In the cutthroat high-tech recruiting environment, companies need strong retention programs to keep employees from walking out the door. One of the most common mistakes is expecting compensation--including cash bonuses and stock options--to play the role of an incentive. Compensation is essential, but it's not enough to recognize employees for outstanding efforts, whether they have closed a key deal or beaten their research deadlines. Employees need to be motivated and rewarded--not just paid.
A recent study sponsored by the Incentive Federation polled top management at companies across the United States and found that 69 percent of respondents agreed or strongly agreed with this statement: "Travel and merchandise awards are remembered longer than cash payments." Remember that the next time you watch an employee pack up his desk and head off to the dot-com down the street.
Unfortunately, even if you know your company needs a reward system, it's easy to get it wrong. To begin, get to know your demographics: Potential participants' age ranges, travel preferences, work demands, and previous recognition rewards will help to determine whether travel or merchandise is right for your people.
Travel Options Group travel. If the objective of your incentive program is to reward and recognize top achievers, consider group travel. Recognition and relationship-building opportunities abound when top performers are together in a relaxed environment. With a group program, it's also possible to include meetings to discuss company products and objectives.
Individual travel rewards. Schedule conflicts may not afford a top achiever the time to make a group trip. Other incentive winners may simply want to do their own thing. Individual travel awards provide convenience: Incentive winners schedule their trip when it suits them and their families.
Limiting incentives to travel can be problematic. In most cases, travel rewards go to only the top 10 percent to 20 percent of a company's performers, and there's a risk of alienating the rest. Combining merchandise and travel rewards is a way to offer more performance levels a chance for recognition.
Merchandise Awards Catalog programs. A catalog program allows for a tiered approach to rewards and avoids the "winners and losers" perception sometimes associated with travel rewards. Participants accumulate points and redeem them for products: apparel, tableware, electronics, and so on. Historically, catalog programs only included merchandise; now they offer individual travel rewards, or even certificates, as well.
Gift certificates. Generally, gift certificates differ from catalogs in that winners may choose from just one retailer's selection. Like catalogs, the appeal of gift certificates stems from their convenience. Recipients can choose exactly what they want, when they want it. Setup and administration costs are nil.
Debit cards. These come in two basic types: those that can be used at select locations and those that can be used at any store.There is a risk with the latter that winners will use the money for necessities such as food and gas instead of more memorable merchandise. Your company logo on the card is the only improvement on the practice of handing out cash. Cards can be used once and thrown away or kept as part of an ongoing program. The latter requires significant administration, as participants need to be sent monthly points statements.
Whichever reward style works for you, remember that cash bonuses and stock options are everywhere. An innovative reward program is one way your company can distinguish itself and at least slow down the revolving door.