The incentives industry is an entirely different beast than it was 30 years ago. In the 80’s there were only a handful of companies offering incentives, and that handful of companies pretty much monopolized the field. The 80’s were also a time when incentives focused almost solely on sales, and sales were made primarily on the basis of relationships. The time since then, especially the past decade, have seen the emergence of many smaller companies that offer more diversified and customized incentive solutions. The focus of incentives and employee recognition programs are much broader in scope than they used to be. Back in the 80’s incentives were focused on sales and sales alone. Today incentives focus on organizations and customers as a whole because modern companies have realized the power of incentivizing every aspect of their business. If you offer performance and behavior incentives to your whole company, you see improvements in more than just sales; you see improvements in productivity, customer service, motivation, and engagement all around.
The Incentive Research Foundation (IRF) conducts studies into the state of the incentive industry on a consistent basis, and their studies have lead them to come to a few predictions as to where the industry is headed in this new year.
1. The Rise of Optimism – With the progressive lowering of the unemployment rate, employers and organizations are experiencing a sense of cautious optimism in the marketplace. With this optimism and moderate increases in revenues, HR managers and executives are reporting that they’ve seen improvements in their ability to plan and finance employee recognition programs. Employers are tempering their optimism with a cautious edge, though. Most companies that are increasing their spending on recognition programs are making sure that their programs are able to flex up or down with their spending based on business performance.
2. The New Norm – Employers are now adjusting to a new lower level of spending available for incentives and recognition. However, smart employers aren’t simply slashing incentives from their budgets, they’re making their incentive programs smarter. They’re evaluating which rewards bring optimal ROI’s so they impact their business in the best way possible. If a business recognizes that their top performing incentive is travel, they’re still offering it, but instead of going to exotic international locales, they’re going to exotic domestic locales – like Florida.
3. Incentives Increase Globally – Incentives are no longer a global industry based on where they send reward recipients. Google searches showed that the term “employee engagement” was searched more in India, Singapore and South Africa than the United States. In “GlobalInc: An Atlas of the Multinational Corporation” the authors suggest that by 2015 over 50% of Brazilian, Chines and Indian employees will be considered Middle Income. If incentive companies want to thrive and not just stay afloat, they’re going to have to start thinking on a much larger global scale than they ever have before.
4. Extravagance – After the public concern over AIG’s corporate travel incentives, America and the international business world have become much more sensitive to what is perceived as extravagance. Businesses are focusing their incentive efforts more on what is viewed as a necessity when it comes to rewarding their staff for jobs well done. As mentioned earlier, instead of sending employees abroad, companies are spending their money on sending employees to much more affordable domestic locations.
5. Craving Experiences – The IRF’s roundtable studies revealed that 40% of program participants are expressing desire for more travel as a way to increase life experiences versus simply having things. Participants who didn’t opt for travel experience still showed a preference for their rewards to be an experience rather than just a thing. They wanted more reward offerings that allowed them to visit restaurants they wouldn’t’ normally go to. They also wanted massages more than ever before. Focusing on providing life experiences and things to do outside of work is becoming much more prevalent and is a direction many companies will want to embrace in order to stay relevant in the coming year.
6. Non-Cash Rewards – Employees appear to be clamoring for the chance to have richer workplace experiences as well. Opposed to having cash rewards or material things, many employees list praise from immediate supervisors; attention from company officers; and the opportunity to direct important company projects among their top incentive desires for the upcoming year.
7. Social Awareness – The IRF found several indicators that suggest a “reprioritization” of what’s important to individuals in the workforce. These indicators and social trends are now, more than ever, affecting what we buy, where we invest, and where we choose to work. There are roughly 43 million LOHAS (Lifestyles of Health and Sustainability) consumers in America who are dedicated to personal and planetary health. Another 34 million people are called “Naturalites.” Naturalites aren’t as politically committed as their LOHAS counterparts are, but they do focus on purchasing natural and organic foods and products.In the Global Workforce Study, Towers Watson found that “Corporate Social Responsibility” Was the third largest driver of employee engagement and motivation. With this trend growing larger every day, it’s important that companies find some way to fold it into their employee recognition programs going into the future.
Where the industry goes from here is entirely up to it. The uptick in the economy means that 2012 will be a better year than we’ve seen since the beginning of the recession. Plan a way to keep your employee recognition program up to date with current technologies and trends and your employees will show their appreciation by giving more time, energy, and dedication to your cause.
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