Departments - September/October 2017

Distinctive Traits

Study Shows Strategies of Top Companies

By Deborah L. Vence

A recent study from the Incentive Research Foundation (IRF) revealed what successful companies are doing differently when it comes to non-cash rewards and recognition.

The IRF Incentive Benchmarking Survey, along with the white paper, "Ten Things Top Performing Companies Do Differently," showed that top-performing companies are more likely than average-performing businesses to use non-cash rewards and recognition programs to reward their salespeople (90 percent), employees (88 percent) and channel partners (81 percent). Top-performing companies also think about, design and support their programs differently.

"The Incentive Benchmarking Survey revealed a wealth of best practices for human capital investments from truly exceptional companies," stated Melissa Van Dyke, president of the IRF, in an August press release. "To be considered a top performer for this study, companies met benchmarks in revenue, growth, customer ratings and employee ratings. Of the 900 companies reviewed, only 300 organizations made the cut."

Some insights from the study include the following: top-performing companies have higher payouts; top-performing companies have a stronger belief in non-cash rewards and recognition; top-performing companies have strong executive buy-in for non-cash rewards and recognition.

The vast majority of top-performing companies (93 percent) reported that their executives are strong supporters of non-cash rewards and recognition as a competitive advantage for the organization; and top performing companies focus on reach, not exclusivity. While 56 percent of top-performing companies had said they prioritize reach for both employee and sales programs, only 36 percent and 28 percent of average companies said so respectively.

Besides using non-cash rewards, top-performing companies, as defined by the latest research with Intellective Group, needed to have four characteristics:

  • High revenues: $100 million or more in revenue.
  • Good growth: greater than 5 percent revenue growth or stock price growth.
  • Excellent customer ratings: greater than 90 percent customer retention or greater than 90 percent customer satisfaction and greater than 5 percent new customer acquisition rate.
  • Excellent employee ratings: greater than 90 percent employee satisfaction ratings or greater than 90 percent employee retention and less than 10 percent top performing employee turnover year over year.

In terms of what those companies do differently than other businesses regarding non-cash rewards and recognition, the following are 10 distinctions:

  • Strong belief in rewards and recognition: Top-performing companies were over 20 percent more likely to assert that their non-cash reward programs were effective recruitment, retention and engagement tools. Top-performing companies were also over 30 percent more likely to believe that their non-cash reward and recognition programs effectively influence behavior.
  • Strong executive buy-in: Respondents at top-performing companies were 35 percent more likely than those at average companies to agree that their executives believe non-cash rewards and recognition are a critical tool in managing company performance.
  • Consolidated program: Though many top-performing companies (more than 40 percent) indicated that they had multiple programs running across the company that were designed and managed under a common purpose, top-performing companies were significantly more likely to have a single program for their entire company.
  • Income-based budgets: Regardless of program types, more than half of respondents from top-performing companies stated that their organizations calculate their budgets bottom-up (based on income, using a percentage of anticipated sales income, product/operating income, or employee income to calculate their budgets). Across program types, top performers were twice as likely as average companies to use income-based budgeting.
  • Higher payout: Top-performing companies have higher payouts in their programs than average companies do. For example, the typical sales person in a top-performing company can expect to earn $3,916 in non-cash rewards versus $2,749 in average companies.
  • Goal-focused design: Top-performing companies were more likely than average companies to favor goal-based structures in their programs. Only 57 percent of average-performing companies used sales-based quota programs while 80 percent of top-performing companies did. While 55 percent of average companies used goal-based programs for their employees, almost 70 percent of top-performing companies did.
  • Focus on reach: When asked whether their non-cash program design was structured with the goal of rewarding and recognizing the truly exceptional performers (exclusivity), or if it was structured with the goal of each participant receiving a recognition or reward in the program (reach), top performers were statistically more likely to say "reach" regardless of program type.
  • Leveraged analytics: Top-performing companies are more effectively moving beyond reporting to leveraging analytics. More than three-quarters of all respondents at top-performing companies using non-cash reward and recognition programs—regardless of program type—indicated they were fully leveraging the performance data produced by their program using analysis and insights to guide decisions.
  • Integrated communications: Integrating the rewards and recognitions into broader organization communications is key for top performing companies: 77 percent with employee programs said their programs were integrated into broader company communications, 78 percent said likewise for channel programs, and more than 80 percent said likewise for sales programs.
  • Excellent support: Top-performing companies also are statistically more likely to give their rewards and recognition programs a rating of "excellent" in the following categories: participation, budget, manager buy-in, staffing support and corporate goal alignment.