The Challenge of Going Global
Incentives & Rewards Around the World
In this highly competitive and expanding global economy, how an organization approaches talent management capabilities, and plans for growth by attracting, motivating and retaining a skilled international workforce, is critical to success.
To that end, organizational growth—and the development of incentive, recognition, human resource, sales and marketing professionals—should include an international component. "We all need to lead the way in championing workforce cultural sensitivity and guiding organizations through complex global reward programs," said Michelle Smith, vice president, marketing, O.C. Tanner.
International programs are exceptionally challenging, complex and fraught with subtleties that can dramatically derail your best laid plans if you're not extremely careful, Smith explained. "No leader wants to take a chance on any recognition or incentive program, but once you cross a country border, the odds of something going wrong increases significantly."
Whether locally or globally, Smith said, incorporating recognition and incentive programs into your corporate strategy has rapidly evolved from a discretionary corporate initiative to a 'must have' business imperative.
Across the globe, corporations are wrestling to improve productivity in their organizations, reduce expenses, increase retention of employees and customers and stem the tide of an increasingly disengaged and restless workforce.
Global corporations now lose up to 30 percent of their customers each year, half of their customers in five years, half of their employees in four years, and half of their investors in less than a year, Smith said. "In some countries and industries, the metrics are much more alarming. Fortunately, incentive and recognition programs have proven to be one of the most effective vehicles for combating challenges like these. Engaging your global workforce through incentive and recognition programs can vastly improve productivity, employee morale, customer loyalty and corporate profitability."
Organizations need to realize that it's easy to recognize employees locally, but it's even more important to recognize global employees, as one incentive strategy simply does not fit all cultures, noted Fintan Connolly, global eCommerce manager, Globoforce.
Take, for example, Thanksgiving, Connolly said. "Employees in the United States might truly value a frozen turkey as a reward from the companies they work for. This same incentive would likely not apply in a region like Canada, which celebrates the holiday at a different time of year. You also need to make sure employees in China and Brazil have specialized incentive options they can redeem locally, which are truly meaningful for them based on their respective cultures."
Consider giving diverse audiences the power of choice—a key tenet of recognition—which contributes to more human cultures in the workplace. This option, Connolly explained, caters to the demographics of a global workforce spanning multiple generations, all with different expectations and driving forces. More important, the power of choice eliminates the costs of failed recognition efforts that do not consider local cultural sensitivities or needs.
Challenges and Solutions
There are many challenges behind the scenes in managing global incentive and reward programs, said Jonathan Grey, CEO of Ovation Incentives.
But before you get to the nuts and bolts of running a campaign, the most important thing is to have a solid agreed specification with the client before you ever kick off. "In my opinion," Grey said, "spending high-quality time with your client in the project 'discovery phase, as we call it, lays the foundation for success later on."
Two of the main challenges in developing and managing global incentive and motivation programs, are dealing with the cultural expectations of the participants and the management expectations of the client.
It really is important, Grey explained, to understand how different cultures engage with the whole process of incentives and motivation. "The human recognition that is inherent in the incentive and reward process often needs to be adapted for different countries based on their cultural values."
For example, in India recognition in physical form, visible by many—such as being called out at a team meeting or having your award poster visible in a communal area—is a massive motivator for employees, Grey said. The very opposite is true in places such as Switzerland and South Korea, where a higher value is placed on individual line management recognition or team recognition.
There are many challenges behind the scenes in managing global incentive and reward programs.
"These factors have to be carefully understood prior to launching a program—conducting small focus groups or qualitative surveys prior to launch can be very helpful in getting this right," Grey said. "Secondly, there is the management expectations of the client. In general, clients underestimate the level of internal support that they will need to put in place to properly manage and grow a large incentive or motivation program over the long term. When dealing with diverse groups over wide geographies significant resources, controls and communication support will need to be put in place to maximize the effectiveness of the program and deliver the desired return."
The biggest challenge, summarized Jordi Prats, vice president, Global Rewards, Maritz Motivation Solutions, is getting enough of an understanding of your participant audience to make meaningful program design decisions.
"What is their demographic profile?" he said. "What challenges do they face in their role which may affect the program? What cultural barriers might need to be overcome? Do the program sponsor and participants speak the same language—literally and figuratively? There's no substitute for doing your homework."
From a reward perspective, Prats believes a company can get mileage by ensuring programs speak to their participants' reality. "A client recently wanted to run a summer promotion, but modified the title to better accommodate participants in South America and Australia, then in the middle of winter. Another found that a spiff using an Advent Calendar was only meaningful in selected markets." (A spiff is a term for the sum paid by a vendor's salesperson to a retailer's salesperson to motivate him or her to push the vendor's goods.)
Another thing to consider, from a logistics standpoint, is having multiple product inventories based on plug sets or on brands that resonate in certain countries.
"That's always a concern," said Paul Gordon, senior vice president of Sales for Rymax. "Partnering with in-country suppliers that understand the nuances of the market is critical. In addition, certain countries set up barriers of entry such as approved countries of origin in manufacturing or high tariffs and duties that make some products less desirable. These are some of the ins and outs that affect the programs."
Digging Deeper: Dealing With Differences
If your programs include countries with different languages, you'll need to decide if you'll want all program materials to be created in each of the languages, some of the languages, or just one universal language. "The same decision," Smith said, "will need to be made for customer service support—in how many languages, and during which hours to accommodate different time zones, will you need to provide verbal and/or written program support?"
Take a cue from corporate practices already in place at your company, Smith suggested. How are corporate communications distributed currently? What accommodations are being made for language differences? Will affected employees be participating in your program in the near term?
For example, Smith said, "… if you're creating a service award program that will recognize employees for every five years of service and your non-native language speakers have all been employed less than two years, you may not need to translate all of the program materials at the onset of your program—translating general program information and launch announcements may suffice in the short term."
Most well-established, full-service incentive and recognition program providers can provide multilingual customer service support, as well as print or online program communications in a multitude of languages. But translating, creating and distributing different versions of program materials can get costly, Smith explained, "… so take the time to fully understand the number of participants who will be impacted by language issues and carefully consider the magnitude of that impact while investigating creative workarounds already in place."
Cultural considerations are a volatile aspect of recognition and incentive presentations, often overlooked when designing a program, and inattention to detail here almost always spells disaster, Smith said. There are two broad categories of cultural considerations: the cultural aspects of recognition within the country, and the cultural appropriateness of the award itself for that country.
Cultural aspects include the etiquette around presenting an award to an individual or group, especially if class distinctions or hierarchical protocol dictate a format for presentation. Many Asian cultures have a very formal etiquette for presenting and receiving gifts and awards, and properly adhering to this etiquette is often more valued than the award itself.
In some European, and Central and South American countries, team recognition is much better received than individual recognition, which can actually be perceived negatively. Hand-in-hand with that philosophy is the preference for longer-term versus shorter-term incentive or recognition programs in those countries.
Cultural appropriateness of awards addresses the powerful force of symbolism that should be carefully considered when selecting awards for your program, Smith noted. "Clocks, knives and liquor are three common award categories that are quite popular in some cultures and very inappropriate in others due to cultural or religious beliefs," she said. "Numbers and the colors of items can connote different meanings to various cultures as well. To say the least, a wonderful award offered in a color symbolic of death in that country will not be well received."
Global Incentive Strategies
When designing the reward structure for global programs, there are some fundamental principles that need to be in place in order to have a successful program, Grey said. "If you can get these right then you are on the right track."
Is the structure fair and impartial for participants in all countries? "Is it equitable?" Grey asked. "Do all the participants have the same level of service and expectation of success? Is the program run on the same rules in all countries? You cannot find a situation where extra hurdles are put in place for participants in one country over another."
Have you set up the reward program in such a way that it is easy for participants to get on board? Just as important, Grey said: "Is it easy for administrators on the client side to manage and adapt and stay connected? Overly complex program design and over engineered tech can kill a great incentive or rewards program—especially international ones."
And finally, are the rewards attractive to all members of the audience? Have you tailored reward choices to the cultural and geographic factors present in global programs?
Make sure that customer service can support the various languages. Do you understand the retail climate in the country that drives brand awareness to the consumers who will be in your program? Asked Gordon.
Another consideration, Grey suggested: Are you offering a customized choice by country or age-group? "If you just offer a one-size-fits-all catalog of products or a simple prepaid solution in a global program, then you are telling your audience that you didn't really think about them as individuals or respect their different cultures. You have to make the effort to have desirable reward choices in each country."
That's right, said Connolly. Build incentive programs with reward options that take cultural differences into account. By offering incentives relevant to specific cultures and geographies, employees will feel more respected and appreciated while also gaining a greater sense of how attuned the organization is to their needs.
Programmatic clarity is most important in an international context, Grey contends. "In any incentive or motivation program, you are asking someone to do something for you, the corporate client, and in return you are promising them a reward. That simple piece of communication has to be absolutely clear. It's almost like a 'personal contract'—you do this and I'll give you that."
While there has to be clarity in the communication, Grey said, there also has to be clarity in the payout—the value of the rewards cannot being masked by complete point calculations, and the recipients also need clarity in when they can expect their reward.
Currencies, Customs, Tariffs and Taxes
If your organization is already conducting business in the countries where you will be introducing an incentive program, the odds are that internal corporate procedures exist to work with foreign currencies.
If not, Smith said, "… get someone from your finance team to work with you in this area. If you're working with a local award provider in a country, it's important to establish in which currency you will be invoiced, which currency will be used for payment, what currency conversion rate will be utilized and what method (if any) will be utilized to 'true-up' expenditures to address currency exchange rate fluctuations over time."
If your program also includes gift cards or cash as award choices, Smith continued, establish how you'll handle award values as currency rate fluctuations occur, if those fluctuations will impact the face value of the gift cards or cash awards.
Depending on where your company is based and which other countries will be included in your performance or recognition program, awards shipped to participants may have to clear customs and be subjected to taxes and tariffs.
Clearing customs will undoubtedly delay the arrival of the award, so expectations should be managed in this regard, Smith said. Also, customs regulations impose restrictions on items and materials that aren't allowed to enter the country. Check to ensure that restricted materials are not included, so they will not be barred from entry. Avoid award selections that will be confiscated.
Import taxes and tariffs can be costly depending on the imported item and the country involved, Smith said. "It's not unusual for the taxes to exceed the actual value of the award itself, so factoring tax implications into your award selection process could prove to be a very worthwhile endeavor. Unless you clearly state in your shipping documents that these taxes and tariffs are to be charged back to your organization, the recipient will be liable for payment of the taxes and their award will not be released to them until the charges are paid in full."
This discovery, Smith warned, can be an unpleasant surprise for the recipient and may result in the recipient refusing to claim the award for lack of desire to pay the taxes.
Although technology can't save you from taxes or cultural idiosyncrasies, there's a great deal that it can do to help you create an engaging, cost-effective, flexible and easy to administer global incentive or recognition program.
"In today's business climate," Smith said, "company goals often shift so frequently that employees aren't always sure what's expected of them on an individual level. This uncertainly is magnified when you're dealing with a variety of business units that cross borders. Mobile and online incentive solutions provide a quick and consistent method for communicating information to employees, and allow your program to continue to evolve at the same speed as your business."
While moving a program across a border can be a challenge, don't ignore the opportunity to gain a competitive edge in the marketplace, Smith concluded. "It can literally mean the difference between thriving as a company and perhaps ceasing to exist."