The insurance and financial services industry is among the longest and most loyal users of incentive programs—in particular, incentive travel programs. Which means you could look at those programs as the most established and proven in Corporate America. Or you could say they are the most in need of change.
LIMRA, an association for the financial services and insurance industries, and Maritz, a performance improvement and research company, set out to gauge the state of financial services reward and recognition programs by partnering on a survey of 5,400 U.S. and Canadian producers from 20 LIMRA member companies.
They discovered, says Jim Ruszala, senior director of marketing, Maritz Travel, that while many programs do motivate producers, companies need to go beyond year-over-year improvement of potentially decades-old traditions—an approach that amounts to “better sameness.”
That’s clearly not enough today, with so much more scrutiny of the investment in incentive programs and whether that investment yields business results. This scrutiny is especially pronounced in financial services. “Companies are no longer focused only on spend reduction, but on the effectiveness of programs,” Ruszala says. That means that the definition of is evolving from a purely financial measure to a longer-term consideration of measures such as recruitment and retention of talent, customer loyalty, marketshare, teamwork.It’s also about what executives believe are a company’s values, and what producers perceive as that company’s values. One result of a well-designed incentive program is to bring those beliefs into alignment.
How Much Free time is Enough?
So what does “well designed” mean, exactly? The LIMRA/Maritz report suggests that one way to engage the greatest percentage of participants is to look at the participants’ own values. The study asked respondents to prioritize a list of 10 personal values (tradition, self-direction, power, benevolence, and others). Ranked highest overall were “self-direction,” “achievement,” and “security.” According to the executive summary, “Typically, in a sales-oriented audience, achievement is found to be the predominant value. However, as the independent agent is a key subset of this audience, self-direction rose to the top.”
This preference for self-direction should be kept in mind when companies are designing their programs. For example, consider that in another part of the study respondents worked through a predictive modeling exercise designed to reveal the optimal incentive travel experience. That optimal trip included no scheduled daytime activities, scheduled dinners or events on “some evenings, but not all,” and “a pre-paid debit card to use on select individual activities” rather than organized group activities. Obviously, a trip in which participants do their own thing 24/7 is not optimal for a company’s needs! But you might consider loosening up the agenda somewhat to allow for as much free choice as possible.
Of course, group incentive travel is not the only potential reward in the mix. Asked to rank 16 types of rewards that top producers might typically earn, respondents put cash on top, followed by family group travel, group travel, and certificates for individual travel. Asked to rank 12 types of rewards that might be earned for reaching lower objectives or for making progress toward a larger goal, respondents also put cash at the top of the list, followed by gift cards, travel certificates, and earning “points” to save or spend on items or services.
It would seem that an incentive strategy that includes multiple types of rewards could push the maximum number of participant buttons, and that is, essentially, what the LIMRA/Maritz report advises. The question is how, practically speaking, a company could put that together.
According to Ruszala, companies have found ways to mix their rewards, sometimes using smaller items such as gift cards as “booster shots” within a larger program, or by integrating additional rewards into a group travel program. “The 12 to 18 months of a typical incentive travel cycle is a pretty long time,” he says. “How can companies keep producers engaged?” It’s easy at the beginning, when the program is announced and excitement levels are high. “But when you hit the midway point, people start thinking, ‘I’m going to make it’ or ‘I’m not going to make it.’ They stay engaged or they become disengaged. There are a whole set of design approaches to manage that—running a tiered program, offering upgrades on site, or extra subsidies for guests.”
But each company needs to determine its own level of program complexity. “The incentive industry is becoming much less ‘one size fits all’ and more geared to an organization’s specific goals and its own audience,” he continues, attributing this trend in part to the greater number of stakeholders involved these days. Planning, sales, human resources, procurement, and marketing are all involved in decision-making with regard to reward and recognition. “The legacy practice is that one department owns the program. Now a company needs transparency and needs to provide relevant, meaningful value, not just a financial return. That is a cross-functional effort.”
It could also be an effort that has to start from the ground up. As Ruszala puts it, “What’s needed is not just spring cleaning but a massive overhaul.”