This blog is about management incentive programs
We now have a growing body of compelling research from credible sources around the world on the positive – and significant – impact of recognition and incentive programs on a company’s financial performance. The research demonstrates that companies who engage in incentive and recognition programs are significantly outperforming their competitors (who don't run programs) in bottom line savings, contributions to the profit line and shareholder return. This is important news for companies seeking every possible advantage in the marketplace.
The research has attracted the attention of business leaders and helped them to realize that everyone in their company is affecting the organization’s ability to compete and thrive. There’s no better vehicle for a CEO to communicate what's important to the company than to recognize and reward people for the behaviors and results that drive the company towards success. Recognition programs have proven to be a highly effective means of aligning the boardroom and the lunchroom and cascading the company’s strategic imperatives throughout the organization and into the hands of the people who can make them a reality…. people who are often anxious to make a meaningful contribution.
Maximizing ROI
Frequently, companies run a number of disparate recognition and incentive programs that span various departments. A common approach has been to allow each department to implement a unique program with goals and rewards specific to the individuals in that unit.
However, when you have independent programs within an organization there is often poor accountability for ROI or clear line of sight to overall results. Most companies don’t really know how much they’re actually spending on programs let alone how much value they’re extracting from them. Running a multitude of disparate programs also undermines the opportunity for creating a consistent, over-arching performance-based culture throughout the company. Additionally, there’s the danger that employees will perceive that one department is favored over another or that some managers are offering more generous awards.
Companies are consolidating many of their programs to decrease expenses and increase effectiveness. Multiple programs are being pulled into one corporate-wide program with numerous sub-programs and variations to address the specific needs of different business units or geographical locations. This consolidation helps strip-out cost and administrative burden while insuring a unified message and application throughout the enterprise.
Organizations are also becoming much more aware of all the contributors to corporate success and are implementing performance and recognition programs to help align and recognize more employees for their contributions to those successes. Employers have realized that everyone in the company – not just the sales team – can contribute to revenue growth and operational efficiencies that help a company prosper. Leaders need to gain the support and buy-in from everyone who can influence company results. Keep in mind that if you’re not actively engaging employees in your goals, they may be working against your efforts – even if it’s done unintentionally and inadvertently.
Nowadays, some of those additional participants are likely to be based around the world. The internet allows us to easily execute programs across borders and many HR professionals are delighted to finally be able to offer something better than watered down versions of their domestic programs to those employees who live and work beyond the corporate office. Offshore employees are pushing for these programs as well, unwilling to be bystanders in the company’s recognition efforts any longer. Online program technology does the heavy lifting of language translation, currency conversions, and creating multiple award catalogs that reflect the brands and types of awards that will be compelling and relevant in different countries.
Track and measure
Demand is rising steadily for more measurement in recognition and incentive programs. Companies are looking to reward the quantifiable, actionable behaviors of their employees and more metrics are being introduced into programs. There’s also a growing interest in tracking program performance throughout its course, rather than waiting until the end to assess the results.
Sales incentive programs have always been focused on measurement, usually on revenue growth or sales. Traditionally, recognition programs have been more discretionary: you catch someone doing something beyond the call of duty and reward them. Now many recognition programs are also focusing on very specific corporate goals or initiatives to avoid being viewed as an entitlement or risking programs being eliminated due to ambiguous results.
Tracking metrics during the program allows you to quantify the end result and also affect the outcome – you can intercede if a group is not performing well and provide extra training or assistance. Or, you can spread the word about a successful initiative so that everyone can benefit from the example.
Inspire – reward – achieve
As workplaces change, employees are asked to adapt, learn, re-adapt, and re-learn in order to ensure that companies themselves retain a competitive edge. Recognizing these employees — for service, achievement or performance — is vital to corporate health. A well-known veteran of recognition, Herb Kelleher, former CEO of Southwest Airlines believes that “anyone who looks at things solely in terms of factors that can easily be quantified is missing the heart of the business, which is people."
Herb has it exactly right on a number of levels. First, as companies have automated their back offices with Enterprise Resource Planning (ERP) solutions and implemented Customer Relationship and Supply Chain Management systems (CRM), they have benefited significantly from the efficiencies and cost savings of these applications. The next ‘big thing’ is to focus on implementing and improving those processes and programs that manage our people assets. Recognition and incentive programs are a proven, strategic opportunity to do just that. Few initiatives can deliver such significant ROI and also advance the company’s reputation as a great place to work in the process.
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