Archive for the 'Employee Wellness Programs' Category
The Employee Performance Improvement Puzzle
Author: Ley
If you Google “Improve Employee Performance” you will find hundreds of thousands of interesting approaches and options. Everyone seems to have an answer…from training to better communications, research, consulting, new appraisal software, different measurement, 10 step management guides, performance assessments or surveys and reviews, etc..
While most companies that provide these various solutions have valid methods of improving performance, rarely do you see any of them recommend that you close the loop of performance improvement by rewarding your employees for results. Award programs just seem to be born out of trial and error, the natural progression after other solutions haven’t produced the desired result. Most companies think they know all the pieces of the employee performance improvement puzzle. They’ve spent millions on the separate pieces but have they determined the best way to group the pieces to affect the best result?
Award Systems Can Drive Performance
Employee engagement is the big challenge today. Corporations have fewer dollars to spend and are constantly striving to improve performance. Over the last few years, there have been many articles written on employee recognition as a viable way to improve performance. Studies have shown that recognition is a key element in employee satisfaction, and employee satisfaction is a key element in employee performance. Satisfied employees drive customer satisfaction and improved bottom line results. If it’s that simple, why don’t more companies include award systems to motivate and recognize their employees for improved performance?
Other studies have stated that when incentive/awards programs are implemented correctly, individual performance improves by 22%. They also found that when there was both an individual as well as a team component that individual performance improves by 27% and team performance improves by 45%! Of course the essential point here is “implemented correctly.”
Do Recognition Programs Motivate the Majority?
Do employee recognition programs really drive the performance of the majority of your employees? Or do they merely recognize and reward those employees who work above and beyond the norm? If you want improved performance should you structure a simple recognition program that allows peers and front line managers to say thanks with a periodic reward? Or should you design a program that has real objectives, communications, measurement and feedback mechanisms with an appropriate award system to drive the performance?
What Incentive Award Company to Use?
The results of the above study did not surprise some of us in the incentive industry. The full service performance improvement incentive companies have seen these outcomes for years. In fact they have seen results far greater than these. If you could search through the archives of successful incentive companies you would find literally hundreds of unbelievably successful programs. Unfortunately for a myriad of reasons, not the least of which are proprietary information and confidentiality, these findings rarely reach the eyes of people in their own companies, much less the industry in general. And that’s a shame.
Your Own the Tools
The tools to change employee behavior and improve performance are already in your hands. It is often not much more complex than telling your employees what you want them to do, teaching them how to do it, measuring their performance, telling them how they did and then positively reinforcing them for their results. If you want to look to the incentive industry for the expertise to help you construct and implement a program that will drive results, not just recognize the performance of a few, seek out the professionals who have done this for years. If done correctly you will drive the results you want.
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A study recently released by Fidelity Investments in conjunction with the National Business Group on Health and as reported in Premium Incentive Magazine,
“…found that financial incentives have taken on greater importance in the drive to increase employee participation in health improvement programs. The survey, which looked at the behaviors and offerings of 147 mid-to large-size companies in various industries nationwide, is a follow up-to a research conducted in 2009.”
The study found that several different types of financial incentives were used in 2010, predominantly cash to lower premiums and making additional contributions to health savings accounts. Of the non-cash incentives offered, gift cards were the most popular.
The average dollars spent were $430 per employee in 2010 up from $260, an increase of 65% over 2009. Interestingly, half of the companies studied actually provided incentives to dependents of the employees at an average value of $420.
“More employers (62%) offered incentives last year than 2009 (57%). Employers know that a healthier workforce is more productive in the long term, said Sunit Patel, senior vice president of Fidelity’s Benefits Consulting business. Wellness programs in the past have typically had modest impact because of low participation rates, but our study indicated that incentives are starting to make a real difference in employee interest and engagement”
“According to the research, the majority of employers surveyed (52%) agreed that incentive based programs had a better than expected success rate at increasing employee participation.”
Incentives were used to drive participation in various wellness programs in four main categories
- Health Risk Management (e.g. on site flu shots)
- Lifestyle Management (e.g. smoking cessation programs)
- Condition Management (e.g. nurse phone lines)
- Communication Education (e.g. intranet wellness web site
Gift cards are ideally suited for awards to drive participation. Within the categories mentioned, there numerous award opportunities and structures that can be used. A budget of $430 offers approx. $35 per month. Cash in this amount will often not have the same perceived value to the employee as a gift card to their favorite store. Cash will get lost in everyday life while a gift card can afford them guilt free shopping.
Everyone has an opinion on what the incentive rewards industry is all about. Clients have their own understanding and bias and award salespeople are knowledgeable of their own deliverable but typically not much else. If a company wants to design a program to produce incremental results and and improve the performance in sales, non-sales activity, or any corporate goal, they will historically use a program that they’ve heard of, have used in the past, or one that is brought to them by a vendor who may or may not have asked enough questions or done sufficient research to even make a recommendation in the first place.
Our last post spoke to the fact that probably 2/3 ‘s of all incentive program either do not produce results or only marginally. The first reason this happens is because they use the wrong type programs in the first place. There are some fundamental differences between various types of incentive progams. They are not interchangeable and will produce different results depending on how they are administer. There are certainly several different forms of awards to use and the wrong award combined with the wrong design can mean you spend a lot of money with minimal or negative results.
Following is a list of the different types of award programs and how they differ from each other. Read the rest of this entry »
For any of us selling in this industry for more than just a few years, a thorough review of the latest Incentive Research Foundation’s Vertical Market Study must have been painful. At least I hope it was. In that study, it indicates that 78.5 % of the respondents did not engage the services of an outside incentive company for the design, management and measurement of their incentive programs. Of the balance of the respondents who did engage an outside company, the majority were engaged to provide fulfillment services only. Wow, have things changed!
I must say that I was absolutely amazed that nearly 80% of the respondents didn’t use outside incentive companies other than for fulfillment. In the not too distant past, when we developed a proposal for a piece of business, that proposal contained all the elements to make an incentive program successful. We concentrated specifically on the design and rules structure, the measurement, the administration or management and the communications. The end of the presentation was mainly reserved for the fun stuff…the dazzle, glitz and glamour that could be provided by the awards. But the important points of how to make the program work well were almost always discussed first. Frankly, everyone in the industry could present a travel destination (it’s not hard to make Hawaii or Rome look good) or a beautiful book of merchandise awards (but TVs and toasters are the same for everyone). If our salespeople were doing their job, our proposals could capture the essence of what the client really wanted to do because we knew their industry and we had done our homework to know how to make their program successful. That’s what we were trained to do, that’s what we did best. Evidently the clients of today don’t have that same opinion of the suppliers that sell them awards. And that leaves us to selling commodities instead of our intellectual property.
When asked why they didn’t use outside agencies in the design, management and measurement, following were the three major reasons:
- 70% of the respondents felt that they had in-house resources with the ability to design programs without assistance.
- 11.3% said the cost was too high to engage an outside agency,
- 10.8% said that the agencies lacked the specific expertise in their specific industry to be of any value.
I won’t comment here on the first reason, but you might want to take a look at the last post we did on why only 1/3 of all non-cash incentive programs produce results. Evidently we have allowed our stock in trade, our real reason for being in the business, our expertise, to be devalued in pursuit of the profits of just the awards. And that is a shame! What we used to be proud of was implementing programs that produced results for our clients, not just fulfill awards.
So what changed? Well, I really don’t know the exact reasons, there are many, but I can make an educated guess on one of them. For years, it was common practice in the industry to not charge for the program design, management, measurement and design/ layout of the communications campaign. The full service incentive companies actually gave all this away as a cost of doing business and made up their profits on the high margins they received on the production of the communication pieces and the awards, specifically the merchandise awards. It was not uncommon for these companies to be selling merchandise, guised in points, at very inflated prices, often 50% to 100% more than retail.
Over twenty years ago I recall a meeting where we invited a high level executive from McKinsey & Company, the well respected and successful business consultancy, to come and listen to our plight of shrinking profits. After respectfully listening to what we did, how we did it, and spending a morning touring our college-like campus, he said….”I’m very impressed by what I’ve seen and what it is that your company does, but let me get this straight. You provide all the design, management and measurement services to your clients at no cost and give away your intellectual property, while trying to make your profit on selling what is essentially a commodity, is that right?” When we answered “yes” he said….”we do just the opposite.”
Well, the eyes of our chief executives opened in amazement, the smirk on the faces of the sales executives was palpable, and the rest is history. From that day forward, we tried to change our entire pricing philosophy and invoice clients for all of our services. But, unfortunately, the sales force was very reluctant to make the change and the clients were less than agreeable to being billed for what they had previously received for nothing. So the die was caste, we were essentially hoisted on our own petard, and rest is history.
As time went on, because there is relatively no real barrier to entry, more and more companies got into the business, the competition stiffened, and many of these much smaller companies started nipping at the heals of major incentive companies. Today it is not uncommon to find very large multi-million dollar programs in the hands of very capable small local incentive companies who will provide tremendous service to the clients for the profit derived from the fulfillment of the awards. Most of these companies don’t have the resources to provide analytical assessment and measurement, detailed program structure and design, and a marketing services company quality communications campaign. They leave a lot of that up to the client. But they can and do provide any and all, and often more of the awards that are provided by the larger incentive companies.
If clients don’t put much stock in our capabilities other than fulfillment, when they turn to us only to purchase what is essentially a commodity we should expect to be challenged to provide commodity pricing. And, if clients see it that way, they should be getting the best price they can….or shame on them!
Do Incentive Programs Really Produce Results?
Author: Ley
As I’m in the incentive industry I suppose my unqualified and enthusiastic answer to that question should be ABSOLUTELY! While that answer may be politically correct for this publication, it does tug at my integrity a bit.
Sadly, in close to 40 years in the business, I have seen far too many programs that didn’t achieve objectives and even worse, some that actually decreased performance. When we had the fortitude, we told clients up front the program that they wanted to implement had little chance for success. It wasn’t always the way to endear ourselves to them, but better to do that than have our name on a program that we knew would be unsuccessful at best.
Sometimes incentive companies accept business and think they can “change the client to our way of thinking.” I know we did, and all too often. But, those programs usually didn’t produce satisfactory results and in the end, disenchanted clients both blamed us and never used us again, or stopped implementing programs altogether. In those cases, no one was the winner.
To quote an old proverb taken in part from St. Bernard, ‘The road to hell is paved with good intentions.’ We all have good intentions of making our programs successful. The reasons they aren’t has been discussed many times in many ways. I will jump into that debate in a later article. But for now, let’s just say there’s a lot of room for improvement in design, communications, implementation, operation management and awards selection for many incentive programs.
I saw an interesting recap of some research the other day. It was taken from a study conducted by Kluger, Avraham and Angele DiNishi entitled “Feedback Interventions: Toward the Understanding of a Double Edged Sword” and published in Current Directions in Psychological Science. In it were the following conclusions:
- 1/3 of all non-cash incentive award programs produce results
- 1/3 of non-cash incentive award programs produce no results
- 1/3 of all non-cash incentive award programs actually decrease performance
While this type of research was rarely shown to a client, it was something that many of us in the industry already knew because of the ROI analysis we had done on many programs. Of course our results were typically better than average, and at times we even guaranteed results depending on the type of program and circumstances. Even then, it was not uncommon for a program to have only 50% or less of the participants actually performing above goals, earning awards and producing results.
Experienced industry sales people divulged this type of data to clients to manage expectations. The not-so-experienced took the money and hoped that the program wouldn’t blow up in their face. If it did, it would be the last program they sold to that client. If it didn’t, everyone would be happy and keep implementing programs until one finely did blow up. I’ve seen programs like this stay in place for years until some executive finally challenged their own management on why they were spending the money and what they were getting in return. At that point, things usually “hit the fan.”
Today, the Incentive Marketing Association estimates the industry volume at $46 billion! Of that total, how much is actually spent on successful programs?
If you believe the above report and based on the current estimate:
- $15 billion is spent by corporations on programs that do produce results.
- $15 billion is spent by corporations on programs that have no effect on performance
- $15 billion is spent by corporations on programs that actually decrease performance
No wonder there are a lot of companies that don’t believe in non-cash incentive programs. I guess they think that their cash programs produce better results? An interesting question!
Just remember, if you’re planning to implement a non-cash incentive, motivation or recognition award program…there’s a 66% chance that it might not be successful. Taking the time to find professionals in the industry to help you plan, design and implement your program could save you a bunch of money!