News Analysis: How ISO 10018 Standards Will Affect Rewards & Recognition
Whether or not companies adopt 10018 Quality People Management standards, the new focus on processes, science and creativity will drive demand for more sophisticated solutions, a more personal and creative approach to awards and a more transparent business model.
Read the Art & Science of Engaging Rewards and it becomes clear that most traditional incentive, recognition and loyalty programs do not follow best practices. The 20 years of research from multiple sources still hasn't reached the front-line customers who use rewards and recognition programs...or perhaps they don’t believe the research.
Because few professionals in sales, marketing, or other areas of management have any training in rewards and recognition, it’s understandable that program design would fall short. The research not only suggests that most organizations overlook the potential power of rewards and recognition, it also means that when they do use them, they often do so in ways that yield inferior results. See the Art & Science of Engaging Rewards and News Analysis: Independent Academic Research Supports Engaging Rewards Principles.
Common design and implementation mistakes include:
- The desire by management for a quick fix, 'do this, get that' approach that relies on bright shiny objects rather than a strategic approach.
- Carrot-oriented programs that focus people on the rewards instead of the results, often promoting unintended behaviors.
- Failure to address all the other leadership, assessment, communication, learning and other factors that affect engagement and outcomes in a strategic way.
- Program designs that reward people who would have achieved that level of performance anyway.
- Using cash-equivalent reward strategies that get confused with compensation, pricing and benefits.
- Failing to maximize the reward experience through careful selection, customization and personalization, rather than the general practice of using cash-equivalent programs.
What’s the potential impact of a more scientific approach?
- A need for people with formal expertise, experience and training who know how to apply the science with an understanding, as well as the art of engaging people.
- A need for an entirely new approach to reward selection and delivery that is highly personal and relevant to each individual and which is designed to foster a personal connection rather than the equivalent of bonus or price discounts that are forgotten almost as quickly as they're spent.
- A new transparent pricing model for solution providers that pays for their expertise and technology, as well as for the performance their strategies generate, and that separates the cost of rewards selection, customization, management, technology, fulfillment and customer service as a separate line item.
Billions Spent on Inferior Strategies
Organizations spend billions on incentive, loyalty and recognition programs that miss the mark. A textbook example of oversights is the recent announcement by Hilton that enabled customers to redeem points for Amazon.com. Most people purchase from Amazon, many love it, and the majority believe that Amazon.com sets the benchmark for value. But what impact will those awards have when they come into the home with the regular flow of Amazon and other retail boxes? When a loyalty award arrives in the home of a loyal customer, it should arrive in a way they’ll never forget. Apparently, it rarely occurs to anyone in the loyalty or incentive business that these products are being redeemed by their most valuable customers or employees. The Hilton program fails on almost every key gauge in terms of best practices by doing nothing to separate the rewards from the appearance of a cash equivalent or to create a special and personal bond. All the research on engagement, as well as the ISO 10018 standards, underline the importance of an integrated approach to customer loyalty that touches all the levers of engagement and that makes people feel special by being sincere.
Why Should Reward Recipients Pay for Reward Markups?
Well over half of all rewards and recognition programs fold the costs of technology and program management into the reward cost and pay the solution-provider upon redemption instead of when the desired behavior is rewarded. If the goal is to drive sustainable performance through fun, meaning and expert ongoing implementation, why should solution-providers have to wait until the reward is fulfilled to get paid for their services? Why should recipients have to pay for design, project management and technology services through the markups on the products they redeem?
One of the most frequent complaints in sales incentive programs is related to the low perceived value of points when employees compare the point value of an incentive item against the cash price of online retailers. That’s often because the legitimate costs to the solution provider are buried in the markup.
Here’s why ISO 10018 standards create a major opportunity, both for organizations that use rewards and recognition and those that sell them. ISO 10018 standards are completely voluntary and transparent; anyone can follow them with or without paying outside consultants, experts, or paying for the right to display the ISO 10018 Quality People Management logo. ISO 10018 standards provide a roadmap that organizations can follow to benchmark their strategies and to vet potential vendors, whether or not they seek a certification. As more organizations understand the need for expertise in program design, they will be able to use the ISO 10018 framework and best practices in each field of engagement to better select solution-providers, and solution-providers in turn will have a clear model against which to benchmark their own training, sales and marketing initiatives. Savvy solution-providers have a load of evidence to help clients achieve better, more clearly measurable results.
The International Center for Enterprise Engagement (ICEE) will present the first audit tool for ISO 10018 Quality People Management Dec. 7-8 in Galveston, TX. Go to TheICEE.org for more information on that event, or click here for a primer on ISO 10018.
