IRF Study Shows High Rates of Incentive Program Changes to Comply With Regulations
The Incentive Research Foundation (IRF) announced the release of its signature study, "2019 U.S. Federal Regulations and Non-Cash Awards." This research into program owners' understanding of U.S. regulatory and tax requirements reveals a high rate of change in incentive program design due to a perceived need to make accommodations to comply with regulations.
The IRF's study generated 398 responses from decision-makers for non-cash rewards programs representing a cross-section of U.S. businesses with $5 million or more in revenue. The four business sectors reporting were: automotive/manufacturing; pharmaceutical/healthcare; technology/telecommunications; and financial services.
"High awareness and knowledge of regulatory and tax requirements correlated with greater rates of change in program design across all sectors among firms of all sizes," said Andy Schwarz, vice president of the IRF. "However, when presented with specific scenarios, respondents frequently identified legal and regulatory issues where none existed, raising the question of whether the high rate of change in program design is always necessary to comply with U.S. regulatory and tax requirements."
Additional findings discussed in the study include:
- Program owners' overall confidence in the ability to identify regulatory and tax requirements was high, with 77% of respondents being "very confident."
- To comply with regulatory or tax requirements, 39% of firms eliminated at least one program.
- Knowledge of regulatory and tax requirements was relatively higher for financial services firms and technology/telecommunications firms—and relatively low for automotive/manufacturing.
- Compliance practices are more fully developed at technology/telecommunications firms and financial services firms, while pharmaceutical/healthcare firms do not yet have fully developed and implemented compliance practices.
- Senior executives and finance departments are more likely to be involved in the review and approval of changes to non-cash rewards and programs.
- Almost half of firms (47%) shifted spend from cash incentives to non-cash rewards to comply with regulatory and tax requirements.
- Firms in a growth phase allocate more resources to ensure non-cash reward programs are in compliance.
For more information, visit www.theirf.org.