“Spectacular achievement is always preceded by unspectacular preparation.”
— Robert H. Schuller
A Dedication to Research-Based Effective Engagement Practices
Level Up was founded on the premise that organizations will achieve the best results from their incentive and broader engagement programs when they apply the latest, science-based best practices on how to design effective programs to motivate people to achieve their goals.
Key Research Insights
Level of ROI Measurement is Shockingly Low
Only about 25% of corporations have a formal strategy for measuring the return on investment of their incentive programs, according to this latest Incentive Research Foundation research study: Incentive Travel Industry Outlook. (see slide 27) Level Up is dedicated to helping organizations build return-on-investment into every program.
The Importance of Distinguishing Between Recognition and Compensation
While no one argues that cash is highly motivating, extensive research demonstrates that cash is inappropriate as recognition for performance incentives and recognition programs. This is because it quickly becomes confused with compensation. Research indicates that non-cash rewards work best when the purpose is to draw attention to specific behaviors or goals in programs that might not be continued on a regular basis and to help tell a story that engages people. Non-cash awards create a buzz, are clearly understood as a special thanks for performance that is not part of the regular compensation package, and do not become expected. Cash used as an incentive does not generate the same level of buzz because people do not generally discuss compensation with colleagues. Cash is easily forgotten and becomes lumped in with the family budget. Cash SPIFF’s can also cause program addiction: people come to expect them as part of their overall compensation package and feel entitled to them.
The Need for Effective Program Design
Many organizations that run incentive programs and their solution providers often make the mistake of focusing too much on the reward, and not enough on the program design. People are complex and the reliance on carrots without addressing other elements necessary to drive performance can result in short-term bad behaviors such as fudging on performance reports, pushing clients to buy something they don’t need, changing the timing of a purchase, or other questionable behaviors to game the system. In addition, carrots alone do not address the communications and skills required that often stand in the way of performance. Effectively designed programs address all the levers of engagement.
Source: Incentives, Motivation, and Workplace Performance, the Incentive Research Foundation.
How to Avoid the Budget Nightmares Caused by Unanticipated Success
Properly designed incentive programs using what’s known as the open-ended design approach have the advantage of rewarding everyone who meets their goals, rather than closed-ended programs, which only reward the top performers. Closed-ended programs carry the risk of discouraging all but the top performers who know they’ll qualify for rewards. The challenge with an open-ended program though is: what happens if everyone earns points? While this should result in an overwhelmingly positive ROI with the program being funded fully from incremental gross margin dollars, it can sometimes be viewed by management as a new expense rather than an investment in growth. There are several ways to address this: 1) Determine the right metric(s) to track. This could vary based on each company’s objectives, but it is critical to identify and quantify this on the front end since it creates the benchmark against which to measure future program results. 2) Do financial modeling against this metric using historical results. Introduce industry and/or similar company benchmarks to determine how many invitees will likely participate and how many will earn. Level Up can not only help with pre-program budgeting projections but can also provide monthly executive summary reports so that there are no surprises at the end of the year. 3) Build into your budget a “best case” scenario—make sure your chief financial officer is presented with the costs of the program if it should outperform anticipated results so there are no unpleasant surprises on the cost side of the ledger. 4) Set up your program so that your company keeps the breakage—that is, the value of the unredeemed points, which can range up to 15% of all points distributed. Level Up welcomes performance-based fees that pay us for the results we achieve and not for breakage on points that people fail to redeem.
Best Research Resources
Incentive Research Foundation
An organization that offers a wealth of research and surveys that Level Up frequently references for program design and other information.
Incentive Marketing Association
This organization’s practitioner program is the most comprehensive learning program in the business and is used by Level Up to make sure programs include the most effective practices.
Enterprise Engagement Alliance Academy
The learning program at EEA.tmlu.org contains many of the principles we use to make sure programs address all the key levers of engagement.
Recognition Professionals International
This comprehensive learning program covers all the key elements of recognition program design and is incorporated into all of our recognition design processes.
World at Work
This organization provides surveys and annual reports on the latest effective rewards strategies.