Fulfillment Force: Recognizing Recognition Developing brand name incentive programs that add value

Today, corporate incentive programs are a multi-billion dollar business that can significantly impact a company’s bottom line. This can cause many sleepless nights for managers who wrestle with a basic question – should I offer cash, or tangible incentives such as merchandise, travel or gift certificates?

Cash Is King? Not Necessarily

Premium representatives often hear that “Cash is King” when planning employee motivation programs. Why? Because repeated studies have shown that, when asked for their opinion, most people prefer cash. However, these same studies have shown that employees perform at a higher level for “non-cash” incentives such as merchandise or travel rewards.

This seeming inconsistency between incentive and behavior reflects a common misunderstanding of the value and purpose of the incentive. In our society, cash is rarely accepted as a means of recognition (i.e. showing acknowledgement, approval and gratitude). Winners of awards in sports, business and science often receive cash, but when they attend the awards dinner they receive merchandise, travel, trophies and public expressions of gratitude as well. Likewise, most people don’t give cash to express thanks but choose tangible expressions of gratitude that are more personal and long lasting. In other words, the currency of recognition is almost always anything but cash.

The Downside of Cash – Perception vs. Reality

It may be true that money talks, but the question you have to ask is what is it saying? Before making a decision to use cash, it’s important to ask if cash will help your employees meet their sales or service objectives.

Take a moment and see if any of these perceptions apply to your incentive program.

Perception #1: Everyone can find a use for cash.
Reality: Rarely will cash offer a long-term benefit to the employee. Many times they will spend that extra cash on everyday necessities or paying off overdue bills – neither of which has a lasting effect. Asked a year later how they spent their cash reward, most recipients will be unable to tell you.

Perception #2: It’s going to cost the same whatever I do.
Reality: Cash is expensive. There’s no way around paying less than “face value” for cash. A $100.00 reward will cost $100.00. When you factor in administrative charges, cash offers less value then other types of incentives.

Perception #3: My employees know the purpose of the reward.
Reality: A cash reward is typically seen as “compensation” not recognition, like an annual bonus. Even when the purpose behind the incentive is explained, cash can create an environment of entitlement in the future. Cash works best when employees have reason to expect that they can earn the same amount the following year if they work hard. If employees receive a generous cash bonus one year with no hope of getting one the next, many will feel as if they’ve taken a pay cut, resulting in resentment and disillusionment.

Perception #4: Cash will generate goodwill throughout the company.
Reality: Cash can be used to promote individual performance, but will it allow your organization to tout top performers or publicize what they did to achieve their status? Since many employees would prefer to keep the exact amount of cash compensation secret from colleagues, offering cash helps ensure that people will keep quiet about their rewards instead of becoming a champion for your business.

The Role of Premium Incentives

So with all that said, how do you know what type of premium incentive you should offer? Here are several questions to consider:

What will our employees/sales force appreciate?

Good premium rewards are those things that people would love to have, but may not buy for themselves.

What residual value will these rewards provide for your employee?

A merchandise reward offers a constant reminder of their accomplishment. Each time they gather with their family around the Sony® big-screen TV that they earned, there will be a conscious or subconscious memory of their sales achievement (and the company that appreciated their efforts).

Are you offering your employee the most value for your promotional dollars?

Merchandise rewards provided by manufacturers who truly understand the premium and promotional products industry will offer significant discounts for volume purchases that allow you to maximize your budget.

Will there be an opportunity to earn this incentive next year?

Unless they are part of an on-going program, cash rewards can get lost in the compensation/benefits equation. Because recognition comes as a result of exceptional performance, it is easier to position non-cash rewards as one-time events that may or may not be repeated. And since the reward probably won’t be used to defray living costs, there is a better chance that employees won’t feel cheated the following year if they are unable to qualify for special recognition.

What will get recipients to promote your incentive program from within?

With recognition, the objective is to express thanks for exceptional performance and to create role models throughout the organization. While a recipient may be unwilling to talk about their $5,000 bonus, they’ll gladly boast about the free trip or desirable merchandise reward.

Brand Names Matter

While it may be tempting to use non-brand name incentive merchandise because of budget or convenience, you should know that the amount you save in time and money will cost you where it counts – with the intended recipients of the rewards. The end result could be disastrous, ultimately leading to the downfall of your corporate incentive program.

The quality of your incentive merchandise speaks volumes to the time and dedication you put into finding proper rewards for your corporate incentive program. The appreciation and motivation it produces in employees will be more than worth the extra expense with better bottom-line results.

Brands distinguish recognition from cash incentives or compensation strategies, and they reinforce your own brand or corporate identity by associating your company with other powerful brands.

What’s more – numbers don’t lie. According to Promo Magazine, in 2005 companies spent more than $46 billion a year on corporate incentive programs to motivate employees, channel partners and customers. Nearly two-thirds of all those incentive redemptions were for brand-name products.

Here are three additional reasons to use brand name merchandise.

1. Creates excitement. Making branded merchandise the centerpiece of any motivation program generates amazing good will and excitement with your employees regardless of what the corporate incentive program is.
2. Elevates motivation. The reward not only becomes more enticing, but also more valuable. And, you can increase motivation simply by increasing the size and value of the brand name. It’s the difference between offering a knock-off kitchen mixer and a top-of-the-line KitchenAid® stand mixer. Which prize will resonate with every cook?
3. Encourages dreaming. You know you’ve found a great incentive when the participants know that the only way they are going to get the 3-night stay at the Ritz-Carlton, or that Sony home entertainment center, is to earn it in the program. They know they would never spend their own money on such a luxury. To really get their attention, you have to offer something that they really want, but would never spend their own money on.

Only brand named incentives have this pull, the ability to captivate an audience and change behaviors. And that’s what a corporate incentive program is supposed to do - captivate participants and get them to align their behaviors with the company goals.

Decisions. Decisions. Choosing which brand names to use.

As brands proliferate in the media, pop culture and the retail marketplace, today's workforce has become more brand-conscious than ever. This requires an intelligent, informed approach to choosing brands for your incentives. You'll need the right strategy to motivate the right behaviors in the right people. Having the right brands in your incentives ensures that you get the desired response and enthusiasm. Otherwise you're spinning your wheels.

The fact that retail brands cost more than generic items and go on sale less frequently adds to their perceived value as incentives. You want the perceived value of the reward to be high, and the highest perceived values are associated with well-known brands. Since many brands have unilateral pricing policies or have pricing relationships with retailers that are more defined, recipients identify the value of the brand – meaning you’ll get more bang for your buck. The growing importance of brands has also impacted dining and entertainment, where gourmet foods are more popular than ever. Brands are especially important in the food and entertainment arena because these are consumable products that employees should know and trust.

Successfully utilizing name brands can be accomplished by:

1. Deciphering demographics. Many buyers are tempted to include rewards that appeal to them rather than what would most appeal to the participant audience. A key starting point for understanding the demographics is age – young workers will appreciate more active products like bikes and camping gear, while baby boomers are well established and motivated by luxury items and high-end consumer goods. Similarly women might be more inclined to choose household goods while men would be more inclined to choose high quality tools. Some types of merchandise, like electronics and apparel, cut across age groups, but it's going to be different apparel and electronics for each demographic group. A well-designed incentive program offers several choices that would be popular to each demographic group.
2. Assessing your need for brand affiliation. Choose brands that support your own goals, or the goals of your program. If your brand/company stands for quality and integrity, select products that reinforce those messages.

When designed and implemented effectively, employee incentive programs can be an excellent strategic human resources tool that promote employee confidence and boost measurable performance. While employees may indicate a preference for cash and planners may be tempted by the ease of administration, utilizing high quality branded merchandise will maximize any program’s goals. Branded rewards can clearly be seen as recognition instead of compensation, provide increased motivation to the employee, serve as a constant reminder of the employee’s success and help generate excitement around the program.

Fulfillment Force represents ten manufacturers spanning more than 25 name brands of Housewares, Food and Electronics products. Together, with nearly 30 Manufacturer’s Premium Reps, we design, plan, coordinate and fulfill all levels of employee and consumer promotion programs. Let our experience work for you when implementing an incentive program utilizing high quality, well known name brands.

Andy Shinrock, VP Operations, Fulfillment Force, www.fulfillment-force.com