Employee incentive programs increasingly used by employers: Survey

Developing programs to motivate multiple generations among challenges
By Amanda Silliker
|Canadian HR Reporter|Last Updated: 08/03/2012

When software company Trend Micro wanted to boost sales, it starting looking for a new incentive plan for its sales staff. It decided to implement a program where employees would receive a bonus for each piece of software they sold that would go on a reloadable prepaid credit card.

When the employees realized selling one piece of software would give them enough money on their card to buy lunch that day, sales by associates who signed up for the program increased by more than five times what the company had projected, said David Eason, CEO of Berkeley Payment Solutions in Toronto.

“They used it each and every day,” he said. “So, when you’re being given, in essence, a free lunch, you’re going to be motivated to get your free lunch tomorrow because it’s top-of-mind.”

Employers have considerably increased their use of corporate employee incentive programs over the past two years, according to a survey by Berkeley Payment Solutions, a firm the offers prepaid Visa cards and gift cards.

More than eight in 10 (82 per cent) said they have used incentives for employees in 2012, compared to 68 per cent in 2011 and 56 per cent in 2010, found the 2012 Canadian Incentive Trends Survey.

“It goes back to people understanding the value of employee engagement and if you’re going into times of economic uncertainty, you want to make sure you have your best people with you,” said Eason. “So, focusing on providing incentives that assist in employee engagement is important.”

Performance is a critical component at all organizations, especially since most employers are forced to do more with less, so encouraging employees to work harder and meet strategic goals is essential — which is where incentives come in, said Karen Gordon, partner at Rosson and Gordon, an organizational development consulting firm in Halifax.

“By the employee being motivated to achieve the goals, as a result, it is shown it will increase productivity, increase dedication, make the results that otherwise would not normally be made,” she said. “It drives performance… and it’s a motivating factor.”

Employee motivation high priority

Increasing employee motivation is a high priority (51 per cent) or moderate priority (38 per cent) for management this year, found the survey of 767 employers across Canada.

Incentive programs are used to reward employees for achieving pre-defined deliverables, such as sales targets and customer service goals, said Barry Cook, partner at Western Compensation and Benefit Consultants in Vancouver.

“Depending on the job, it could be (achieving goals around) quality of work, quantity of work, project delivery — it could be a lot of things in their individual performance plans or it could also be achieving sales levels, revenues or profit targets,” he said.

Employers are starting to look at incentive programs across all categories, and health and safety is becoming a very popular area for incentives, said Eason.

“Health and safety applies to everyone, so providing incentives and making it fun, having challenges between different groups or putting teams together and reporting which team has gone without the most incidents and making it available to everyone is something people can take part in,” he said.

The most common type of incentive used is retail gift cards (43 per cent), followed by merchandise (39 per cent), experiential special events such as concert tickets or sporting events (23 per cent) and prepaid credit cards (22 per cent).

Although merchandise is the most-used incentive, it is perceived as the least valued by recipients, with only 14 per cent of respondents citing it as high value.

Prepaid credit cards are perceived as the most valued (38 per cent) and most motivating for employees (51 per cent), found the survey.

“Typically, people want gift cards and they want gift cards that are of use to them, so either having the ability to select a retail gift card that is of value to them or just having a prepaid Visa or MasterCard because they get to choose what they want to do with it,” said Eason.

Incentive programs such as these are especially effective because they provide rewards on a continual and timely basis rather than just a one-time bonus, he said.

“Some companies might just have an annual bonus program and, the thing is, if you get your bonus on Dec. 31, by Feb. 4, you’re not particularly thinking about that bonus, it’s so far away,” he said. “(With ongoing incentive programs) it’s much more likely you’re going to entrench that behaviour, reinforce that behaviour and experience that behaviour again.”

Developing incentive programs that motivate employees of all ages is a key challenge for employers, with 74 per cent of respondents saying it is very difficult (11 per cent) or somewhat difficult (63 per cent) to do so, found the survey.

“You want the reward to catch the employee’s attention, so demographics are quite important in the design,” said Cook. “(For example), for people that are working parents, an incentive to have more paid time off could be preferential to other types of incentives.”

Employers have the hardest time determining the most appropriate incentive to offer gen-Y employees (21 per cent) and baby boomers (16 per cent), found the survey.

When developing an effective incentive program, employers first need to consider who their audience is and develop the program to meet the needs of that audience, said Eason. The program should also be aligned with the objectives of the company, he said.

Once the program is developed, it needs to be communicated to employees. Management should explain the program objectives, what an employee has to do to accomplish those and the potential reward for doing so, said Cook. And the communication needs to be ongoing.

When it comes to measurement, 49 per cent of employers measure the success of their incentive programs, 22 per cent do not measure it and 29 per cent are not sure if they evaluate their programs or not, found the survey.

Of those who do measure their programs, only 12 per cent are very successful at determining the success of a program, while 33 per cent are moderately successful at doing so, found the survey.

“People had a lot of difficulty determining whether a campaign was successful or not,” said Eason. “That’s why it’s important to link it to strategic objectives because, typically, those objectives have metrics tied to them so you can create a baseline before the campaign, look at what happened during the campaign and, at the end, you’ll be able to determine success.”

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