Modes of Motivation

A new research study examines seven trends in incentivizing the workforce.

By Melissa VanDyke

As economic growth continues and CEOs replace their recessionary view with a longer-term focus on growth and innovation, talent retention and motivation will be a key battleground. A recent 2017 Incentive Research Foundation (IRF) Trends Study sought to identify important changes taking place in motivation. The research uncovered seven strategies CHROs can leverage to incentivize their workforce.

1. Focus rewards on non-core job behaviors. Fifty years ago workers focused primarily on one thing: their core job responsibilities. Yet over time, as HR, learning, and talent organizations have diminished and organizational necessities such as innovation and core values have grown, workers have amassed numerous non-core job roles. These roles may include trainer, innovator, career advocate, brand advocate, team supporter, wellness advocate, and many others. Where and how organizations apply these roles are key differentiation points for organizations.Traditional compensation systems were not created for—nor are they capable of—rewarding non-core job behaviors, which are variable by nature. As the IRF study Engaged in What? found, non-monetary rewards and recognition are powerful ways to encourage and motivate engagement in key non-core job roles.

2. Understand the regulatory environment. Federal Tax code 274(j) has long provided tax relief for organizational investment in non-cash safety and year-of-service programs. Unfortunately for HR executives, the 2016 Department of Labor’s Conflict of Interest rule, which redefined a financial advisor’s fiduciary responsibility in reporting incentives, and the proposed non-exempt overtime law, were not as accommodating. The changes to regulations affecting non-cash reward and recognition programs progress at an almost alarming pace. Almost 60 percent of respondents in the latest IRF Outlook Study now agree government regulations are making it more difficult to design reward and recognition programs. Engaging legal advisors and leaning on reward and recognition associations will be important as these regulations ebb and flow.

3. Benchmark budgets. According to the IRF, 86 percent of all U.S. businesses with over $1 million in revenue now use non-cash reward and recognition programs to motivate their employees, sales people, channel partners, or clients. With these businesses spending over $90 billion annually on award points, merchandise, gift cards, and incentive travel, it’s not surprising that over 80 percent of these businesses use more than one award type. Budgets for these tools continue to grow, with the latest IRF Outlook Study showing the average per-person spend on incentive travel programs at $3,755 and the average per-person spend on gift card and merchandise programs hovering near $420 per person. Almost 40 percent of incentive travel programs now have per-person budgets of $4,000 or more. The majority of these budget increases are going toward the rising costs of hotel rooms and food and beverage, and sometimes toward the higher costs of longer flights. A net 35 percent of programs with larger gift card and merchandise budgets in 2017 will be investing in areas such as more award earners and better technology for their programs.

4. Get social. The vast majority of reward and recognition programs now use some form of new technology. There are also multiple indicators to show this technology has a strong social edge. As organizations discover more and more economic value in social sharing technologies, reward and recognition programs are following suit. According to the most recent IRF Outlook Study, over 60 percent of program owners now use social media before, during, or after their program. Social recognition, or the juxtaposition of technology-enabled internal networking sites and peer-to-peer recognition schemes, is now part of almost 40 percent of reward and recognition programs.Accordingly, the value and benefits of social recognition are becoming key elements of reward and recognition business case discussions.

5. Individualize and personalize. Engaging the diverse perspectives of three or four different generations in the workforce is a core challenge for HR executives. Yet as the IRF’s Generations in the Workforce & Marketplace: Preferences in Rewards, Recognition & Incentives study found, concentrating on broadly defined cohorts versus the individual employee drains reward and recognition efforts of their impact. Simple interest-focused questionnaires; personalized blast emails; award catalogs with customized views; specialized merchandise selection areas for award earners; and the increased inclusion of unique “experiential rewards” such as spa days, concert tickets, expensive dinners, sporting events, non-cash reward and recognition programs all offer a strong opportunity to forgo the less engaging macro view for the more impactful micro focus. Likewise, to enable a broader range of large and small experiences, many organizations now split their budgets between individual and group incentive travel, with a quarter of program owners increasing their individual travel offering in 2017, according to IRF research.

6. Be predictive. As more organizations grapple with the bane and promise of big data, they often overlook its implications for reward and recognition programs. However, the intersection of big data and engagement programs holds immense promise for the future of HR analytics. Where reward and recognition programs maintain scores of real-time behavioral data on the current workforce, there lies enormous potential to use predicative analytic tools such as classification and regression models to determine how changes in this data will impact key performance indicators. With the right partners and tools, inputs from employee files, attendee responses, and business results can now all be analyzed to help solve real problems such as detecting fraud in programs, enhancing the reach and impact of program communications, or predicting how various changes in a program may impact the bottom line.

7. Think global. Top-performer incentive travel programs have long been international, with over three-quarters of incentive travel program owners running at least one program outside U.S. borders in 2017. With the continued global expansion of U.S. business operations, however, globalization now influences all reward and recognition program types—merchandise and gift card programs included. According to the IRF’s latest Outlook Study, three-quarters of the programs now include participants outside the U.S. in their non-cash rewards programs. More than half of corporate program owners said they have international participants in their programs, with Canada, Mexico, and Europe as the most predominantly included areas.

Modern compensation systems are not designed to reward and recognize the full breadth of activities in which the modern worker is engaged. As CHROs expand their reward and recognition budgets, so must they expand their focus on rewarding non-core job roles, unlocking the promise of predictive analytics, creating a social and personalized reward experience, and staying attuned to global and regulatory needs.

Melissa Van Dyke is president of The Incentive Research Foundation.

Posted March 15, 2017 in Engaged Workforce

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