What is up with senior management when it comes to incentives? Why don't they use them more often?
A recent SITE Foundation study, the result of a year's worth of research, shows that when incentive programs target individual employees, performance increases by 27 percent; when they target employee teams, companies can see a 45 percent boost in sales. When researchers talked to workers, they found that 92 percent of them credit incentive programs as the reason they reached their goals.
Yet half the the corporate world doesn't buy into them, according to SITE Foundation President Mike Hadlow, president of US Motivation, Atlanta.
“It's largely a matter of unenlightened management. There's still a corporate philosophy out there that says, ‘We pay our people, and that should be enough,’ and the majority of companies simply think they're too much of a hassle to administer and manage. They don't necessarily know that they can get help to do this.”
Of companies that do use incentives regularly, most do so only for their sales departments; perhaps more significantly, they limit awards to the top echelon of performers.
“What this research conclusively shows,” Hadlow says, “is that incentive programs are appropriate for all employees, and that to limit them just to your top performers is pennywise and pound-foolish.”
What's needed is more education, adds Howard Henry, founder and executive director of the Incentive Federation, Westfield, N.J. His organization has also done research into the effectiveness of incentives and why companies are reluctant to buy into them.
“We found that 48 percent of companies employing 1,000 or more are concerned about their cost,” Henry says, adding that this figure is likely higher now because the survey was done in early 2000, when the economy was stronger. He sees his organization's job as overcoming this resistance and lack of understanding.