Having Total Choice is Bad in Reward Selection

Having been in the incentive industry for over forty years, we were always under the belief that if you wanted motivate someone with awards, you needed to give them a wide choice of options to choose from.  The greater the choice, the more successful the program, or so it went. 

Now it appears that a study by Ashley Williams, assistant Professor of Negotiations, Organizations & Markets at Harvard Business School may have a different answer to the question of choice.  She says that the answer to a simple question of…”What would you choose between time and money to determine the best way to design a reward program?”...says a lot about what will motivate you. 

She feels the answer is critical to understanding in general how to engage anyone in business or life…as well as how to select rewards.  She recently completed her dissertation for a Doctorate degree in Social Psychology entitled “Exchanging Cents for Seconds: The Happiness Benefits of Choosing Time Over Money.” Her research focuses on “understanding how people invest their time and money to promote health, well-being and happiness.” The choice between time and money, she asserts, helps predict how people will spend money to maximize their own sense of well-being and in this spectrum helps determine the right types of awards to use for incentive programs.

After studies with thousands of thousands of people representing almost all demographic groups, her takeaways are that…

“People who have a general orientation in their lives focusing on time over money generally experience greater happiness, greater social connections and greater meaning in life.”

Knowing whether people value time or money will help determine how they respond to your organization’s offers to them in terms of incentives, recognition, rewards, and promotions or, for employees, scheduling changes, career advancement or more.”

According to Whillans companies should limit choice of awards because people will make suboptimal choices, and the program will not have the impact for which it was designed. While we can certainly understand why you would want to know if an employee valued time over money we look forward to more conclusive evidence that less choice within the two main alternatives has the negative impact mentioned. 

For more information on Ultimate Choice Inc.’s products or services or other white papers please contact us at Ultimatechoiceinfo@cox.net

What Happens When Incentive Program Design Fails?

There are legions of stories in the incentive industry of programs gone bad, some very bad, some that destroyed careers, fiscal years, channel reputations or even lives.  Many did not achieve the objectives outlined or over achieved them and budgets skyrocketed out of control. Still others were just embarrassing like using alcohol to motivate salespeople (some of whom were recovering alcoholics) or sweets to diabetics…you get the point.

Recent research conducted by the Incentive Research Foundation found that while the two thirds of the companies used outside suppliers for awards, less than half looked to suppliers for expertise in the best ways to recognize or motivate participants.  Why?

You can’t learn incentives in college like marketing or communications, or advertising.  It’s not taught.  Yet it is a subject that uses upwards of $100 billion in corporate budgets annually in all its forms.  A great incentive/motivation program requires the combination of sound research, skill training, dynamic communications, a complete award offering the information technology to run it and professional analytics to tweek it and make it effective. 

If you interested in how incentive have gone wrong, Google “Incentives and the BBC”, or Lehman Brothers, or Well Fargo, or the teachers union in Atlanta about the “No Child Left Behind Act.”  Certainly all of these programs started with good intentions, but good intentions don’t make up for poor design planning. 

Most companies have marketing communications departments, but when they want to undertake a multi-million dollar corporate change they look to outside Marcom’s or their own advertising company to lend a hand. But when it comes to incentives the majority of companies think they can do it themselves.  But when you do remember that there are many things that can go wrong, not the least of which is a program that spends lots of money and doesn’t achieve results.  Basedon our experience that happens up to 50% of the time. 

For more information on Ultimate Choice Inc.’s products or services or other white papers please contact us at Ultimatechoiceinfo@cox.net

How to Maximize Your Recognition and Incentive Budget

When implementing employee recognition/incentive programs, one of the toughest challenges is managing your budget.  A number of factors must be taken into consideration when deciding how much to allocate to a given program.

To help make these decisions, Incentive has released a new white paper that breaks down more than two dozen tips for getting the most from incentive spending.  The tips cover a wide range of budget considerations such as:

·       Spending Strategically

·       Leveraging Technology

·       Protecting Your Incentive Budget

A main area to consider is leveraging your corporate buying.  All organizations have dissimilar award budgets spread out over an array of departments and divisions. These budgets are often used to motivate and incent the same employees for different objectives and can in fact be at odds.  You need to total all the awards purchased throughout the organization to find economies of scale. As there are usually different gatekeepers in these silos you may encounter some push back in determining this total for fear that the silos will lose their autonomy. 

The report also includes a section on "cutting strategically," with tips such as "be transparent with everyone across the company" and "prioritize and shake things up."

The full report also has a section on "Making the Case for Value-Based Award Selection" that urges planners to remember that "whether it is a merchandise award, a gift card, or a travel incentive trip, an award will have a greater impact if it is personalized to the individual receiving it." 

Click here for the complete  white paper on budgeting for incentives.   

For more information on Ultimate Choice Inc.’s products or services or other white papers please contact us at Ultimatechoiceinfo@cox.net

Consider Restraints to Employee Engagement

An article in Freakonomics from last fall titled "How to Launch a Behavior Change Revolution" offered the insight that there are two types of forces that affect motivation:

1.     Restraining Forces - those that prevent you from achieving your goals

2.     Driving Forces - those that push you to achieve your goals

In our experience when organizations consider using recognition or incentives to improve employee engagement or achieve any meaningful goal, we almost always utilize Driving Forces. But, according to Princeton psychology professor Daniel Kahneman:

"Diminishing the restraining forces is a completely different kind of activity, because instead of asking, 'How can I get him or her to do it?' It starts with a question of, 'Why isn't she doing it already?' Then you go one by one systematically, and you ask, 'What can I do to make it easier for that person to move?”

In your incentive and recognition planning start by asking why your employees aren’t doing what you want already?  As Kahneman points out if you want to make changes you will be better off starting by controlling the environment, by just making it easier. Is there an incentive that works against your program objectives? Are there social pressures? Are there any of your people against it? 

Start by looking at your rules structure.  Are they needlessly complex?  We’ve seen time and again where companies work feverishly to design programs with so many minute details that when explain it at launch time your employees don’t want to jump through all the hoops and simply revert back to ‘business as usual.’ 

The second roadblock that can be removed is lack of knowledge and positioning of what you’re really trying to accomplish…the overall picture…along with the small steps your people can take to affect the outcomes you want. People do what they know how to do, what they are excited about, and what they see as a great value proposition. You may not have thought about it this way, but you might consider some minimum rewards to employees for understanding the message.

Another very important point to consider, and often an additional barrier to success, is not to over promise. Set up your program in such a way to reward them for early wins. If you want your employees to change their patterns quickly and meaningfully then use meaningful awards early in the process.

Put yourself in your employees place, drive out as many restraints as you can. It’s difficult to discuss all the external negative restraints that could be in play, but it’s important to consider them.

For more information on Ultimate Choice Inc.’s products or services or other white papers please contact us at Ultimatechoiceinfo@cox.net

Effective Design Patterns for Sales Incentive Programs

60% of all U.S. businesses use non-cash sales rewards, spending conservatively $23 billion annually on these awards.  Following is a summary of research completed by the Incentive Research Foundation about the effective design elements of these sales incentive programs.  For purposes of the research, the respondents were designated either top performing companies (those with the highest revenue growth, customer satisfaction, and employee satisfaction scores in their industry) or average companies. 

Setting Program Objectives: Emphasize Multiple Behaviors

In the past, sales programs concentrated almost completely on increasing sales dollars.  The research showed that many more objectives are now used in these programs.  Most companies now use a mix of objectives, including: 

·       80% increasing overall sales

·       76% improving morale

·       58% productivity

·       47% gaining market share

·       27% increasing sales of specific products

·       21% changing the sales culture

·       17% promoting cost reduction

·       16% rewarding training completion

Rules Structure: Center on Quotas

Companies use multiple targets to achieve awards, including:

·       80% earn awards on achieving quota

·       71% earn awards by being a top performer

·       51% earned awards based on team performance

·       40% for discretionary sales awards

Rewarding the Right People: Expand Your Footprint

Designers are shifting from programs that just award the top performers to one that includes more of the middle.  More than half (56) of top performing companies said they wanted their program to reach more participants.

Program Funding: Start at the Bottom

Top performing companies are nearly 100% more likely than average performing companies to use a bottom-up budget model and fund programs as a % of income during the program period.  Other interesting notes were:

·       The average business used 7.2% of income to calculate budgets, top performing businesses use 9.4% of projected income.

·       Less than half of average performing companies in the United States have no top stop on their programs, but almost 80% of the top performing businesses have no top stop.

·        The typical sales person can expect to earn $3,916 in a top performing business annually, with the top performers in these companies earning over $5,000 in award.

What Awards to Use: Combination is Common

Sales programs can use one of many award types, including recognition awards, recognition events, merchandise, symbolic awards, gift cards, logo merchandise, individual travel, group travel, group incentive travel, and cash. On average, businesses use more than seven types of awards for sales incentives.

The top four awards used were:

·       72% use gift cards

·       44% use award points redeemable for a variety of things (including gift cards)

·       44% use merchandise

·       34% use group or individual travel

Multiple Programs: Efficiency in Consolidation

Most companies reporting use a single sales incentive program for the entire organization, but more than half of the top performing companies had multiple sales programs managed by one operation.

Program Support: Think Outside Your Walls

·       60% of all companies operate their own sales programs. 

·       60% of top performing companies used outside support from external partners.

·       Half of companies engage outside supplier expertise for best ways to motivate participants and over two-thirds using external award suppliers

Administration: Communications and Tech Support 

The IRF research indicates that 43% of a top performing company’s budget generally goes to program administration (design and operation) versus only 30% of a budget of an average performing company.

Over 70% of businesses use some level of program-specific technology to support their non-cash sales incentive programs.

Measuring Effectiveness: Multiple Metrics

More than 75% of top performing firms fully leverage the data produced by their programs to quide decisions in future program design.

Following are the most used metrics and %:

·       66% overall product sales in dollars

·       49% net new customers

·       37% product sales in unit

·       36% revenue

·       25% productivity

·       24% staying in budget

·       14% customer satisfaction surveys

For more information on Ultimate Choice Inc.’s products or services or other white papers please contact us at Ultimatechoiceinfo@cox.net