How Neuroscience of Behavioral Economics Affects Employee Engagement

In a recent paper, researchers from the Incentive Industry Foundation suggest how behavior economics can help explain why some incentives are more effective than others and how program planners can strategically apply these principles to their own companies.

The white paper “Using Behavioral Economics Insights in Incentives, Rewards, and Recognition: The Neuroscience,”describes the behavior economic principles that connect emotions to performance. The research states that the majority of human decision-making is emotional as opposed to rational. While we were initially skeptical about this last statement, a complete review of the research makes it very understandable and eye-opening.

A completely oversimplified recap of the research would be to say that it proposes four drivers that complement our biological drives and regulate virtually everything happening in the workplace. And when you combine a good understanding and how all forms of awards are likely to affect these drives you will be in a position to build reward systems that can change employee engagement.

Over the years we have seen most of the research conducted by the Incentive Research Federation aiming to move incentive and recognition into the strategy sessions of the executive floor. Most fell short of this goal with little or no change in the reward industry, and as a matter of fact even some complacency currently exists.

This paper offers a concise guide to use applied behavioral economics in the recognition and reward industry, and will help you understand the reasons and motivations behind your employee’s actions and behaviors. By applying this guide to your everyday business life, we believe that you can make significant changes to your reward and recognition programs which will in turn make them more and more effective.

If you have an interest in making a change, a complete review of this paper will be very beneficial. We actually read it over a few times before concluding that this will go down as industry changing research if reward practitioners embrace the concepts and incorporate them into their programs.

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

Wellness Budgets Per Employee

When considering an incentive effort to drive employee wellness, one of the first decisions to make is how much to spend on each employee. There has never been any definitive analytical proof that will show you how much it will take to motivate someone to change behavior, or for that matter what award will induce the most excitement.  For years the incentive industry has provided guidelines to help you decide, and which award recommended will always be dependent on what the sales rep is selling.

A number of factors go into motivating behavior change.  And while one is the award itself, it is by no means the only one.  If you think by simply offering some type $50-$100 fitness device you are going to motivate an employee to change years of poor lifestyle choices then think again, it probably won’t.  But in combination with the other pieces of the wellness program (not the least of which is well designed communications) a choice of awards can be effective. 

Following is a chart published in Incentive magazine comparing how much budget companies invest, on average, per employees for their wellness programs.

Spend rate	2015	2016	Change
Under $50	42.8%	40.9%	-1.9%
$50 to $99	18.2%	26.3%	+7.8%
$100 to $199	10.2%	15.0%	+4.8%
$200 to $499	11.8%	5.1%	-6.7%
$500 to 999	11.2%	3.3%	-7.9%
$1000 and more	5.9%	9.5%	+306%

Almost 70% of companies researched use individual awards under $100.  A mistake often made in the planning phase is to only use an award in the fitness related field.  They may be good for introductory or communication reasons, but if you want to get the most motivation appeal out of your award budget.

Don’t give them what you want them to have or what you think they want, let them choose for themselves.

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

Potential Problems of Employee Engagement Programs

Employee Engagement can be a controversial topic mainly because it is hard to define and even harder to tie to business metrics and a quantifiable return on investment.

We often hear only the positives about employee engagement, and how it has become the Holy Grail within corporate America today.  In an article at ERE.net, John Sullivan PhD, an internationally known HR thought-leader, explored several insights into the problems concerning employee engagement programs.  If you want a better understanding of the pros and cons of this topic that seems to be on the top of most surveys that cover the concerns of the HR world today, you can download a copy of this paper here.  

Dr. Sullivan writes:

… there is far too little focus on the problems or issues related to engagement. … The process of gathering engagement data and the interpretation of it both improve dramatically when program managers and users are fully aware of all of its potential problems.”

Some of the employee engagement issues Dr. Sullivan gets into include:

• That “engagement may be a byproduct, not a cause;
• Engagement is not productivity or an output;
• Outside factors influence engagement;
• Diverse employees and different generations are engaged by different things;
• Managers and employees don’t understand engagement;
• The goals and metrics of engagement programs are often limited.
• Engagement is not productivity or an output 
• Engagement may be a byproduct not a cause;
• High levels of engagement may not prohibit turnover
• And many others 

The bottom line is; organizations are trying to manufacture engagement instead of figuring out what each employee's mind and heart are naturally engaged by.  It seems  the vast majority of organizations are afraid to ask, because they fear that it's not related to the business they're in.

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

Corporate Objectives Focus More on Engagement than Sales

Merchandise IQ Report 

An interesting fact was noted by the recent Incentive Magazine “2017 Merchandise IQ” research study.  9% of companies responded that they had decreased their budgets for brand named merchandise over the prior year.  In combination with a corresponding decrease of 5.3% last year, there has been almost a 15% decrease in this budget item over two years. 

Frankly, that is very disturbing to incentive merchandise manufacturers as this category of award has been the backbone of the industry for decades, and they have spent millions in advertising and promoting it.  By design it was also the single highest profit category of any award in the industry and if this trend continues, the manufacturers, their wholesalers, distributors and incentive companies will have to look for other ways to shore up their profits. 

So why is this happening?  Some feel that it is because of the shift of award budgets from growing sales to improving employee performance and building employee loyalty.  In addition, the emphasis that the human resource professionals have placed on employee engagement is starting to pay off.  Most believe (without much empirical evidence to support the conclusion) that improved employee engagement does result in incremental revenue and profit.

Unfortunately for some, the predominate award category in employee recognition efforts is gift cards…which for incentive companies are also the single lowest profit award category in the industry.  Correspondingly you can expect an increased effort on various pricing schemes for gift cards to improve their profitability. The ubiquitous “points” programs will be the most dominate scheme, so caution is advised to closely analyze the “points needed” for any gift card…usually an easy calculation as with gift cards the value is readily apparent.

Some questions and data from the “Merchandise IQ” that supports some of these conclusions are:

Audience	2016	2016
Consumers	52.6%	44.1%
Salespeople	50.2%	51.8%
Non Sales Personnel	37.7%	30.8%
Distributors/Dealers	14.5%	15.4%
Other	7.45%	14.7%

What Are the Top Five Objectives You Set for Using Awards?

Objective	2016	2015
Employee Recognition	58.0%	56.3%
Employee/Client Gifts	51.0%	35.9%
Employee Satisfaction	43.1%	36.6%
Build Customer Loyalty	40.1%	42.3%
Increase Sales	38.8%	47.2%

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