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The Future of Incentives

Times have changed and the incentive industry simply isn't what it used to be. But who said that's a bad thing?


IncentiveFEatureTimes have changed and the incentive industry simply isn’t what it used to be. But who said that’s a bad thing? written by M&IT staff

At one time, incentives and rewards were reserved for sales programmes. However, the proven power of incentives to drive employee engagement and customer loyalty has caused incentive firms to expand their focus. Recent research by the U.S.-based Incentive Research Foundation (IRF) offers insights about where this dynamic industry is heading. M&IT highlights some of the IRF’s most pertinent findings:

THE NEW NORMAL
In its report, “Driving Our Future,” the IRF observes that the incentive business is settling into a new, lower level of activity. This “new normal” is not cause for alarm. Rather than cutting incentive programmes, organizations are beginning to adapt in ways that make for stronger business models. Incentive planners are developing new ways to justify programmes, focusing only on business prospects with well-qualified potential and molding travel programmes to fit into budgetary constraints.

REDEFINING WHAT’S NECESSARY
Most incentive planners, and meeting planners for that matter, would agree that we, as people, are now more sensitive to extravagance. It’s caused us to think carefully about how we define extravagance and necessity. For some planners, that means switching to domestic travel from international travel, as well as a reduction of qualifiers, fewer management attendees, fewer room gifts and less-than-five-star hotel properties.

EXPERIENCE OVER PRODUCT
With the apparent growth in affordable massage services, a rise in ‘vocation vacations’ and the incredible number of deals featured on group-buying sites that highlight experiences and services rather than products, it would appear that these days, what people want is the experience. While a memorable experience has always been the anchor of incentive travel, the IRF reports that merchandise incentives now need to incorporate experiences to reflect this change in preferences.

NON-CASH REWARDS
Variable pay (pay above and beyond an employee’s salary), which was once an “alternative” reward, is becoming an integral part of companies’ compensation plans, according to the IRF. Just fewer than 40 per cent of companies worldwide have increased—or plan to increase—the proportion of variable pay in their employees’ pay packets, reports global management consulting firm Hay Group. In addition, there continues to be an unsurprisingly healthy interest in non-financial motivators. Non-cash motivators, such as praise from managers, attention from leaders and the opportunity to direct projects, are reportedly as effective as monetary methods. Clutching the purse strings provides business leaders with a chance to more effectively reward talented employees by emphasizing non-financial motivators in concert with cash rewards.

CORPORATE SOCIAL RESPONSIBILITY
An increased interest in corporate social responsibility can be felt across the planning industry. This is in part due to a reprioritization of what’s important. The IRF report estimates there are 43-million people dedicated to personal and planetary health, who make environmentally friendly purchases, support advocacy programmes and act as stewards of the environment. The Global Workforce Study found that corporate social responsibility is the third-most-important driver of employee engagement. These facts alone suggest incorporating elements of health and sustainability into incentive programmes will not only be well regarded, but expected, now and in the future.

THE VIRTUAL JUGGERNAUT
Regardless of your personal feelings toward the virtual world, it’s nearly impossible to disregard the growth in all things virtual. Beyond virtual meetings and events, there are virtual employees, virtual money; the list goes on. According to U.S. research heavyweight Bernstein Research, over the next decade, virtual meetings could replace nearly 70 per cent of travel to and from an organization’s own facilities, and 10 per cent of trips to visit customers. The result? Expect to see an aggregate reduction in corporate travel spending, to the tune of more than 20 per cent. So before you push the virtual space aside, consider accommodating virtual products and solutions into your incentive plan, as the IRF deems them an important part of programmes, moving forward.

GROWTH OF GAMING
While highly entertaining, computer games will be explored for application to motivation programmes. According to the National Training Laboratories, those who engage with games as part of an education process retain 75 per cent of the knowledge they acquire. The IRF reports that computer games are already a fixture in many organizations’ incentive-programme promotion, communication and training. Many games use “points” to award for performance and improvement and the IRF suggests it’s only a matter of time before gaming and token economies will be mainstream in incentive programmes.

It’s true, the incentive industry has faced challenges, and those challenges have affected the use and perception of incentives. But as the IRF’s report has illuminated, with change comes opportunity. Planners, clients, employees and employers are bearing witness to an industry that’s adapted and evolved in spite of roadblocks, and has used alternative routes and innovated, to further integrate technology into incentive programmes and strive for another level of success.



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