Incentives, Rewards Help Incite New Ideas
Being innovative across an organization is imperative in order to stay relevant in the marketplace. Employees need to be inspired to create new ideas and be made to feel that their input is vital to an organization.
Companies can help motivate creativity through the use of rewards and incentives, thus encouraging a positive work environment.
"Incentives and rewards are flexible tools that can be used across an organization to focus the workforce on any number of goals or priorities, including innovation," said Susan Adams, senior director of engagement for New Brunswick, N.J.-based Next Level Performance, a Dittman Company.
"When faced with a competitive marketplace, many companies—even those in established industries—must innovate to remain relevant," she said.
In this issue of Premium Incentive Products magazine, industry experts discuss the ways in which companies can use incentives and rewards to inspire innovation, how incentives and rewards can help in transitional times, as well as what the most recent innovations are in inspiring performance.
Methods for Inspiration
It's possible to increase performance in targeted areas by letting employees know what is needed of them and providing opportunities to share in the rewards of success.
"A program to increase innovation also conveys that ideas and advancement are essential to the organization, and that maintaining the status quo is not the goal," Adams said.
Michelle M. Smith, CPIM, CRP, vice president of marketing at O.C. Tanner, said she's discovered that a common question when leaders set out to increase their focus on innovation is in how to formalize the capture of new ideas and structure an incentive or recognition program for the ideas generated.
"However, encouraging bold, new thinking shouldn't be limited to employees," Smith said. "Customers, vendors, distributors and other stakeholders in the organization can also yield a wealth of rich ideas to move a business forward.
"I would encourage leaders to involve as many people as possible to offer their best thinking, although employees are undoubtedly the first place to start if a leader wants to begin modestly," she added.
Employees also have told Smith that developing new and creative ideas often is an intrinsically enjoyable process—especially for those who appreciate having leaders invite them to offer their suggestions.
"That invitation alone has proven to be highly motivating for them to contribute, and many employees feel the recognition of the potential value of their ideas is a reward in itself," she said.
When looking for innovative ideas from employees or other business stakeholders, Smith recommends that companies invest serious thought into how to deal with those whose ideas are rejected, for further development.
"Innovation initiatives frequently result in having to diplomatically say no to a lot of ideas, sometimes repeatedly. How people's contributions are acknowledged, the transparency of the decision-making process, and how the results are communicated to them are crucial factors in keeping trust and morale high and future ideas flowing," she explained.
Employees need to be inspired to create new ideas and be made to feel that their input is vital to an organization.
While specific tactics for getting employees to be more innovative likely will vary from organization to organization, research can help provide guidance about what employees need from their workplace to become loyal and productive contributors.
"I've seen research proposing that human beings have six basic needs in the workplace: respect, recognition, a sense of belonging, autonomy/freedom, personal growth, and to feel that their work is meaningful," Smith said.
"It seems to me that the first step in creating a workforce of innovators is for leaders to create an environment in which everyone can become their best and excel. These six workplace needs should provide a good starting point," she said. "Some of these needs can be met through rational and strategic corporate objectives (recognition, autonomy/freedom, personal growth and meaningful work), and the others are emotionally-driven by the culture of the organization (respect and a sense of belonging)."
The good news is that the ratio of rational to emotional needs is 2:1, giving leaders a significant opportunity to make progress, or to make certain that these workforce needs will be met.
"The more challenging news is that research revealed that emotional factors are four times more effective than rational factors in influencing employees. So, leaders need to work just as hard at building a culture of appreciation and connection, too," Smith said.
Since the 1990s, research has shown that work has become a greater part of establishing and maintaining individual self-identity than either family or community influence. So, meeting employee needs in the workplace have further-reaching consequences than job performance.
It's possible to increase performance in targeted areas by letting employees know what is needed of them and providing opportunities to share in the rewards of success.
"Leaders would be well-served to appreciate and embrace the opportunity to help their employees become enriched human beings who can more richly contribute to their job, their family and friends, and to their community," Smith said. "I'm confident that enriched employees who are fully engaged in their work will bring new energy to their workplaces and yield a wealth of innovative ideas."
Innovation is one of many "behaviors" that a company may want to inspire their people to achieve, noted Richard Blabolil, president of Rosemont, Ill.-based Marketing Innovators.
"To invite innovation, a company may find it useful to give examples of what innovation can be," he said.
For instance, innovation can involve reapplying an existing product, service or activity in a new way, or it can involve creating an entirely new product or service.
"Helping employees frame the context of innovation can certainly get the ideas flowing. One context for innovation can be to encourage employees to reflect on the tasks or activities in their job that are the most frustrating and time-consuming," he said.
"Are there ways or innovations that they can come up with to refine these processes, automate them or streamline them? Once you set these wheels in motion, recognize those ideas and implementations with rewards and appreciation," he suggested. "Too often people may be constrained by the fact that they believe innovation has to be about a new product or invention, rather than a refinement or improvement to an existing situation."
Innovation also can be represented by the development of the skill sets of team members.
"Encourage the pursuit of training and problem-solving as a means of innovating your greatest asset: your people," Blabolil added.
An example is a high-tech global corporation that communicates to its employees a host of examples of what they mean by innovation.
"Employees are encouraged to think big and small; revenue-generating and cost-saving; quality-minded and efficiency-focused; people-centered and service-oriented," he said. "All ideas are reviewed and recognized, while on a quarterly basis 'key' ideas are communicated to the company and rewarded."
Communications are essential to transitions.
"Helping people stay on track, know what to expect, and remain focused on organizational and personal goals can ease stress and provide a pathway through confusing circumstances," Adams said.
And, "Incentive and rewards programs, at their heart, are communications programs that set expectations and make priorities clear," she said. "They have an important role to play in keeping top performers working toward the right things and also provide opportunities for feedback on achievements in the evolving organization."
"All companies need communication," he said. However, companies that are going through a transition are in critical need for constant communication.
"Incentives and rewards can be used to promote constant communications up and down the organization. Social recognition, badges and gamification techniques can be very effective to generate and reinforce channels of communications," he said. "Then, incentives and rewards can be used to thank employees for taking action and being involved in the transition."
Research supports Smith's belief that company culture is a critical driver of innovation and overall business success.
"In fact, two-thirds of employees believe that company culture is very important to the success of their organizations, stating that it has the greatest impact on morale and productivity," she said.
Revitalizing company culture is often an overlooked opportunity to jump-start business improvements and should be treated as a critical component of overall business strategy.
"While company culture may be the secret weapon for innovation, it has suffered during the past few years. A majority of employees believe that the Great Recession had a negative impact on company culture. With layoffs, reduced benefits and wages, morale suffered and many workers became disengaged and [weren't] operating anywhere near their creative best," Smith noted.
What's also important is for leaders to regain employees' productivity and ignite innovation, especially if they are undergoing a change initiative or other transitional events.
"A healthy culture is important at any time, but in times of change your company culture alone can make or break the success of the change," Smith said. "Revitalizing company culture is often an overlooked opportunity to jump-start business improvements and should be treated as a critical component of overall business strategy. The keys to a better culture begin with benchmarking the current culture: how it is defined, what it means to employees, and what the organization would like it to be."
Incentives and recognition have proven to be effective tools for encouraging innovation. So, using your reward budget generously is important, especially if you're undergoing a transformation.
Research has revealed that the top two elements critical to strengthening company culture are employee attitudes and effective management; while other important elements include encouraging new ideas and innovation and leveraging recognition and reward programs, as well as strong trust relationships; customer focus; high accountability standards; commitment to training and development; useful resources, technology and tools; and emphasis on recruiting and retaining outstanding employees.
"Secondly, since knowledge workers are responsible for many commercially successful innovative ideas, I'm pleased to share that one of the top performance motivators for knowledge workers is progress," Smith said. "When workers have the sense they're making headway in their jobs, or when they receive support that helps them overcome obstacles, their emotions are most positive and their drive to succeed is at its peak. If they feel they're spinning their wheels or encountering roadblocks, their moods, motivation and creativity are lowest."
The key to motivation and innovation is within your control because you have influence over events that facilitate or undermine progress.
"I would encourage you to make the most of that influence," Smith added. "You can provide meaningful goals, resources and encouragement, and you can protect your staff from irrelevant demands. Or, you can fail to do so by changing goals autocratically, being indecisive or holding up resources and sabotage any hope for meaningful innovation within your organization."
Moreover, she also suggested that companies clarify overall business goals, cultivate a culture of helpfulness and ensure that people's efforts are properly supported and recognized.
"Of course," she said, "these efforts will not only keep people working with gusto, but also get the work done faster. So, openly and generously celebrate progress and goals met. But, there will be nothing to recognize if people aren't genuinely moving forward—and as a practical matter, recognition can't happen for everyone every day. You can, however, see that some progress happens every day, and that will increase motivation and create numerous opportunities for innovation and celebration.
"Finally, I've discovered that leaders at organizations that set formal priorities for innovation rate their overall success higher than other organizations that don't have formal priorities and plans in place. These results suggest that companies would benefit from the simple step of setting formal strategic innovation priorities and ensuring that those priorities are well-communicated and reinforced throughout the company," Smith added.
Keeping employees engaged and motivated to perform is crucial to companies and the economy.
"Gallup estimates that disengaged employees cost the economy nearly $350 billion a year in lost revenue," Blabolil said. "This is the perfect opportunity to use incentives and rewards to change things up. Effective implementation of an incentive program can grow your company exponentially."
Companies have turned to Marketing Innovators to revamp their incentive programs. And, oftentimes, companies only reward the top performers, which usually exclude a significant number of employees.
"This motivates those at the very top, but leaves the rest feeling much less enthused. The greatest potential increase in sales volume comes from the middle (let's say 50 to 60 percent) to individually improve their performance. These performers can be motivated to achieve their goals knowing that they can be rewarded for their accomplishments," Blabolil said. "This impacts and improves the bottom line, as well as individual performance. It is best to use a model that allows each person the opportunity to earn awards by achieving reasonable goals."
Another point to keep in mind is the ever-growing presence of millennials in the workplace. By 2030, they are projected to make up nearly 75 percent of the workforce.
"While there are similarities between generations, company leaders need to account for those differences as this transition occurs," he added. "Millennial employees average about two years at a job, so this is another great opportunity to utilize rewards and incentives. Building the relationship and finding out what motivates these forward-thinkers can help to retain them for longer."
Fresh Innovations to Inspire
The fundamentals of incentives, recognition and engagement always will remain the same. Such programs help organizations connect with individual aspirations and goals, and help people to succeed in meaningful work.
However, the delivery of incentive programs changes with the tools and awards that are available, Adams noted.
"Technology has had significant impact on incentives and engagement," she said. "With mobile technology, program participants can be connected to the program wherever and whenever they want to. They can also participate in social interactions with others in the company, whether in the next office or around the globe."
This connectivity brings programs into the day-to-day lives of every participant. In addition, technology, and the data it collects, allows the program experience to be increasingly personalized and relevant to each individual. And, managers can use the data for better understanding of employee performance.
"Recent innovations are targeted at fostering and bonding connections between people in order to inspire better individual and team performance," Blabolil said. "Companies are creating communities of interest—groups of people with similar interests who can connect and support each other."
Rewards and recognition play a role and an innovative tool is "conversational commerce," whereby a person can share appreciation to a coworker by sending a "cup of coffee" via their instant messaging—thereby, thanking someone virtually right away.
Blabolil said, for example, that by partnering with his company and using its disbursement platform, companies can streamline the payment process to employees and create a more positive experience.
"The technology allows for immediate access to funds and eliminates the hassle of cashing or depositing checks. In addition, it provides zero liability fraud protection, and a more secure way to use funds. Our model provides significant benefits to companies as well," he explained.
In turn, the cost associated with check processing, disbursement and administration is reduced greatly. The platform is user-friendly and provides on-demand usage and reporting for your company.
Marketing Innovators also has an incentive platform that allows participants to set goals and KPIs (key performance indicators) and then monitor progress through the platform. This, in turn, helps to inspire performance, as employees can track their growth, stay motivated, remain competitive and, thus, improve productivity.
Smith stressed that every organization today needs to commit to improving employee productivity, igniting morale and capturing market share proactively.
"In my opinion, innovation is the lifeblood of a company's vitality and sustainability, and it can play an especially important role as we move forward in the unprecedented pace of change and disruption in the marketplace," she said.
"I can remember a time in the not-too-distant past when a company was able to leverage an innovation to their advantage for decades ... or years, at the very least. That market no longer exists," she said.
The Internet, she noted, has shortened market cycles dramatically and created consumers who are obsessed with novelty and 'what have you done for me lately?' Organizations have to keep innovating and moving forward, or risk being eclipsed by competitors.
The bar has been raised and leaders need to proactively encourage employees to experiment, modify and explore every aspect of the business.
"I believe that continuous innovation is the only path forward, and the scope and definition of innovation has to be universally redefined," Smith said. "In the past, most leaders I've spoken with equated innovation primarily with the development of new products or technologies, and only a select group of employees were tasked with innovating within the company."
But now, more leaders are viewing innovation as the responsibility of the entire organization and the scope and definition of innovation has evolved to be much broader and more inclusive.
"The hyper-competitive market in which we find ourselves has created the need for companies to look for innovation and competitive advantages in every aspect of their business—and that requires everyone to think about new ways to approach their work," she said, adding that customers today are seeking the "remarkable and the new," and expect "flawless quality to be inherent in every product and service."
"The bar has been raised and leaders need to proactively encourage employees to experiment, modify and explore every aspect of the business," Smith said. "Curiosity, initiative and persistence are sought-after employee characteristics."
What Smith finds most promising about pursuing innovation is that besides its own benefits, it also complements another critical business need: the need to control risk.
"Both innovation and risk operate in the realm of the unknown, and a dynamic balance between the two can yield enormous advantages to an organization willing to pursue both with equal vigor," she said. "Controlling risk is about preparing for the unknown and innovation is about enabling the unknown to emerge successfully from a secure environment. They are two sides of the same coin that afford leaders the best opportunity to control their own destiny in a volatile marketplace."
The first step for leaders who want to encourage innovation, Smith believes, is to clearly define productive, commercial innovation for their organization and distinguish it from what is simply creative, novel or trendy.
"Otherwise," she said, "many new ideas might prove to be useless to the organization if they can't be successfully implemented or commercialized. The transformation from creative to innovative occurs only when real value is created—when the idea significantly alters a process to reduce costs, or when others are willing to pay for it and it produces revenue."
Generating new ideas is important, but it's only the first step, and without a good working framework for what constitutes a viable new innovation, that first step might be squandered.
"I find that when they focus on it, most companies are sufficiently good at generating ideas. The challenge occurs further down the pipeline when they try to bring those ideas to life," she added, "and that's where a formal evaluation plan can make the difference between success and failure."