Understanding the Pros and Cons of Employee Incentive Programmes

Sometime back, I met a friend of mine, who is also a HR Manager. It was really an interesting conversation as he shared about the challenges he faced when he decided to give incentives to his employees. 

He mentioned that problems arise among his employees when the Employee Of The Month  was chosen and the management gives him an incentive for his achievement. The co-workers  express their dissatisfaction as they fell like there is 'favoring factor' involved when selecting the Employee Of The Month ( some how, the same person was nominated for 3 months in a row).  They felt that since the workload is been shared equally, the incentive should be given to all to make it fair.

So, the management decided to introduce Group Incentives instead. Yet, another problem crop up. Team members feel that not all the members should be entitled for the incentives as there are some 'lazy' ones in the team who does not contribute to the team's success.

This is just one scenario out of thousands of challenges faced by the HR Department. Discussing about the pros and cons about employee recognition problems draws the question whether these system are outdated. 

Since the modern day job descriptions outline in details the employers's expectation and employees are briefed about the disciplinary action for workers failing to perform, is it really necessary for employee reward programs? Is there really a need if it only causes dissatisfaction and ill feelings? The short answer is- YES!

Recognizing efforts and superior accomplishments serve to motivate the employees. Employee recognition programmes provide the formal 'pat on the back' for job well done.

Lets look into the pros and cons of employee recognition progammes.

The Pros of Employee Incentives Programmes would be :

• Employee recognition programmes reward employees who achieve the business goals. This opens door to rewards for hard work, creativity, loss prevention and initiative by employees at all levels.
• Increases employee loyalty and retains good employees.
• Promotes good relationship between the management and the employees.
• Motivate employees to perform to their potential, for the higher and better their performance, the higher their rewards. It helps in establishing a competitive performance oriented work culture and an environment of continuous learning, improvement, and innovation where employees take responsibility for the outcome of their work

The cons of Employee Incentives Programmes :

• Management selection of employees leads to allegations (or actual cases) of favoritism.
• Limiting recognition of an employee to only one occurrence per calendar year supress the continued willingness of the employees to excel.
• Unrealistic incentives will de-motivate employees- for example an employee who just invented a way to prevent some computer virus which can save thousands of ringgit,should get more than merely a computer-generated certificate and a mug with the corporate logo.

However it is, at the end of the day, the overall success or failure of a recognition programmes is determined by the way it is structured and administered.

The discussion over the pros and cons of employees recognition programs should never been an issue at all as its clearly the way to move forward to have a strong corporate culture and happy employees.

The Carrot Culture : Power of Employee Recognation

When we talk about employee benefits, the one  most important thing that comes to my mind is the Carrot Culture, which is getting  popular among the employers and seen as an effective ways of employee recognition method.

For those who are new to Carrot Culture, let me explain to you what is it all about.

A Carrot Culture is an environment where employees are valued and appreciated for their contributions - creating passion and performance. Every major workplace survey conducted in the last twenty years has shown the need for praise and recognition in driving business results. In fact, long-term success is almost impossible without effective recognition.

A lot of organization is opting to the methods of recognition of Carrot Culture and sure enough it is doing miracles to them and definitely increasing the performance of their staff.

Now, what are the ways to implement recognition programs in the most effective way?

These are the areas to consider to have a win-win environment with your staffs. 

Positive - managers sometimes use a recognition presentation as a time to talk about how far someone has come, or how they could have done even better. This is not the time or place. Comments must be positive and upbeat.

Immediate - too often by the time an employee is recognized for a job well done, weeks if not months have passed. Obviously the closer the recognition to the actual performance the better.

Close - recognition is best presented in the employee's work environment among peers. Invite the person's team members and work friends to attend.

Specific - a great presentation is a time to point out specific behaviors that reinforces key values.

Shared - typically, recognition comes from the top down; however, recognition that means the most often comes from peers who best understand the circumstances surrounding the employee's performance. Peers, as well as managers and supervisors, should be able to comment during the presentation.


Put these suggestions into action and see the wonders that the culture will do. Good luck! 

Why Are Employee Benefits So Important?

Joe Dunlop is a business consultant and an adjunct professor at Steven Henegars College in Salt Lake City, Utah. Understand why employee benefits are so important and how it encourage employees to stay on the job even when there are higher-paying job opportunities.

Why Does Everyone Hate HR? What Went Wrong?

 Every leader knows that people are a firm’s most precious asset. Every leader should know that investing in people is more efficient than investing in technology. And seven percent of CEOs say they don’t have the talent they need to execute their strategy effectively.

So why is HR always the least important voice at the table? And why does everyone hate them?

In most companies, HR lacks organizational clout because it doesn’t have its own P&L. No revenue = no influence. That some firms have outsourced their HR function goes to show just how low it can fall within the corporate power structure. Others claim that HR doesn’t exist to do anything — it’s just there to prevent lawsuits. Focused on compliance, it has neither the mandate nor the will to go beyond mild-mannered policing, which just annoys everyone. And the poor naïve employees who think that HR is “on their side” soon discover the opposite: that HR exists to make bosses’ lives easier when they want to get rid of someone.

No wonder HR professionals are frustrated. They know how important they could be. Often, intellectually and professionally, they are light years ahead of the departments they service. They can see clearly many of the issues that bedevil their organizations and would like the authority to direct change. But they almost never get it. Instead, they’re forced to witness countless executions, insuring that terminations are conducted appropriately and desks cleared without a fuss. It’s enough to make anyone hard and defeatist.

There is another way. The firms that think most seriously about this problem are professional services firms, because they rarely have any assets except people. They’re innovative because they have to be. And their most recent innovation could change the HR game. It’s a rule, within some firms, that no one can be considered for senior partner without serving at least one year in HR. If you want to lead your firm, you have to have first-hand experience overseeing the assets. You may know a lot about money, but you get nowhere if you don’t know a lot about people, too.

A year is not enough to turn a number cruncher into a people person, but it is long enough for them to absorb the economic importance of developing talent. Institutionally, the fact that any serious player sooner or later must work in HR means that all aspirants have to treat the function with at least a semblance of respect. And when people issues are discussed at board level, it means that even executives with massive P&L responsibilities have some concept of human beings. It’s a cheap, effective game changer.

Are you really helping your employees to bring out their full potential?

Source : Margaret Heffernan,BNET

How to win customer though Incentives?

This interview was done by Dog and Pony - a daily interview show of new business ideas. This particular interview was with the CEO of Office Supply Max, Jonathan Avganim on how he uses some creative ideas of giving incentives to his clients.

Source : The Dog and Pony Show.

Knowing What Incentives to Give to Customers

I read this article, from All Business,talking about the effective ways creating customer incentive programs. As we are aware, customer loyalty or incentive programs are everywhere now. Whether it is a free pouch for a magazine, downloadable coupon, or reward filled e-newsletter, these kinds of programs can be essential for increasing customer database, retaining the old ones and finding out what the customer really want from you.

Some very interesting facts to consider while creating a customer loyalty programs.

Meet the needs and wishes of your specific target audience. 

A paint shop giving away paint brush won't work in a pet shop as well as a free dog collar might. Give the people what they want. 

Increase customer loyalty. 

For years, knowing that children outgrow their shoes in a matter of months or even weeks, children's shoe stores have offered a great discount on the tenth pair you purchase. Car washes and haircutters do this as well. If you sell something that customers need often, you can make sure that they return to your business by providing a similar loyalty incentive. 

Add a service or accessory. 

If you sell windows, offer a free cleaning. If you're selling exercise equipment, provide an exercise video. If you sell handbags, you can include an umbrella to fit inside the bag. Low-cost perks can go a long way -- just keep a close watch on your profit margin. 

Promote new items.

In general, people do not like change. Therefore, if they are reluctant to try something new, add a freebie. This can also serve as a great free promotional gift with purchase. 

Boost slow seasons. 

Many business owners find that two-for-one specials and various other shopper incentives draw in customers during slower times of year. 

Combine with your marketing efforts.

Have customers fill out a short survey to get a free soda, the above-mentioned umbrella, or other appropriate product. Your goal is to get more information on your customers, without crossing the line into personally identifiable information. It's a worthwhile trade if you can fill your data bank with the likes and dislikes of your customers.

Source: allbusiness.com   

    

Incentives - A brilliant Marketing tool

Businesses around the world are going through heavy competition to reach to their customers and market their products. The video below provides a very simple yet powerful tool for businesses to be different and stand out among their competitor. Incentives are a great way to increase sales and to make your customers happy!

Have a look at the video from Marketing Best Practices. You can download free e- books on marketing ideas from their website too.



Source: Marketing Best Practices.

Non-Cash Incentives to Boost Sales

 I came across these interesting findings that supports the fact that using non-cash incentive does a great deal in increasing sales and also a fantastic method to use as part of your customer retention and employee benefit programs. Mind blowing facts and figures...

• Over 65% of business owners strongly agree that "travel awards and merchandise are remembered longer than cash payments and that you can build a more exciting and memorable program around travel and merchandise than you can with cash." 
  Study conducted by Incentive Federation, USA

• Loyal customers not only spend more on each visit, but also are twice as likely to refer a new customer. Loyalty is the key to growth. Fred Reichheld, research author of the book “Loyalty Rules!” It costs 6 to 8 times more to acquire a new customer than it does to keep an existing customer coming back again and again.* September 2007 American Express Market Brief

• Companies with high levels of employee engagement improved their operating income by 19.2% .While companies with low levels of engagement saw their operating income decline by 32.7% over a 12 month period."FORUM - The Economic Case for People Performance Management and Measurement", December 2007.

• KPMG’s "People First" Recognition Program has made a big impact – a 3.6% fall in turnover, saving $3 million and $5 million per annum. The Australian Financial Review, ‘Work Space’. Knowledgeable and attentive employees account for 80% of the reasons consumers feel satisfied, PNC Bank Corp. survey, USA.

• Fewer than one in four American workers is working at full potential; half of all workers do no more than directly asked, and 75% of employees say they could be more effective in their jobs. Public Agenda forum, USA

• 70% of unhappy customers abandon vendors because of poor service.
  Forum Corp, USA. A 5% increase in customer retention can increase lifetime profits from a customer by 75%, Loyalty Effect by Frederick Reichheld.

The Motivation Show

Companies in the US are finding out that offering incentives to increase sales does wonders. Companies spend almost 30 Billion Dollars every year on incentives with the hope to give their employees a reason to go the extra mile and bring in the big sale! 

The Desirability of Incentives

Numerous surveys and studies have been conducted in the effort to identify which rewards people want "most". While the list below reflects the kinds of incentives people commonly say they want (which should indicate the rewards that elicit the greatest motivation), we've found that the effectiveness of rewards varies considerably.

Incentives in Order of Desirability

• Travel
• Brand name merchandise
• Gift cards/Stored value cards
• Recognition items
• Cash

Cash or gift cards are easily understood and universally accepted. They have an immediate gratifying impact but little or no lasting trophy value. Travel sets high expectations, has a trophy and memory value and frequently enrolls spouses or others into the motivational process. Merchandise, both high and low value, allows each individual to set their own targets and has the longest sustained trophy value.

On the flip side, cash is quickly spent--often on routine bills--and quickly forgotten. Travel is only as good as the actual experience and merchandise can break, go out of fashion or reach a point of diminishing returns in the minds of recipients. The ideal program understands the stimulus and response value of each tool and incorporates many tools to account for the different psychological buttons they push. Similarly, a well constructed program offers enough enticing reward choices to encourage each individual to set their own preferences.

The Strengths of Non-Cash Programs Motivate specific behavior Build teamwork Enable on-going measurement and insight Establish a unique competitive advantage Provide lasting trophy value and linkage to achievement Improve teamwork Improve administrative efficiency Increase ROI and profitability The Limitations of Cash Rewards Salespeople earn commissions Cash doesn’t add motivation Cash pays routine bills Cash has no trophy value Cash is forgotten after it's spent and sustains little, if any, association with achievements