A new survey by the Incentive Federation concludes that noncash awards are powerful motivators, while bonuses are another story. In the study of 600 business owners and managers, three out of five respondents said their employees consider their bonuses to be part of their total remuneration, while they think of merchandise and travel awards as a special form of recognition — a gift from employer to employee.
In fact, 68 percent of survey respondents said bonus payments can have a negative effect if they are not paid or are not large enough.
Despite the downturn in the economy, the survey shows that companies are spending more on incentive merchandise per recipient and including more people in their incentive programs as compared to 1999, when the Incentive Federation did its last survey. The two biggest growth areas: consumer programs and sales incentives.
Here's how the responding companies have grown their use of merchandise and travel: 77 percent use them for consumer promotions (compared to 66 percent in 1999), 82 percent use them for sales incentives (up from 78 percent); 57 percent use them for dealer incentives (up from 48 percent); and 67 percent use them for nonsales employee recognition (up from 61 percent). Individual domestic travel was the most popular choice for consumer promotions, while group domestic travel is the tool of choice for sales and dealer incentives.
Three out of four respondents (76 percent) base quotas for sales improvement programs on previous sales for the duration of the program, and 61 percent base quotas on sales forecasts. The most common criterion for judging the success of a sales incentive was by total units sold. Other popular criteria used by respondents: profits on incremental sales, increased market share, and cost as a percentage of incremental sales.
The majority of the responding companies run five sales incentives per year and three dealer incentives. Programs run an average of five to six months.
The most popular merchandise awards were apparel, clocks and watches, desk accessories, food and beverage, gift certificates, plaques and trophies, tools, and writing instruments.
What will be hot for the future? Gift certificates, especially for consumer promotions, and sales and nonsales incentives. On the merchandise side: plaques, trophies, and apparel for all uses. Also, writing instruments are expected to grow faster than any other gift category. On the travel side, individual incentives to domestic locations are expected to grow fastest, especially for nonsales uses.
Another area that shows significant growth is the use of the Internet to run incentive programs. Fifteen percent of respondents said they have used the Internet for programs, up from only 4 percent in 1999.
The Incentive Federation study, prepared by the Center for Concept Development Ltd., targeted executives in the manufacturing, services, finance, insurance, transportation, and communications industries, among others. For more information, visit www.incentivecentral.org
Most Popular Awards for nonsales employees
plaques and trophies
watches & clocks
food & beverage
leather goods & books
SOURCE: Incentive Federation