The act of awarding employee achievement is probably one of the trickiest terrains a manager needs to navigate. It calls for a deep understanding of what would be meaningful to individual members or subgroups of a widely diverse workforce, and awareness of the kinds of awards that are available. Moreover, current economic circumstances are having an impact on the kinds of awards employees prefer. Finally, the impact of awards on ROI must be determined and monitored.
A total awards system, one including cash, travel, merchandise and cards, offers the flexibility needed to fine tune awards for greatest effectiveness. Cash is interesting: Intuitively, and especially in times of economic downturn, it seems the most effective of awards, and an Incentive Research Foundation (IRF) and Incentive Federation, Inc. (IFI) study of cash versus non-cash awards found that 37 percent of respondents used cash to motivate employees. However, the study revealed that non-cash awards were much more powerful. One reason could be that tangibles—such as cards, travel or merchandise—grab and hold employees’ attention.
We are finding that prepaid cards are increasingly valued by employees and employers alike. They are handy for the recipient, easy to administer and offer the employer a range of options—closed loop, open loop, or virtual/digital–each with unique advantages. Closed loop cards are just that: they can be used only at a specified merchant and are often called “store” or merchant gift cards. A variation are closed loop promo cards, which can be redeemed only within a specific time frame and usually have a lower cost to the buyer. Open loop, or network branded, prepaid cards can be for one-time use or reloadable and offer the option of a custom design. A variation is the restricted authorization network card, which may be used only with select merchants but has the advantage of better pricing than many purely open loop products. Finally, there are virtual/digital cards that can be delivered via email or mobile devices. While increasingly popular, they do carry additional costs because of the technology required to deliver and not all merchants have the means of accepting them any not all merchants offer them yet. On the other hand, the virtual card delivered by email offers immediacy, which is of great value to an increasingly younger workforce that wants their rewards “now.” Mobile coupons are experiencing explosive growth and are changing the awards landscape.
At MI, we find that prepaid cards are very popular for both employee and channel incentives. Even when part of a mix that includes merchandise and travel, cards often come out ahead. Participants want them. Why? It gives them choice. When gas prices were rising, we saw open loop and closed loop cards used to buy gas; these days they are going for home improvement and casual dining. An added value is realized if the recipient is in a store loyalty program, they just use the card there and get an even better deal. Basically, cards supplement a lifestyle.
Travel and merchandise still have a strong role to play. Travel awards offer a unique experience and create an emotional bond, while merchandise has high trophy value. Not surprisingly, travel awards most often are part of a sales incentive program, where merchandise has a home as well as in customer service areas.
But here’s the kicker: A significant number of organizations in the IRF/IFI study had no good measure of the results of any award. To help, the IRF has developed a free Master Measurement Calculator tool that is easy to use and is designed to show the impact and ROI of incentive, reward and recognition programs. What the tool does not do is take a deep dive into the softer aspects of ROI, an area that will be explored in a future MI blog.
What are you finding to be your most successful rewards programs? What did that success look like? We’d like to hear from you and share your successes with our readers.