Getting the right ROI with employee recognition.
Welcome to the office of Shannon White, the vice president of human resources. Shannon is meeting with David Moskowitz, the companys VP for sales. He wants to increase revenues right away and hes asking about incentive programs. Let’s listen in …
David: I’m under serious pressure to move my sales numbers up this quarter. I need incentives for my sales reps that will work quickly. And while were at it, I really need for the program to pay for itself. What can you do for me, Shannon?
Shannon: I think I have just what you need, David. This is always a tough assignment, but Im sure our department can help.
David: Were going to have to throw a ton of cash at these people to get them to sell harder, and I know that money talks.
Shannon: In my experience cash sometimes works-but only for the short term. Cash incentives wont necessarily accomplish what youre trying to do here, plus there are some serious downsides to cash. By using cash, you may end up paying more and only getting a slight improvement or not even getting enough improvement to pay for the incentive. I know that accelerating your sales result is a priority, so let’s pick an incentive strategy that will get results now and pays for itself.
David: Yeah, its important that we get something back for this.
Shannon: You will. Let’s talk about Return on Investment …
If this conversation has not happened in your office, it most likely will. The reason is that sales leaders are relying heavily on their HR partners for help with incentives, and HR officers are now better equipped to meet these needs. Let’s look at some research.
A survey published this year by the Incentive Foundation shows that about three-quarters of companies are placing a greater emphasis on Return on Investment (ROI) when evaluating their incentive dollars invested in productivity programs. Three-quarters of respondents feel they can build a “more exciting and memorable” program around travel or merchandise than cash. It was reported that 60 percent of employees see cash as a part of their compensation package. David and Shannon clearly are not the only ones who are looking for a way to make their incentive programs more productive.
One of the leading-edge ways of accelerating sales and efficiencies immediately and also assuring a significant ROI is by rewarding changed behaviors. The following are important steps to follow when developing a work performance program:
Identify the behaviors of the top performers (those improving the fastest) in growth, customer satisfaction, and efficiency/profit. You want the middle group of performers in your company to do what the top performers are doing.
Focus on two behaviors, such as knowledge validation or knowledge sharing, and one improved results measurement.
Reward employees for good or excellent behavior change and for improved results.
Remember that the goal of a performance acceleration program is to copy what is already working well in your organization. The following is an example of how it can work.
A leading telecommunications company needed a sales incentive program, designed to reward a specific group of employees with prizes they could win by scoring performance points in a three-month program. Its purpose was to change behavior. Workers whose behaviors changed-as measured by tests, surveys, observation, and sales-earned merchandise and travel rewards.
The company also wanted to increase product sales by 20 percent as a result of the incentive program. To help meet its goal, 90 percent of employees passed a knowledge validation quiz to increase knowledge of products and services by 275 call center workers. Participant response was much higher than anticipated: 98.5 percent of eligible sales reps participated in at least one aspect of the program, and 84 percent earned rewards. The company reported that overall customer satisfaction scores were up decidedly. They also announced a 32.1 percent increase in sales of targeted products for the three months of the program.
The program exceeded its stated objectives because of two important factors. First, it set out to change behaviors rather than to affect only short-term action. This was accomplished largely through education, supervisor coaching, and creating benefits for the company, which as demonstrated in the results above, are much more likely to be permanent. The second factor was that, in this case, the incentives and the number of choices of awards was specifically designed to appeal to the nature and economic level of the participants.
Remember, we were looking for ROI as well as performance improvement here. Imagine what kind of return David could claim for their company if sales increased 32 percent as a result of Shannon’s work.
Louise Anderson is president and CEO of Anderson Performance Improvement Company (www.andersonperformance.com), a company that is accelerating results through the science of performance. She is also the author of Cream of the Corp., a book of practical suggestions and ingenious ways companies can get people doing things that accelerate profits NOW, available on Amazon.com and www.andersonperformance.com.
