Do Incentive & Recognition Awards Programs Really Work?

According to a study conducted by Kluger, Avraham and Angele DiNishi entitled “Feedback Interventions: Toward the Understanding of a Double Edged Sword” and published in Current Directions in Psychological Science.

· 1/3 of all non-cash incentive programs actually decrease performance
· 1/3 of incentive award programs produce no results
· 1/3 of incentive award programs did produce results.

While this type of research was rarely shown to a client, it was something that many of us in the industry knew because of ROI analysis we had done on many of the programs that we implemented. Of course our results were typically better than the average, because we knew the steps to take and different rules to use to give the program a better chance for success. Even then, it was not uncommon for a program to have only 50% of the participants actually performing above goals, earning awards and producing results. The wise industry sales people told this to clients to manage expectations; the not so wise took the money and hoped that the program wouldn’t blow up in their face. If it did, it would be the last program they sold to that client. If it didn’t they would all go along dumb and happy and keep implementing marginally successful, or often unsuccessful programs. I’ve seen programs like this stay in place for years until some executive finally challenged their own management on why they were spending the money and what they were getting in return. At that point, the baby poop usually hit the fan. In future posts we’ll discuss this phenomenon of apathy toward ROI and other lack of measurement.

Over the years, I’ve seen many estimates of the size of the incentive industry. These estimates range from $35 Billion to $65 Billion. No one really knows for sure because there are so many pieces to the industry.

As of today, the Incentive Marketing Association pegs the number at $46 Billion! It is so large, they say, because incentives do work! Really? Well some do but most don’t

Based on the current estimate and the above study:

· $15 Billion is spent by corporations on programs that actually decrease performance
· $15 Billion is spent by corporations on programs that have no effect on performance
· $15 Billion is spent by corporations on programs that do produce results.

WOW! Wouldn’t it be nice to have a job where you only had to be right 33% of the time? Well, many in this industry do!

As we delve more into the inner workings of the incentive and recognition industry, I’m sure I will find friends who will agree with me and foes who don’t like someone exposing all the secrets that the industry has kept from clients for years. But, now with the internet, so much is changing that it’s about time that we take a look at where we’ve been and what might be ahead of us.

I look forward to sharing this information with you in this candid and open forum and hope you find our discussion informative, lively and fun. If you have anything you want to add, or any question you want to ask, please let me know.

While my baby might be ugly, for all those parents out there, yours certainly isn’t!

Just remember, if you’re implementing a non-cash incentive, motivation or recognition award program...there’s a 66% chance that your baby is ugly!!

Be Well, Be Happy and Hug Someone