent reminder of appreciation.
  • Motivation Type: Consider rewarding top-performing teams as opposed to using a system in which team members all compete for a single reward. In today's workplace, cooperative incentives are more effective and valuable than competitive incentives. Also, don't underestimate the value of rewards that reinforce internal (intrinsic) motivation, which creates a long-lasting desire to perform well by increasing the recipient's self-esteem by establishing a sense of purpose, fueling a desire to live up to expectations, or helping the recipient master new skills. And celebrating reward-earners publicly has measurable, favorable effects on productivity.
  • Personalization: Who does the recognizing and how personalized or public that recognition is can have an impact on the recipient's emotional response and, ultimately, their productivity. One person may value and appreciate public recognition, while another might respond more favorably to private acknowledgement from an esteemed colleague. Similarly, employers need to depart from a generic, one-size-fits-all model and incorporate creativity and personalization (based upon what matters to the individual) into rewards.
  • Timing: Surprise a recipient with their reward immediately after the goal has been achieved to make it more meaningful. A reward that is explicitly promised in advance to a program participant if he or she achieves a particular goal loses its impact much more quickly than a reward received unexpectedly in recognition of reaching a goal.
  • Desired Impact: Rewards programs that prove employers truly care about their employees are the most effective. Implementing emotionally meaningful incentives in programs has benefits that extend beyond improving employee productivity. The more valued a company's employees feel, the better the internal brand impression, and those employees act as brand ambassadors who extol the company's virtues to job candidates, current and potential customers, vendors and the media.
  • Purpose: Ideally, every incentive and reward program will align to the company's purpose in some way. If employees believe in the company and its vision, trust their leaders, and develop caring relationships with the people they work with, then the employer becomes an asset that employees will instinctively protect. In this case the employee feels like an owner as opposed to a renter and will act accordingly.

Industry Challenges

In the IRF's 2017 Trends Study, it indicated that one of the biggest challenges facing the incentive and recognition industry today is the rapid succession of changes in government regulations that pertain to incentive program design and execution. In the study, it indicated that nearly 60 percent of respondents in the latest IRF Pulse Study had indicated that they agree or strongly agree that government regulations are making it more difficult to design reward and recognition programs.

Van Dyke said that "The churn created by changing regulations and costs that are exceeding budgets will be our biggest challenges moving forward."

To boot, Blabolil noted that tax reform might be the single most influential factor in the near term regarding the use of incentives.

"Depending on how Congress views the effectiveness of corporate incentives and whether government should play a role of 'incenting' companies to drive productivity and engagement, or whether they believe that it is totally in the hands of corporate American, will be a key by product of tax reform," he said.

"The paradox is that if incentives are so influential and important to Corporate America," he added, "Congress may conclude that they do not need to participate in its deployment or 'tax benefit.'"