IRF Study Has Big Wake up Call to the Industry on Program Design

An IRF study based on interviews with 45 top program planners is a must read for anyone in the incentive or related rewards and recognition business about both the opportunities and challenges facing the business. A telling conclusion: “Hard-won expertise combined with the ongoing success of their programs creates a level of satisfaction with the status quo.”

Key Findings
A Stunning Conclusion for IRR Industry Leaders

Confirming what RRN has suggested for years, forty-five top buyers of incentive programs told researchers involved with the IRF’s 2019 Voice of the Market: The Use of Non-Cash Rewards and Recognition that they generally don’t consult their incentive company vendors on incentive program design and don’t even know such services exist.

“The majority of program owners interviewed this year appears to be largely unaware of the deep experience and expertise that exist in the incentives industry. If using an outside partner, it is to source rewards and manage the program ‘platform,’ rather than engage in program strategy or design.” The report adds, “Most companies begin their use of incentives with home-grown reward and recognition programs. Over time, program owners develop a strong understanding of how to motivate and influence their target audiences by trail and adaptation.”

The report adds, “While metrics are often anecdotal (how excited and engaged were participants?), program owners are vigilant about the design approaches and tactics that yield stronger results and edit programs period-over-period to maximize their effectiveness. This is particularly true for short-term programs with narrow objectives – program success is more immediately discernable, and learnings can be applied to the next program in quick order.”

Key Findings

Organizations have an expansive view of non-cash rewards and use all types in many combinations. Gift cards are popular when ease of administration is key, or there are many people are involved. Organizations turn to merchandise when the goal is to create excitement, buzz, and a reward experience is desired.
Travel is considered the “penultimate reward—expensive and difficult-to-administer but offering enormous impact from an experiential perspective.”
A dynamic approach to rewards and recognition. Organizations specifically use rewards and recognition because of their flexibility and adaptability and not necessarily as part of long-term programs.
Competitive pressure plays a role in reward and recognition emphasis, the study found.
Communication can be enhanced—while respondents seemed satisfied with program design, many admitted that room exists for improvement in getting the messages across.
These buyers generally have no professional networks in the incentive space and do not frequently connect with “experts” on design, nor had their web searches yielded anything compelling, they reported.
More understanding of the reward experience. Buyers did seem to have a firm understanding of the difference between compensation and rewards and recognition. “There is intuitive recognition that memorable rewards will have a more lasting effect on engagement, and that ‘memorable’ will be different person-by-person. Many program owners noted that even the recognition aspect of a reward needs to be personalized, as some people may enjoy public acknowledgment while others prefer a more individualized approach.”
Cash and cash-equivalents favored for ease of administration and speed. Even strong proponents of non-cash rewards weave cash and cash equivalents into their programs because of the need for speed, ease of administration, or to manage a large audience.
Planners don’t necessarily have and are not called upon to provide clear ROI measures. While highlighting the types of KPIs (performance measures) organizations say they use, the report noted that, “While they prefer to be prepared with this data, they note it is rare that they are asked to review this data with the management team. Instead, there tends to be broad support for these initiatives at the executive level, and programs are accepted as part of the organizational culture.” As for performance-based programs, such as sales and channel incentive programs, as well as safety and productivity rewards and recognition for employees, “Programs that are designed to impact specific KPIs will be measured by their success in delivering the results desired. Because these programs emerge from a need to address metrics, there is a natural measurement system (and baseline of performance) already in place. Program owners do not spend much time or energy analyzing results, as they are often self-evident by the nature of the programs.

Across all types of reward and recognition, the primary success indicator used by program owners is the energy and enthusiasm of the participants. The ability to ‘get people talking’ is a paramount achievement, regardless of the type of program or reward. While imprecise and perhaps easily dismissed by advocates of more stringent techniques, it is a universal ambition among program owners and the ultimate representation of the true goal of these programs – to fully engage an audience in a unified objective.”

A Stunning Conclusion for IRR Industry Leaders

The report spells out a stunning contradiction between the 20 years of research on the most effective practices and the confidence that planners have that they know it all despite almost no outside assistance, networking, training, or even awareness that such information exists. The report’s conclusion is worth reading word for word by anyone who cares about this field.

“As with prior IRF studies, the 2018 Voice of the Market interviews demonstrated that reward and recognition program owners invest in and are extremely proud of their initiatives. Many are self-taught program designers, but their deep desire to engage their participant audience in meaningful ways means they have put great effort into determining the most effective ways to energize their participants around the company objectives. They have rich and critical expertise on the microcosm of their firm – what matters, how to drive the needed outcomes, and what works with their audiences.

“These companies do not perceive a meaningful gap between their reward and recognition efforts and programs in other companies – any observed deficits would be corrected relatively quickly to remain competitive in the market. The goal is not to do a program that is ‘good enough’ but to drive outcomes by emotionally engaging participants in the program objectives. This is evident in the way program owners speak about their participants, their programs, and their plans for the future. These program owners are largely unaware of the incentive industry and the services and expertise available to them therein. While they have had to stretch to learn how to apply for reward and recognition programs most effectively within their organization, there is a strong sense that they have successfully accomplished what they were tasked to do. Hard-won expertise combined with the ongoing success of their programs creates a level of satisfaction with the status quo.”

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