Incentive and Motivation Resources and Articles
Mad About Incentives: Do Incentive Programs Really Produce Results? January 05, 2009 By Ley Borlo As this is my first article for Incentive magazine, I suppose my unqualified and enthusiastic answer to that question should be ABSOLUTELY! While that answer may be politically correct for this publication, it does tug at my integrity a bit. Sadly, in over 35 years in the business, I have seen far too many programs that didn’t achieve objectives and even worse, some that actually decreased performance. When we had the fortitude, we told clients up front the program that they wanted to implement had little chance for success. It wasn't always the way to endear ourselves to them, but better to do that than have our name on a program that we knew would be unsuccessful at best. Sometimes incentive companies accept business and think they can "change the client to our way of thinking." I know we did, and all too often. But, those programs usually didn't produce satisfactory results and in the end, disenchanted clients either blamed us and never used us again, or stopped implementing programs altogether. In those cases, no one was the winner. To quote an old proverb taken in part from St. Bernard, "The road to hell is paved with good intentions." We all have good intentions of making our programs successful. The reasons they aren’t has been discussed many times in many ways. I will jump into that debate in a later article. But for now, let's just say there's a lot of room for improvement in design, communications, implementation, operation management and awards selection for many incentive programs. I saw an interesting recap of some research the other day. It was taken from a study conducted by Kluger, Avraham and Angele DiNishi, entitled "Feedback Interventions: Toward the Understanding of a Double Edged Sword" and published in "Current Directions in Psychological Science." In it were the following conclusions: • 1/3 of all non-cash incentive award programs produce results • 1/3 of non-cash incentive award programs produce no results • 1/3 of all non-cash incentive award programs actually decrease performance While this type of research was rarely shown to a client, it was something that many of us in the industry already knew because of the ROI analysis we had done on many programs. Of course our results were typically better than average, and at times we even guaranteed results depending on the type of program and circumstances. Even then, it was not uncommon for a program to have only 50 percent or less of the participants actually performing above goals, earning awards and producing results. Experienced industry salespeople divulged this type of data to clients to manage expectations. The not-so-experienced took the money and hoped that the program wouldn't blow up in their face. If it did, it would be the last program they sold to that client. If it didn't, everyone would be happy and keep implementing programs until one finely did blow up. I've seen programs like this stay in place for years until some executive finally challenged their own management on why they were spending the money and what they were getting in return. At that point, things usually "hit the fan." Today, the Incentive Marketing Association (IMA) estimates the industry volume at $46 billion! Of that total, how much is actually spent on successful programs? If you believe the above report and based on the current estimate: • $15 billion is spent by corporations on programs that do produce results. • $15 billion is spent by corporations on programs that have no effect on performance • $15 billion is spent by corporations on programs that actually decrease performance No wonder there are a lot of companies that don't believe in non-cash incentive programs. I guess they think that their cash programs produce better results? An interesting question! Just remember, if you're planning to implement a non-cash incentive, motivation or recognition award program…there's a 66% chance that it might not be successful. Taking the time to find professionals in the industry to help you plan, design and implement your program could save you a bunch of money!
Cash Loses, Merchandise and Travel Win Big Basic incentive programs involve either merchandise or travel-related awards. The 1999 study sponsored by The Incentive Federation estimates that American businesses spent $27 billion on merchandise and travel for motivational use.  Another type of incentive is cash. However, cash as a motivator is an unemotional award... More ROI Incentive Programs: Driving People, Driving Profits Brian O'Hare will be the first to admit his impression of incentive programs was not a positive one. "I used to think incentives were about going to an island and having a party, and my company didn't need that. I didn't take incentives very seriously at all," says O'Hare, managing partner for Perspectiva, an architectural engineering firm headquartered in El Paso, New Mexico. But that perception quickly changed after The Business Group, Inc., a Rocklin, California-based incentive marketing company introduced O'Hare to the concept of Return on Investment (ROI) incentive programs.... More 10 Steps to an Effective ROI Incentive Program While each ROI incentive program is unique, there are planning and implementation steps common to all. The following were gleaned from interviews with industry experts, as well as from ROI Incentive Marketing, published by The Business Group, Inc.... More Staff Motivation - A Great Example If you've lead an organization and have been faced with the task of motivating your staff, sooner or later you've probably organized an event that just didn't work ... a speaker that fell flat ... the kind of thing that made your staff groan just to think about it. The really hard part at is.... More
Ability + Motivation = Behavior You don't have to sell me on the idea that incentives motivate people, or that they direct behavior. I know that ability + motivation = behavior because I have a background in the incentive industry and I know that incentive programs work.  But you do have to sell buyers in corporate America on the psychology of motivation, and this step is the precursor to selling an incentive program to an end user.... More Reward with Awards How Merchandise Incentives Can Improve Morale, Retention, Recruiting, and All Around Good Will Southwest Airlines may be best known for the company's wacky CEO, Herb Kelleher, or the company's ever-present spot on Fortune magazine's 100 Best Companies to Work for in America. But what most outsiders don't know is that even though the company received well over 140,000 applications last year, many of the airline's workers come from employee referrals.... More Incentive Federation Survey of Motivation and Incentive Applications 2003 Results At-a-Glance -- Incentive program planners say merchandise incentives and travel incentives are more compelling than cash; Sixty-eight percent of respondents say bonus payments can have a negative impact if they are not paid or are not large enough; Three of five respondents say merchandise or travel is preferred because they are more like a gift; Three of five respondents say that a cash payment is perceived to be part of an employee's total remuneration package.... More
Corporate America Ready, Willing, but Unknowledgeable About Using Online Incentive Programs A recent survey has revealed an increasing reliance on Web-based technology to motivate employees, salespeople, and customers. The survey’s respondents – 171 sales, marketing and human resource managers at corporations that use incentives – indicated that motivation programs will increasingly be conducted online. Yet surprisingly, those same managers indicate they feel ill-prepared to take full advantage of the technology’s potential.... More Primer on the Federal Income Tax Treatment of Incentive Awards Section 274(j) of the Internal Revenue Code, enacted by the Tax Reform Act of 1986, provides, in general, that an employer may deduct the cost of employee achievement awards given to the same employee up to $400.00 in any year. If the incentive awards are employee achievement awards made under one or established written plans or programs of the employer, the $400 deduction limitation is increased to $1,600.00 per employee... More
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Basic incentive programs involve either merchandise or travel-related awards. The 1999 study sponsored by The Incentive Federation estimates that American businesses spent $27 billion on merchandise and travel for motivational use. For more information on the Incentive Federation study, please contact the IMA offices. Another type of incentive is cash. However, cash as a motivator is an unemotional award. Its value is concrete, and while it could be used to purchase a lifestyle award, most likely it will be charged against a burgeoning pile of bills or deposited into a leaky checking account where it soon ceases to exist. And with the demise of the cash award goes the memory of its origin. According to an article in September 1995 Potentials in Marketing, it seems that all human behavior stems from one of the brain's two hemispheres: the left, which thinks in rational, linear terms; or the right, which operates in terms of images, emotions, and feelings. When companies offer money as a motivator, they are addressing performance issues from a rational, left-brain point of view. Tangible rewards, however, are often more motivating because they appeal to the right brain, eliciting images. Merchandise vs. Cash 1. In 1994, Goodyear Tire & Rubber Company sponsored an incentive campaign to improve sales of tires. Two groups were formed; one was offered monetary rewards, and the other an equivalently priced selection of merchandise and travel-related rewards. The group receiving lifestyle and travel rewards outperformed the monetary awards group by nearly 50%. This was the first documented evidence that cash, as a motivator, is not as effective as merchandise or travel. 2. In a May 1998 Promo Magazine Special Report, it was noted that LifeUSA attracted new agents and sent sales soaring by abandoning its annual cash incentive program for a more inclusive campaign that gave out merchandise and travel. Only top-producing agents were included in previous years, so the company built multiple award levels into their incentive program to involve new agents as well as old pros. By the program's conclusion, policy enrollments exceeded LifeUSA's initial goals by 700%. The 10,000 certificates issued were more than twice what the company had planned for. The POWER of Perks… Perks provides our clients with cutting-edge solutions and services to create, implement and administer custom branded motivational programs. Administrators can use Perks products to create a customized motivational, incentive or loyalty program that’s exactly targeted to meet their corporate goals and objectives. Targeted mass e-mails and marketing messages keep audiences focused on program objectives, and our clients can use our administrative capabilities to see real-time feedback and results. Back to Top