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THE SOLUTIONS YOU’RE LOOKING FOR CONVENIENCE. YOUR

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W E ’ V E G O T T H E S O L U T I O N S . C O N TA C T U S T O D AY, A N D D I S C O V E R W H AT T H E M O VA D O G R O U P C A N D O F O R Y O U . W W W . M O VA D O I N C E N T I V E S . C O M

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IN(CENTIVE) FOCUS Digital Cameras to Inspire Your Best Emily Tipping Whether your target is a dad wanting to capture his son’s best moves on the ballfield or a 20-something who loves to travel, a digital camera is sure to appeal. Here are some of the latest trends to consider.

THE GIFT THAT KEEPS ON GIVING Gift Card Reward, Incentive Programs Continue to Thrive Deborah L. Vence Like everything else, gift cards took a hit in the recession, but because they offer so many choices to recipients, they continue to thrive in incentive and reward programs.

THE ABCs OF ENGAGEMENT Taking Employee Recognition Back to Square One Heather Racansky The term “engagement” gets a lot of play these days, but that doesn’t mean everyone has mastered the concept. We take a look at what engagement is, and offer some basic first steps to get you going.

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THE ECO-INCENTIVE REVOLUTION Dana LaSalvia You may think that greening your incentive program is just a feel-good measure. But green isn’t just good for the planet—it can be good for business, too.

THE CASE FOR INCENTIVES IN THE NEW NORMAL Jennifer Kallery Businesses are adjusting to the new normal in the wake of the recession. Growth in the wake of staff reductions and people-related expenses requires investments in those left behind.

ASSESSING AMAZON’S EXIT Ira Ozer Now that Amazon is no longer working the merchandise side of the incentive market, what will happen to the estimated $250 million redeemed through that channel?

MEASURE FOR MEASURE Maximize Value Form Your Incentive Program Rick Dandes Even before the recession hit, company leaders were demanding returns on investments in their workforce. Now more than ever, it’s critical to defend your spending, and prove its value.

EARTH-FRIENDLY MOTIVATION Going Green Still Important Among Incentive Providers Dawn Klingensmith Even before the recession hit, company leaders were demanding returns on investments in their workforce. Now more than ever, it’s critical to defend your spending, and prove its value.

FROM THE EDITOR

What’s In a Word?

NEWS & NOTES THE INSIDER

Econmic Downturn Influencing Rewards Strategy

ON THE COVER BACKGROUND PHOTO: COURTESY OF KIM CARRETTE, MANAGER SALES, CANON U.S.A., INC. WITH A CANON EOS DIGITAL REBEL XSi & EF-S 60mm MACRO LENS

Canon Power Shot SD 1300, see page 22. PHOTO COURTESY CANON U.S.A., INC. Sony Cyber-Shot DSC-TX5, see page 22. PHOTO COURTESY OF SONY ELECTRONICS Nikon Coolpix S4000, see page 21. PHOTO COURTESY OF NIKON INC. Vivitar iTwist X018, see page 22. PHOTO COURTESY OF VIVITAR/SAKAR

ON THIS PAGE Fujifilm FinePix Z700EXR, see page 22. PHOTO COURTESY OF FUJIFILM Olympus SP800 UZ, see page 23. PHOTO COURTESY OF MAR-SAN

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IGCC CLOSE-UP:

TRAVELING COMPANIONS

Luggage & Leather

ALL THAT’S NEW & INNOVATOVE

PREMIUM INCENTIVE PRODUCTS is published bi-monthly and distributed free to qualified premium incentive product buyers by Hennessy Communications, LLC, 800 E. Northwest Hwy, Suite 111, Palatine, IL 60074. Phone: 847-705-6867; Fax: 847-705-6878; E-mail: [email protected]. Application to mail at periodical postage prices is pending at Palatine, IL and additional post offices.Copyright© 2010 Hennessy Communications, LLC. All rights reserved. Reproduction in whole or part without written permission is prohibited. Subscription rates: $50 per year in the United States, $75 in Canada, all other countries $100. For subscription information, call 847-705-6867. POSTMASTER: Send address changes to PREMIUM INCENTIVE PRODUCTS, P.O. Box 7370, St. Paul, MN, 55107

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Gift Cards That Motivate

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>> from the editor What’s In a Word?

H

ave you ever known a couple that seemed as much in love as 80-year-olds as they were when they first married? A couple that, despite facing difficulties, still managed to prove time and time again that a marriage can thrive? My grandparents were this way. Or, they seemed this way to me. They passed away within a couple of months of each other. But I can remember, even in their early 90s, they were concerned about each other. Neither one wanted to be the first to go, because neither wanted to leave the other alone. They took very seriously the idea of commitment, and “’til death do us part.” You’re probably wondering what’s got me thinking along these lines. I’ve been thinking about the word “engagement.” I’ve been pondering whether it is so overused that it no longer has much meaning. And I’ve been considering whether many among us—in HR, in sales, in various positions of great and lesser authority in our organizations—have actually been practicing what we preach. What does that have to do with marriage? Well, just as engagement can come in a whole array of colors, beautiful and ugly, so can marriage. And, I think, similar influences can affect the success of the long-term relationship between a couple, or between an employee and the company he or she works for. We all change over time. If we’re truly committed to our partners, we change together. We might find ourselves scratching our head over some of those changes. But somehow we muddle through together, despite all of this. Similarly, the people working for your organization are always changing. Learning and growing. And at the same time, the organization itself is always changing. Expanding, contracting, launching new products and services. And, change can be an enormous challenge to continuous engagement. When things aren’t stable, people tend to get a little jumpy—and that could mean they’re ready to jump ship and head to another job. Or,

it could just mean they’re a little too nervous to do their jobs effectively. If you really want to test whether you’re doing your due diligence on engagement, just throw a little change into the mix and see what happens. In the face of change, slapdash engagement efforts are unlikely to hold up, just as a marriage in which both partners are not fully committed to making things work is not always able to steer steadily through stormy waters. What’s more, this is not just a one-off thing. You need to be in this for the long haul. You can’t just pay lip service to the importance of “engagement,” put a few programs in place and then forget about it. Once you’ve bought into the importance of engagement, you need to commit to it for the long term. And you need everyone else in your organization to get on board with these efforts. When not everyone is rowing the same way, then any initiative you put in place is not going to live up to its full potential. What this means is, if you really want to ensure your workforce, your customers and your partners are fully engaged with your organization’s mission, you need to change your entire culture. You need to cultivate that engagement. You need to sell it up and down. It needs to be a part of everything everyone is doing every day, from the CEO to the sales manager to the customer service rep. You can make it work. But you can’t do that in a bubble. And you can’t do it alone. You need everyone on board. Pulling their weight. Sitting at the oars and steering in the same direction. What does engagement mean to you? What does it mean to them? It’s worthwhile, I think, to examine the meaning of the concept. Because words are just words—marriage, commitment, loyalty, engagement. It’s putting the concepts behind those words into practice that makes a long-term impact. Cheers!

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M AY / J U N E 2 0 1 0 VOLUME 3 • NUMBER 3 PUBLISHED BY HENNESSY COMMUNICATIONS, LLC 800 E. Northwest Highway Suite 111 Palatine, IL 60074 PHONE: 847-705-6867 FAX: 847-705-6878 E-MAIL: [email protected]

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UPS AND DOWNS On page 36 of the March/April issue, we mistakenly printed the wrong description of one of the products listed, the Huffy® AMP™ Karaoke bike, available through Top Brands. You can find a full, correct description of this bike on page 47 of this issue.

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A new dimension of Sony Premium Incentive Products. Give your players another reason to win. Rewarding your employees with Sony Premium Incentive Products is the best way to keep them motivated. Create your own custom program and inspire productivity with today’s leading electronics, like CyberShot® Digital Cameras, dash™ Personal Internet Viewers, and even 3D-compatible BRAVIA® LCD TVs. Only Sony has the groundbreaking technology and longstanding reputation to drive bottom-line sales and make your team believe.

call (866) 596-4823 visit sony.com/motivation

© 2010 Sony Electronics Inc. All rights reserved. Reproduction in whole or in part without written permission is prohibited. Features and specifications are subject to change without notice. Sony, make.believe, BRAVIA and their respective logos are trademarks of Sony. Screen images are simulated.

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>> news & notes On the Go A look at who’s moving up, who’s expanding programs and who’s been recognized for outstanding achievements in the premium/incentive industry.

ous roles, where he has been responsible for pricing, sourcing, leading sales presentations and communicating with company headquarters in Ibach, Switzerland.

IMRA Announces New Directors The Incentive Manufacturers & Representatives Alliance (IMRA) announced its 2010-2011 leadership team. Four new directors were elected to the board: Villa Johnson, IP, BrandSource; Stacie Pinnavaia, IP, Design Incentives; Scott Plybon, The Plybon Company; and Warren Weaver, Zane’s Cycles. Mike Landry, IP, Tumi; and Charley Mann, Professional Marketing Associates, were also reelected to the board. IMRA’s 2010-2011 officers are President Charley Mann, Vice President Pete Mitchell and Secretary Bill Martocci.

Andrew Dodge Joins CashStar CashStar, the Portland, Maine-based digital gifting and incentives company, announced it has added three new management executives to its growing team. Andrew Dodge, formerly of L.L. Bean, joins as vice president of Corporate Sales. Kathleen Goodwin comes on board as vice president of marketing, and Simon Herron has been named director of business development. Incentium Taps Phillips for President, CEO

Rymax Welcomes Jagelka to Team, Announces Partnerships Rymax Marketing Services Inc., one of the largest brand-name manufacturer’s representatives in the incentive industry based in Pine Book, N.J., announced the addition of Joseph Jagelka to its team as western regional sales manager of Product Sales. Jagelka joins the Product Sales team, serving clients throughout the United States and abroad. He has more than 20 years of experience within the consumer products and incentive industries, and has held various management and field sales positions for Vivitar, Casio and A.T. Cross. Rymax also announced two exclusive partnerships, with Sharon O’Connor’s Menus and Music Productions, and with Nourison Industries Inc. Sharon O’Connor’s Menus and Music Productions strategically combines cookbooks using world-class chefs, art, travel experiences and music from renowned musicians, which are now offered within the incentive industry through Rymax. Nourison Industries Inc. is a diversified producer and importer of handmade area rugs. Victorinox Swiss Army Promotes Smith

Chattanooga, Tenn.-based Incentium LLC announced that Rich Phillips has been named president, chief executive officer and a member of the board of directors. Incentium, formerly VIPGift, is a provider in customer acquisition, rebate, incentive and loyalty programs. Phillips was most recently president of Maritz Loyalty and Motivation, where he was responsible for achieving significant earnings growth and developing market-leading product innovation to serve evolving client needs. National Gift Card Adds Marketing Director, Teams With American Express National Gift Card Corp., a leading incentive gift card distributor, recently hired Jason Abrahams to serve as marketing director for the company. His responsibilities will include working with NGC’s retail partners to help build their brands among the business-to-business community. The Crystal Lake, Ill.-based company also announced that it is now an authorized reseller of American Express Prepaid Cards created for the loyalty, incentive and reward industry. Under the agreement, National Gift Card is able to offer corporate customers very competitive, below-face-value pricing on volume orders.

Victorinox Swiss Army announced Mike Smith has been promoted to vice president of sales, Corporate Markets. He has been with the company since 1994 in vari-

Study Finds Engagement in Decline A recent study on employee engagement in the U.S. workforce from Modern Survey shows a precipitous decline in workers’ psychological investment in their organizations after a year of trending upward. While the economic recession may have temporarily motivated employees to put forth extra effort on the job, the latest data from this scientific study suggests U.S. workers may have hit their breaking point, as all five components of Modern Survey’s Employee Engagement Index are now trending downward. Bruce Campbell, senior consultant at Modern Survey, believes that if companies do only one thing right now in regard to employee engagement, it should be to express sincere appreciation for employees and recognition of their contributions, and it should come from the organization’s most senior leaders first, then repeated and reinforced by managers at all levels. Ongoing research by MasteryWorks Inc. demonstrates that the key to improving employee engagement is to show employees what’s in it for them—specifically by showing them their career options within the organization. “Conversations between managers and employees need to recognize and appreciate what employees have contributed to the organization, but, just as importantly, they need to discuss the contributions needed in the future,” said Adam Alexander, vice president of MasteryWorks, a company that specializes in career development.

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‘People First’ Approach to Workforce an Emerging Trend We’re an increasingly connected society—as evidenced by the use of cell phones, social media and other ways to keep in touch with co-workers, friends and family. The challenge to corporate leaders is how to foster that connectivity among employees and customers to create a culture that values individuals, the workforce and the customer experience. In 2010, the Forum for People Performance Measurement and Management, a research center within Northwestern University’s Medill Integrated Marketing Communications graduate program, will continue to study the affect increased connectivity will have on business success. Initial results from the Forum’s 2009 study, “Leadership and the Performance of People in Organizations: Enriching Employees and Connecting People,” indicate that encouraging social connectedness among employees can be beneficial to a company’s bottom line. “Putting your people first can lead to a higher ROI,” said Beth Schelske, Forum president and vice president at the ITAGroup. “It’s more than just engaging them in contributing to the company’s success. It’s being proactive about methods of motivation, retention, education, flexibility and empathy. Our research is beginning to show us trends. One is that corporate success in the marketplace is increasingly tied directly to the way management looks at the whole employee, not just when that employee is ‘on the clock.’ This is important as newer workers become a larger proportion of a company’s workforce.” Results of the Forum research will be available later in the year and will be discussed at the Forum’s annual Think Tank, comprised of executives and academics, on Sept. 15 at the Union League Club in Chicago. For more information, visit www.performanceforum.org.

IMA Anounces New Social Responsibility Award The Incentive Marketing Association (IMA) is expanding its Circle of Excellence Awards program to include a new Social Responsibility Award. “This new award will recognize incentive suppliers that have gone above and beyond in their efforts to expand the commitment of the entire incentive industry to social responsibility and to increase the participation of the incentive supply chain in social responsibility,” explained Karen Renk, CAE, executive director of the IMA. Launched in 2000, the Circle of Excellence Awards identify and recognize outstanding examples of successful customer and employee incentive programs designed to help drive business. Submissions for the IMA Circle of Excellence Social Responsibility Award will be evaluated based on three key areas: Corporate Citizenship, Supply Chain Policies and Industry Leadership. In each area, entries will be judged on: level of company commitment; creativity shown in addressing social issues; execution of social responsibility initiatives; extent to which the company communicated and promoted its position on social responsibility to customers, investors, suppliers, employees and communities; and effectiveness of social responsibility efforts. The new award will be presented for the first time at the 2010 Motivation Show on Oct. 13 in Chicago. For more information, visit: www.incentivemarketing.org.

White Paper Stresses Need For Individualized Appreciation Having a recognition and rewards program tailored to the specific needs of individual employees is the best strategy for engaging employees in a post-recession economy, according to the findings contained in the latest white paper from the Incentive Marketing Association’s Recognition Council. In the paper, “Pump Up Employee Engagement: Fuel Prosperity With Strategic Recognition,” the Council highlights how the effects of the recession and the realities of workforce demographics have created a more complex set of employee expectations amid emerging job market trends. “We have found that when recognition and reward programs provide employees with the kind of recognition that is most meaningful to them, they are not only more engaged, but also are more likely to remain with a company than when they do not feel valued,” said Karen Renk, CAE, executive director of the IMA. “Because today’s workforce is more diverse than ever and is recovering from the effects of being overstretched and under-rewarded, proving that employees are individually appreciated is the best way to engage them and to combat the very real threat of losing valuable talent during the recovery,” Renk explained. The paper also highlights how the mosaic composition of today’s workforce discredits a “one size fits all” approach to employee rewards and recognition. Today’s workers have different needs and expectations, but all want to be valued by their employers. The complete paper is available on the Recognition Council’s Web site at: http://recognitioncouncil.org/resourcelibraryc4.php#whitepapers.

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>> guest column

By Dana LaSalvia, CRP

Dana LaSalvia is Director of Marketing and Corporate Events for Rymax Marketing Services Inc., the largest manufacturer’s representative in the incentive industry. For more information, visit www.rymaxinc.com/PIP.

The Eco-Incentive Revolution G

oing green is not only good for the environment—it’s good for business, too. In recent years, the incentive market has seen a growing concern for the environment, and consumers, retailers and government agencies alike are paying attention and responding to this ever-growing mainstream initiative. In response to this global green movement, a new niche of green consumers has evolved and now is growing at a rapid rate, becoming a very lucrative target market. Incentive firms need to know who these consumers are and what drives their behavior. According to the Natural Marketing Institute (NMI), the United States’ green marketplace is predicted to reach $420 billion by 2010 and $845 billion by 2015. This market share will translate into revenue for smart incentive houses that offer eco-friendly brands. And when you partner with an incentive provider to ensure your merchandise rewards are more environmentally friendly, you also will capitalize on that success. In today’s marketplace, corporate social responsibility plays a major role in the green movement. Companies are reacting to this movement by implementing business practices that lead to more environmentally friendly and ecologically responsible decisions. From recycling to sustainable packaging, and more, businesses are implementing green practices in their daily operations. Consumers admire these green business practices and have a high demand for eco-friendly products. According to a recent study by Green Seal, a Washington-based independent nonprofit product certification organization, four out of five people say they are still buying green products and services today, which actually can cost more, even in the midst of a recession.

It Pays to Go Green Organizations and consumers alike have recognized the need to be energy efficient and environmentally friendly. Redemption patterns in the incentive industry tend to mimic consumer buying behaviors in the retail environment, and, therefore, create a demand for green rewards. Offering green products within an incentive program fulfills a sense of reward as well as personal satisfaction for contributing to a greater cause. Gaiam, a Boulder, Colo.-based company that specializes in healthy living products, invites its customers to live consciously and in harmony with the environment. From yoga and fitness DVDs to nontoxic cleaners, Gaiam offers eco-friendly, organic products, and healthy living solutions. Gaiam’s missions statement sums up its social 10 ❘ MAY/JUN E 2010

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and environmental responsibility: “Gaiam was founded to make a difference in the world by educating people about lifestyle choices that affect personal development, wellness and environmental responsibility. We began as a lifestyle media company with a vision that, given a choice, people would choose a lifestyle that is health and life enhancing— for themselves, their families and the earth.” Faber-Castell, a Cleveland, Ohio-based writing instrument company, takes pride in its efforts to sustain the environment and is widely recognized for its social and environmental initiatives. Testimony

to such recognition are the awards and certifications Faber-Castell has achieved from world bodies like the Forest Stewardship Council (FSC), which is a committee of the world’s most powerful forestry experts, including organizations such as Greenpeace and World Wildlife Fund (WWF). iRobot, based in Bedford, Mass., is another player in the green movement, with a majority of its products powered by NiMH batteries, the most environmentally friendly batteries on the market. The company’s products also are compliant with the Restriction of Hazardous Substances Directive (RoHS) that effectively eliminates heavy metals from the products and their manufacturing process. Monster, based in Brisbane, Calif., the world leader in power conditioning and surge protection products, is clearly demonstrating its commitment to the environment with a line of innovative new Monster GreenPower products designed to help customers easily save energy and money. In recognition of this commitment, Monster’s new Digital Life PowerCenter is being honored with a prestigious Innovations 2009 Design and Engineering Award by the Consumer Electronics Association (CEA). It is the first in a family of energy-saving products that Monster will be rolling out

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in the near future to help people fight the high cost of energy and help preserve the environment. Meyer Corporation, the largest cookware company in the United States and leading cookware manufacturer of brands like Paula Deen, Earth Pan, Rachel Ray, Analon, etc., installed a 580-kilowatt solar electric power system on the roof of its Solano County, Calif., headquarters. It covers 51,000 square feet of rooftop and will reduce Meyer’s utility power consumption by more than 60 percent. Additionally, over the next 30 years, Meyer’s use of solar power will reduce emissions of carbon dioxide by more than 7,000 tons, the equivalent to planting nearly 2,000 acres of trees, or not driving 17 million miles on California's roadways, according to Stanley Cheng, chairman and CEO of Meyer Corp. Miele’s appliances and vacuums demonstrate superb quality, durability and the ability to conserve valuable resources. With production facilities that exceed the most stringent environmental regulations, appliances that surpass Energy Star guidelines by more than 45 percent, products offering a life expectancy of 20plus years, manufacturing technology that delivers 90 percent recyclable goods, and corporate offices designed to maximize the conservation of light, water, energy and even paper— it is clear that Miele cherishes our natural resources. Brands like Gaiam, Earth Pan, Monster and more are focusing on their customers’ green needs, offering eco-friendly options, helping to promote brand loyalty, which is essential to standing apart from the competition.

Eco-Driven Incentive Programs As you look for an incentive provider, be aware of how the green consumer revolution is affecting a wide range of demographics and today’s program requirements. By partnering with a company that keeps these trends top of mind, your business can benefit on many levels. By providing a customized loyalty solution and wide range of eco-conscious rewards, you create a sense of personal connection and drive behaviors by demonstrating awareness of corporate responsibilities to your program participants. The green movement will be a lasting trend in the incentive industry, continuing to produce loyal consumers who are committed to doing their part to help the environment. As you take a look at what your incentive provider currently is offering, make sure your program is complete with the latest and greatest in eco-friendly rewards. PIP

>> guest column

By Jennifer Kallery As division vice president, marketing, Jennifer Kallery leads the marketing and strategy team for Maritz Loyalty and Motivation. In this role, Kallery and her team work to develop client-focused solutions, innovative rewards and marketing campaigns, and apply models and measures that guarantee business results. Kallery ensures Maritz creates responsive, flexible and effective people-centric solutions that influence behavior and reward achievement. For more information, visit www.maritz.com.

The Case for Incentives in the New Normal Emerging from their recession-storm shelters of

2009, businesses quickly discovered a new “normal”—a market landscape scattered with weakened competition and new customers eager for new solutions, balanced with intensified attention to productivity, accountability and value. Companies need to think about long-term strategies instead of 60-day plans used during the recession. Businesses should jump through narrowing windows of opportunity now, before competition beats them to it. Growth is a new focus of senior executives, but the corporate purse strings remain tied up for many companies still chained to the survival practices employed during the “Great Recession.” How can a company grow quickly after reducing staff and cutting people-related expenses like recognition and incentives? The answer isn’t in hiring new people; it’s focusing on the people already in the office. It’s time to make the case for investing in performance improvement programs to drive sales, improve productivity, increase revenue and grow your organization.

Build the Case Before you can defend your program spend, you first need to define it. In the era of the new normal, justify your performance-program investment with hard numbers and alignment around company goals. Start acclimating yourself to the new market landscape. Review the competition, the customers and the factors that influence the industry. Then take a hard look in the mirror. Know the current financial state of the company. List the organization’s weaknesses and strengths. Talk with current salespeople to begin measuring engagement. Know as much as you can about whom and what can affect the business and the incentive program. After you survey the company and the market, work with organizational leaders to put a stake in the ground for where you want to be in the short and long term. Define what success looks like, and align the incentive program with the greater company goals. Show how the program will improve sales performances, spur organic growth and help achieve organizational success. It’s difficult to cut an expense when it’s directly tied to profits. To help make the connection, create a model to evaluate the financial impact of the program on corporate success. A basic formula for determining return on investment combines the joint product of incremental revenue, profit margin and percent attributed to the program. Deduct program costs from this multiplied number and divide the overall sum by the program costs. In the new normal, you will need these hard numbers to prove the value of your incentive program. Once you know where you are and where you want to go, you can develop a plan. Include specif-

ic, measurable benchmarks to track progress. For example, set a goal for year-over-year growth and check movement toward it. Use the tracking data to adjust course, if needed, and to prove success to leadership when you reach a goal. A subset to plan development is to thoughtfully segment your participants. To optimize the investment, an incentive program should target those who have the most potential for improvement. In other words, you must segment incentive program participants just as you do your customers. • Top performers: Continue rewarding the top performers in your company for recognition and retention—these people are your best assets. Employee recognition is key to keeping and motivating the best talent. • Trainees: Identify those performers who need additional training, or who aren’t the right fit. These are typically your bottom 20 percent—people who are contributing very little to company growth. When challenged and coached appropriately, many of these individuals can reach the performance levels of an “average” employee. • “Average” employees: Contrary to popular belief, companies should focus on the middle 60 percent. This is where managers can have the most impact and influence behavior. In fact, this group of “average” performers has the most opportunity for growth. A performance-based incentive program can encourage participants to exceed personal and company goals, and align the incentive with the value of meeting those goals. When each segment is leveraged to its fullest potential, the “people investment” of a performance improvement program becomes much clearer and easier to justify.

Nurture the Program With the business case made for your incentive program, the next challenge is managing the plan. Growth requires attention. For a performanceimprovement incentive program, that means carefully monitoring, evaluating and adjusting the program to maximize efficiency and drive participation. The four focus areas for increasing program efficiency include targeted communications, key performance metrics, non-cash rewards and management costs. • Targeted Communications: Engage program participants by motivating them to achieve shared company goals. Ongoing communications, tailored to each participant, can keep everyone on the same page. Finding the sweet spot for motivating participants requires experimenting on your part. Vary your communications and evaluate the effectiveness

of the different factors, like message frequency, discussed topics or communication methods. The data gained will tell you how to best reach your audience. • Key Performance Metrics: Assess the program’s effectiveness by using engagement scoring, participation rates and tracking progress against key benchmarks. Start by reviewing individual performances and objectives before launching the incentive program. Track performance and participation rates after launch to measure improvement. Monitor progress toward a specific goal with engagement scoring. Check the results to see when you need to change messaging or provide new motivation to act. Also, measure reward issuance and redemption to ensure you provide the right rewards for different individuals. Participants work harder to achieve a goal if they know the reward matches how they want to be recognized. • Non-Cash Rewards: Use them. You might think it’s a debate—cash versus non-cash—but statistics show non-cash rewards are three times more effective for performance improvement. It’s important to note that non-cash rewards typically require an investment of 4.1 cents per dollar of improved performance; cash rewards require an investment of 12 cents per dollar of improved performance. Be efficient with your program spend. When you match this reward system with reward issuance and redemption measurement, you can tailor rewards to individual participants to create more meaningful relationships and increase motivation. • Management Costs: Adjust your budget to lower program administration and management costs. Shift the primary focus from technology and management to investing in strong design, communications and rewards—the features that will drive behavior change. How you lower costs depends on several factors like transparency, economies of scale, technology platform and preferred supplier relationships. If you plan and make the business case for your program first, then you know the needs of the organization and your program participants. Use the knowledge to make appropriate adjustments to your program’s costs to deliver more value. For example, use an automated system for routine program activities to free up funding for better communications and rewards. In order for your incentive program to GET attention, you must GIVE it attention. Take time at the start to understand the business; then weave its goals into the program’s objectives. Build your program with a strong business case to ensure buy-in from senior leadership, and stay engaged with the program after launch to align it with your growth goals. In the new normal, the opportunity to grow your business and grow your people’s performance is now. PIP

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>> guest column

By Ira Ozer, CPIM Ira Ozer, CPIM, is CEO of Motivation Partners, an incentive consulting and solutions representative company that assesses companies’ needs for performance improvement programs, then recommends the best strategy, solutions, services and suppliers to achieve improved business results. He also forges strategic alliances between incentive agencies, distributors and suppliers to create new and improved solutions. For more information visit www.motivationpartners.com.

Assessing Amazon’s Exit A

mazon has been a major supplier to the incentive industry, starting in 2004 as the fulfillment partner for one company and then in less than a decade, growing to fulfill hundreds of client incentive programs for more than 20 incentive companies, totaling an estimated $250 million dollars in merchandise redemptions per year. Then, in abrupt, unexpected notifications during the week of April 5, 2010, Amazon announced they would be exiting the business and were giving notice to find an alternate supplier. So, why did Amazon leave this huge amount of business on the table? Where will this $250 million be fulfilled? There are many traditional choices and some new innovations, but also confusion and uncertainty. As Amazon has demonstrated… it’s a jungle out there! The incentive industry has been in existence for more than 100 years and for the first 80, the business was dominated by relatively few large national incentive companies, such as Maritz, Carlson and BI, the so-called “big three,” as well as smaller, but strong regional companies, such as Hinda in Chicago, PFI in Cleveland, Harco in New Jersey and Quality in Tennessee. These companies have their own warehouses and relationships with brand-name product manufacturers. They publish catalogs, create computer systems to administer programs and manage these in-house with their own IT departments. For years, the barrier of entry into the incentive business was high, because to compete you needed to have these services, which cost at least $1 million to create. Many smaller companies were formed that specialized in travel incentives, promotional products, recognition programs and other services, and when their clients needed merchandise incentives, these companies usually brokered the incentive catalog solutions of one of the regional suppliers. Incentive catalog merchandise was sold to corporate clients at 30 to 50 percent margins, which was enough to cover inventory, warehouse, catalog production costs, staff overhead, pay salespeople or partners and still earn a profit. High margins could be maintained because these were the days of “fair trade laws,” in which manufacturers could dictate to retailers the price they must charge consumers, generally the Manufacturer’s Suggested Retail Price (MSRP). Incentive company prices were compared to retailers such as Macy’s and Nordstrom and by comparison, even with high margins and the need to add shipping and handling costs, the merchandise was within 20 percent or so of retail. Incentive catalogs featured several hundred to a few thousand products at the most, and everyone was content that incentive companies shipped items within four to six weeks. In the past 20 years, huge innovations have occurred, changing the map of the incentive industry forever. Fair Trade laws were abolished in 1975, and retailers were allowed to charge whatever they wanted. Big box stores emerged and became “power retailers” with low prices and “category killers” with vast selection and interactive showrooms. Retailers began offering gift cards, which became popular in the incentive industry, taking a substantial percentage of overall redemption from traditional merchandise catalogs, and then, incentive credit and stored value cards emerged, which let incentive program participants redeem their points anywhere MasterCard or Visa is accepted. With the advent of the Internet and with less expensive and more readily available incentive management platforms, smaller companies could compete with the large companies and not represent them as agents. Incentive margins were reduced

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by most companies in order to compete within the industry and with retailers, which more than ever, began to sell on price, with broad choice and immediate availability being a given. In 2007, Amazon expanded in the industry by opening its inventory and fulfillment system Application Programming Interface (API) to incentive companies that wanted to spend the resources to create a technical integration between their award points engine “front end” and Amazon’s catalog “backend.” This gave companies the ability to select from millions of product choices and filter them any way they wanted, such as selecting certain categories, price points, brands, etc. And for companies that didn’t want to or couldn’t afford to spend the resources to achieve the technical integration with Amazon’s API, a company known as Bridge2Solutions was created to be the “bridge” between their incentive management system (IMS) and Amazon’s fulfillment system. For agencies and reps who didn’t have their own IMS, Paramax Productions and Online-Rewards offered their hosted IMS solutions integrated with the Amazon API. During the Cards & Payments Loyalty Conference New York in December 2009, Rob Rosenblatt, general manager of Chase Cards Customer Loyalty, Mobile Commerce and Innovation, spoke about their Ultimate Rewards program, which uses B2S to fulfill merchandise redemptions on the Amazon platform so that their customers can have vast choice and timely fulfillment. Prior to this, Chase had fulfilled merchandise using traditional incentive companies, but based on feedback from customers and competing programs, this no longer seemed to be considered “best in class.” Similar stories exist for Citibank and other Fortune 500 companies that decided to integrate with the Amazon platform or partner with one of the participating companies. Why would any company leave $250 million per year on the table, especially in a recessionary year? According to industry experts from B2S, Paramax, other companies that used Amazon, as well as an Amazon executive who asked to speak “off the record,” there are three primary reasons: 1. Inconsistent Brand Message: Amazon is an Internet direct retailer, and they provide excellent choice, low prices and a unique shopping experience. Since incentive companies marked up the Amazon prices, in points, by 25 percent or more, Amazon was concerned that people who received their award boxes with the Amazon logo would believe their relationship was with Amazon, when in fact it was through a third-party incentive company. They also didn’t have the ability to acquire these customers for ongoing database marketing efforts. 2. Sales Taxes: There are many state tax authorities that believe Amazon should collect and remit sales taxes for shipments to their states, but Amazon has so far successfully argued that as an Internet direct merchant without a physical address in those states, they are not obligated to collect taxes. Since incentive companies and their corporate clients are in all 50 states, many state tax authorities believe that they do, in fact have nexus. If Amazon’s tax exemption were overturned, this would have a huge impact on Amazon’s overall value and resulting sales and profits. 3. Not Profitable: Amazon provides free shipping for orders of $25 and more, which has been a significant benefit for incentive companies and clients, but while this works for their retail business, it is not profitable for their incentive fulfillment business. Scott Merlino, the senior manager

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of the Amazon merchandise rewards service, had reported to the New York Times that at least 25 percent of orders were for single items. As the business has scaled, this percentage most likely escalated further, because a majority of incentive orders are for single items, especially for large consumer loyalty programs in which participants generally earn less than $50 per year in award value. To be sure, Amazon enjoys the lowest rate shipping costs due to massive volume and close proximity to customers, but when a single item is shipped for free, the profit earned on it often doesn’t cover the shipping costs. Amazon’s profit increases when it can ship multiple items together, and their online shopping recommendation tool can usually get retail customers to buy additional items, but this is not the case in the incentive market. $250 million is a lot of business for most companies, but not for Amazon, where it represented a small percentage of their total $16-billion-and-growing business. So what happens when a major fulfillment supplier disappears? For starters, Amazon gift codes and cards are still available from ACI Gift Cards, in physical form, e-codes and via API, and there are all of the traditional incentive distributors and brands that are eager to fulfill, but now that the bar has been raised in terms of choice, in-stock shipping and price for merchandise fulfillment, what can truly fill that void? Two new fulfillment innovations have been created by leading organizations in the incentive industry that provide broad catalog selections, inventory assurance, fast shipping, consolidated invoicing, personalized packaging and reasonable pricing. ShipQuick, a product of The Database Direct Group, was launched in 2008 as an addition to its RepLink service. RepLink is a Web site that allows brand manufacturers to post their available incentive products online, so their authorized incentive reps and agency customers can access the information. ShipQuick is a subset of approximately 10,000 products from the entire database that are always in stock. Jon Hanson, CPIM, CEO of The Database Direct Group, explained that RepLink supports the special markets channel, in turn providing funding for advertising, education and promotional support for the incentive industry as a whole. The second innovation, the Universal Rewards Exchange (URE), is a new service created by Engagement Technology LLC. It lets incentive agencies create their own online “Universal Rewards Catalog” from a broad selection of tens of thousands of products from participating incentive distributors and brands. These distributors and brands automate their merchandising, inventory and accounting systems with the URE, so when program participants select a product, it is fulfilled immediately from the supplier, shipping information is uploaded, and URE consolidates invoicing and shipping information. According to CEO Mike Hadlow, the URE improves selection, availability, fulfillment and pricing of incentive merchandise, and provides a viable alternative to the Amazon fulfillment system. As an added benefit, URE suppliers also offer special packaging and credit terms. So where will the $250 million be fulfilled? As of press time for this article, it’s too early to say because all of the (almost) ex-Amazon companies are doing due diligence and have yet to make a decision. We will write a follow-up article when the dust settles, but for now, life in the incentive industry is very interesting! PIP

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Gift Card Incentives

In(centive) Focus Digital Cameras to Inspire Your Best By Emily Tipping

With a wide range of styles, price points and features available, digital cameras make a perfect choice for inclusion in incentive and award programs. Whether you’re looking for a relatively low-cost point-andshoot to reward participants in a safety program or you need a fancypants DSLR to recognize your top sales rep who is also a budding amateur photographer, you’ll find what you need among the top camera brands. Digital cameras are always popular. While sales of digital cameras— along with sales of everything else—declined in 2009, the market is expected to start growing again this year, according to the Camera and Imaging Products Association. In 2009, the digital camera market saw an 11.6 percent drop in total shipments worldwide compared with 2008, but it is expected to grow 3.8 percent in 2010. The ever-popular DSLR market, which represents a smaller segment of overall units sold, actually saw modest growth in 2009—of 2.3 percent. DSLRs are expected to outpace digital cameras again in 2010, growing at 11.2 percent this year. As part of the broader electronics category, always among the topredeeming categories in the incentive and award market, digital cameras are always changing, always evolving. That means you can always tempt your targets—employees, sales reps, partners and customers— with something fresh and new. “Electronics is one of the highest redeeming items, and digital cameras are included in this category,” said Heather Chevreau, Special Markets manager for Fujifilm, based in Tokyo. “Digital cameras appeal to everyone, male or female, young or old, because everyone likes to capture memories, like their vacations, their children and their pets.” Kimberly A. Carrette, manager, Sales, CIG Special Accounts Sales Division for Canon U.S.A. Inc., based in Lake Success, N.Y., agreed that digital cameras have widespread appeal. “The best thing about using cameras in a program is that everyone is motivated by them,” she said. “Just about everyone is motivated by cameras in some way,” agreed Shelly Colla, Premium Incentive Group sales manager for Sony Electronics, based in San Diego. “Whether it’s a camera phone for grabbing spontaneous photos or the newest high-end DSLR, taking and sharing photos is a part of our lives more than ever, and cameras are the perfect match for people’s on-the-go lifestyles.” The fact that you should include digital cameras as one of your award choices is a no-brainer. Which digital cameras to include, on the other hand, is a whole different story. Read on to learn about the latest and greatest features, and the newest camera introductions, as well as a sprinkling of advice from those in the know. 14 ❘ MAY/JU N E 2010

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Options Abound When determining which cameras to include in your program, Colla of Sony Electronics said it’s wise to consider many factors, including price, features, ease of use and performance. “There’s such a range of camera users and camera models, that program planners can design many different types of programs—targeted to prosumer or hobbyist photographers, moms or parents who are mainly interested in capturing special events for their families,” she explained. “There are so many possibilities.” Consider your audience. Is your program aimed at hard-working customer service representatives? Or are you targeting a top-notch sales staff that is aiming to boost high-tech product sales? Different types of people will be drawn to different types of cameras. “There are certainly features that appeal to some people over others, so it’s a good idea to keep the target audience in mind,” Carrette, of Canon, said. “For instance, an entry-level point-and-shoot camera, like the PowerShot A series, will get the job done for a safety award program. However, you’ll need to step up to something a bit more trendy to get the attention of the sales force for a cell-phone company that’s around technology all day, like a PowerShot Digital ELPH.” If you’ve got a wide range of participants in your program, you should follow this advice, which applies to virtually any larger-scale program: Let them choose. “Since different types of cameras appeal to different users, program planners should always have a few different types of models in a program,” Carrette said. “This can be achieved by price point levels: as a basic point-and-shoot, the PowerShot A3100 at an entry price level, a compact and fun touch-panel LCD with the PowerShot SD980 Digital ELPH at the next, and then a photo enthusiast’s prize with the EOS Rebel XS or Rebel T2i at the top.” At a retail price of $179.99, the PowerShot A3100 IS offers an excellent entry-level choice that will appeal to your participants who are looking for their first camera, or to upgrade an older camera. Its 12.1-megapixel resolution and 4x Optical Zoom with Optical Image Stabilizer ensures they’ll be able to capture images easily as soon as they open the box. Some of this camera’s features include Face Detection Technology, new scene modes and Smart AUTO that simplifies challenging shots. Its 2.7-inch LCD screen offers a crisp and clear picture when shooting, reviewing or showing grandma that shot of the kids in the pool. It is available in three vivid colors: red, blue and silver. “Price point seems to always be the first priority in programs,” Chevreau said. “Fujifilm has a variety of styles in different price points to appeal to a large range of programs. We usually suggest three different cameras that show three different price points and styles to fit various needs.” Carrette added that if a single price point level is used, you can still offer variety and choice by offering a few different styles of cameras. Outdoor enthusiasts will be tempted by something like the PowerShot D10, while parents and sports lovers might appreciate the PowerShot SX210 IS with HD video, long 14x zoom and large 3-inch LCD. The Olympus Stylus Tough 8010 Digital Camera, available through Mar-San, a Chicago-based premium/incentive distributor offering a wide range of electronics and camera items. This 14-megapixel waterproof (to 33 feet), shock-proof (to 6.6 feet), freeze-proof and crushproof digital camera will appeal to adventurers in your program—or just those who can’t seem to keep their little ones’ sticky fingers off the camera.

Features include 720p HD video recording, 5x wide-angle optical/5x digital zoom, 2.7-inch LCD, 2 GB of built-in memory, SD card slot, Dual Image Stabilization, Intelligent Auto, Face Detection, Shadow Adjustment, AF tracking, Magic Filters and photo surfing to organize images. With a suggested retail price of $399.99, this camera will make a good midrange choice for your program. Or, for those who want all the latest and greatest features in a point-andshoot, check out the new touch-panel technology and HD video capability packed into the compact Canon PowerShot SD3500 Digital ELPH. The camera’s 3.5-inchwide LCD touch screen enables users to drag icons to their preferred on-screen location. Then, utilizing “tap” operaPHOTO COURTESY OF CANON U.S.A., INC. tions, they can switch between images. It also has a 24mm ultra-wide-angle lens with 5x optical zoon, Optical Image Stabilization, a 14.1-megapixel resolution and HD-quality video. It is compatible with Eye-Fi memory cards for wireless transfer of videos and photos to PCs. Available at a suggested retail price of $329.99, it is available in black, silver or pink. Whatever cameras you choose to include in your lineup, remember this advice from Canon’s Carrette: “One thing to always keep in mind when selecting cameras for a program is the product life cycle in comparison to the program duration,” she said. “Making a selection from the newest models will help avoid having a product change during the middle of a program.”

Must-Have Features Whatever you do, you want to be sure that the cameras you include in your program are up-to-date. There’s nothing less motivating than old, outdated technology. And with digital cameras, the features are being updated all the time, so if you haven’t taken a look at your lineup recently, it might be overdue for an update. “Digital cameras keep adding new features, so that picture taking is easy but creates incredible, professional images,” Carrette said. For this reason, people will almost always be ready for an update, she added. “Digital cameras—both the compact, point-and-shoot models, as well as DSLRs—have evolved so much in just the past few years,” Sony’s Colla agreed. Updates include “…faster speeds, higher resolution, better video capture capabilities, especially with HD for SLRs. Feature and performance levels that were once only available with higherend cameras are now available on models with prices that are more affordable to consumers.” The Nikon Coolpix S4000 offers a great choice when you’re ready to reward your PHOTO COURT ESY OF NIKON people for hard work, loyalINC. ty and support. It is a slim, 12-megapixel, 4x zoom compact digital camera with a 3-inch highresolution touch-panel screen that delivers superior performance and image quality. Whether capturing stunning images with remarkable ease or shooting HD movies, the S4000 is a great option. With a suggested retail price of $199.95, the S4000 is available in a variety of stunning colors and a slim size for pocketable convenience and individuality, and offers impressive features for a relatively low cost. Another relatively recent development allows users to turn their viewing screens. For those who want to be able to take pictures of themselves or at odd angles, this feature can come in handy.

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important, as is “Auto Scene Recognition mode, which is really convenient in recognizing six different scenes automatically.” In the Fujifilm FinePix Z700EXR, you will find all of these features and more, all for a very reasonable suggested retail price of $279.99. This camera takes incredible photographs by combining Fujifilm’s award-winning EXR sensor technology and a gorgeous 3.5-inch wide highresolution touch screen, all in a sleek and sophisticated metal body. This 12-

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Moving Pictures With all of these features already packed in, you might think that digital

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megapixel camera features a 5x Optical Zoom, Face Detection, Pet Detection, Automatic Scene Recognition, Dual Image Display with Automatic Image Rotation, Interactive File Management System, Dual Image Stabilization, High Sensitivity ISO 1600 and HD movie recording with sound. It’s another colorful choice, available not only in the classic black and silver, but also brilliant red. Colla, of Sony, added even more features to the list of options that will motivate the most. “A feature like Sony’s unique iSweep Panorama on our DSCTX7, which lets users capture ultra-wide panoramic shots in one easy pressand-sweep motion, is one example of the new innovations in digital cameras,” she said. “The cameras in our Cyber-shot line also have a range of great features for users like enhanced underwater capabilities, HD video capability, improved lowlight performance and more.” The Sony Cyber-shot DSC-TX5, for example, combines a sleek, waterproof design with high technology. The camera offers stunning low-light performance with the ability to capture amazing panoramic images in Intelligent Sweep Panorama mode. Your award recipient will never muss the best shot with the ability to snap 10 frames per second, and they can show off all of their images on the large 3-inch touch-screen LCD. With a suggested retail price of $349.99, this mid-range option is also available in a range of colors, including the basic black and silver, as well as green, red and pink. If your program participants like to hit the beach, they might enjoy the recently released Vivitar Vivicam VT026, an underwater, all-weather option featuring a 12.1-megapixel sensor, 2.4-inch screen and face detection. With a suggested retail price of $199, this camera also includes anti-shake capabilities and operates off rechargeable lithium batteries. According to Scott Crawford, OEM and Special Markets Manager for Nikon Inc., based in Melville, N.Y., another big trend influencing the digital camera market is zoom capability. “Zoom is a big deal these days,” he said. “The P100, for example, is fully automatic with a long zoom. It has a 25x zoom.” Nikon also offers a couple of pocket-sized cameras with 10x optical zoom, he added. “Optical zoom is important because most people have compact cameras, and while they’re convenient to travel with, they’re not always ideal for when you need to reach out onto the playing field and pick out a child playing baseball or soccer,” Crawford explained. “Those long zoom cameras become aspirational. It’s what people want because it allows them to capture the image they really want to capture. They might be intimidated by an SLR, but with the P100 or the L110, they can pick up tremendous zoom capabilities but without the cost or intimidation factor of the SLR.” The Nikon Coolpix P100 provides the ability to shoot Full HD (1080i) video, as well as giving users the ability to zoom in close and shoot faster. The P100 features a CMOS sensor, 10.3 megapixels and an incredible 26x optical Zoom-NIKKOR ED lens. It also has a bright 3.0-inch high-resolution variangle LCD and electronic viewfinder to make it easy to compose and share pictures. When you want to capture the fast action, you can make the most of this camera’s ability to shoot high-speed 10fps shooting at full resolution. It is available at a suggested retail price of $399.95.

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The Vivitar iTwist X018 PHOTO COURTESY OF VIVITAR / SAKAR. features a relasmall tively 1.8-inch LCD with a twist. The screen can 180 swivel degrees so that it faces forward, enabling the subject to see himself or herself. This is perfect for selfportraits, as well as to show your subjects their expression before you take the shot. (Maybe Aunt Marge wouldn’t always look so grumpy in her pictures if she could see the face she’s making before you click it into the camera’s memory.) Other features include 10.1 megapixels, 4x digital zoom, anti-shake and SD card support. With an MSRP of $99, this camera offers a nice low-cost entry-level option, with a twist. But if you really want to engage your program participants, Carrette said, there are a few features the camera must include. “The digital camera musthave checklist should include: Optical Image Stabilization, a minimum 2.5inch LCD (though 3.0-inch or larger is preferred) and Face Detection shooting mode.” Sounds like a pricey proposition? Don’t worry. Most entrylevel point-and-shoot cameras are loaded with features, too. Take the Canon PowerShot SD 1300 as an example. With a suggested retail price of $199.99, it delivers outstanding value for the consumer seeking a stylish, highly functional digital camera. It features a 28mm wide-angle lens with a 4x Optical Zoom lens and Optical Image Stabilization, 12.1-megapixel resolution and enlarged 2.7-inch PureColor System LCD screen, offering superior visibility. It is available in five color variations, including silver, pink, green, blue and brown, and is a must-have for the consumer on the go. Chevreau of Fujifilm also suggested several must-have features for digital cameras. “Everyone needs Face Detection mode, since most photographs are taken of people and you want everyone to be in focus,” she said. “High ISO and digital image stabilization” are also

ity. “HD compatibility allows direct connection to HDTV to view movies and stills in high image quality,” she said. The Olympus SP800 UZ, available through Mar-San, is a 14.0-megapixel digital camera with 30x wide-angle optical/5x digital zoom that also features 720p HD video recording. Other features include a 3.0-inch LCD, HDMI control, 2 GB of built-in memory, AF tracking, Magic Filters, Face Detection, Shadow Adjustment and Dual Image Stabilization. It is available at a suggested retail price of around $350. Of course, some people still want a separate digital camera and camcorder, and for those folks, there are still plenty of options. The JVC 8GB 1080p High Definition Digital Camcorder, available through Mar-San, features 1920x1080 recording, a 2.7-inch LCD screen,

camera manufacturers couldn’t improve on their already-impressive products. But you’d be wrong. According to Canon’s Carrette, one of the newest top trends in digital cameras is the ability to shoot HD video. PHOTO COURTESY OF MAR-SAN “This varies from a compact point-and-shoot style camera, like the Canon PowerShot SD1400 Digital ELPH, which shoots HD video (720p), to a digital SLR camera, like the Canon EOS Rebel T1i and EOS Rebel T2i, which both shoot Full HD video (1080p),” Carrette said. “Then there’s plenty of options in between those two camera classes, with features including touch-panel LCDs, long optical zooms and special scene shooting modes.” Crawford agreed that the merging of still imaging and video is one of the most important trends in the market these days. “That initially took place in the compact digital camera, which from the beginning featured some sort of video mode,” he said. But now, video has been integrated into DSLRs with high-definition video capabilities, and even point-and-shoot cameras offer better video capability. In addition, Chevreau added that more cameras are offering HD compatibil-

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Detection, One Touch Upload to YouTube, Laser Touch Operation, two-way grip belt and SD/SDHC card slot. It is available for a suggested retail price of $449.95. The Canon VIXIA HF R10 Flash Memory camcorder is a perfect choice for the budget-conscious, while still providing Full 1920 x 1080 HD video. The VIXIA HF R10 incorporates 8 GB of internal flash memory as well as the capability to record directly to an SD memory card with Dual Flash memory. It also includes a Genuine Canon 20x HD Video Lens, Dynamic IS, Smart Auto and Advanced Video Snapshot. The VIXIA HF R10 features Canon’s Relay Recording and HD-to-SD Down conversion. What’s more, it also offers a choice of colors, including black, red and silver. It is available for a suggested retail price of $549.99.

Above and Beyond

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While there are plenty of options among point-and-shoot cameras, as well as camcorders, you would be remiss if you left out one important category. While not every participant will aspire to this level, a digital SLR in your program will be the highest motivation you can give for some participants. “If their budget allows a range of price points, they want to have aspiration products at all price ranges,” Nikon’s Crawford said. “Digital SLRs have been around for a number of years and will continue to be the hottest category within digital imaging. And the prices have come down to where they are achievable for most programs and most consumers.” Sony’s Colla agreed, and added that a wider range of DSLRs are now available. “They have evolved to the point where they’re not just for the professional or prosumer anymore. There are more affordable SLR models available for the entry-level shooter that still have the performance and higher-end capabilities traditionally associated with SLRs. So, it certainly makes sense to include those types of cameras in an incentive or reward recognition-type program.” Sony’s DSLR-A230 offers a great first step into DSLR photography. This model is smaller, lighter, easier to use and offers innovative expansion options not found in other systems. The 10.2-megapixel camera is light and compact,

weighing in at 15.9 ounces. Image stabilization is built-in, and it features a 2.7-inch LCD screen. At a suggested retail price of about $550, the camera comes with one lens. 24 ❘ MAY/JUN E 2010

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PHOTO COURTESY OF CANON U.S.A., INC.

Fujifilm also manufactures digital SLR-style cameras that offer an entry point for consumers who are ready to graduate beyond their point-and-shoot, but still might be a little intimidated by a full DSLR. The difference in these types of cameras is “…that you cannot remove and change lenses,” Chevreau said. “It may sound like a disadvantage, but I find it to be a real advantage.” Chevreau said there are actually several benefits to this type of camera. “The lens that comes with the Fujifilm SLR-style body is much larger,” she said. “For example, the HS10 comes with a 30x zoom (24mm-720mm), so there is no need for any other lenses.” In addition, the body of these cameras is more compact, and they are lighter to carry around. Additional lenses, which can be expensive and burdensome for those who aren’t used to them, are not required. “SLR-style cameras in a program show real value because they do have larger zooms, various manual operations, higher speeds and more advanced modes, and basically appeal to the semi-pro photographer or family that wants to shoot sporting events and portraits,” Chevreau said. Fujifilm’s FinePix HS10 digital camera offers impressive features that combine a Fujinon 30x manual optical zoom lens with sophisticated photographic controls, advanced functionality and DSLR-like handling in a single compact, affordable camera. With its BSI-CMOS sensor and body design, this camera is built for speed. In addition to the Fujinon 30x wide-telephoto zoom lens, Triple Image Stabilization and four unique shooting modes, the FinePix HS10 also features full HD movie mode (1080p) with stereo sound. It is available at a suggested retail price of $499.95. “Digital SLR cameras are the trophy prize at the top of the digital camera food chain,” C a n o n ’s Carrette said. “These cameras cost more than a pointand-shoot, so it’s less likely that your target audience owns one already. Anyone looking to take their photography to the next level will surely want to get their hands on one of these, especially if it also shoots HD video, because your digital camera can now also function as your camcorder. These cameras will be the ultimate motivator that people will work harder for.” Canon’s new flagship for its EOS Rebel line, the Canon EOS Rebel T2i is a lightweight and easy-to-use DSLR. It features an 18.0-megapixel CMOS Image Sensor and increased light sensitivity for low-light photography, and also has an advanced HD movie mode for Full HD movies. It is able to capture up to 3.7 frames per second, and also features Advanced Live View, a new wide-area screen, Auto Lighting Optimizer and Highlight Tone. Suggested retail price for a kit that includes an 18-55mm IS EF-S lens is $899. Through Mar-San, you can find the Olympus E-PL1 Digital SLR Pen Camera with 14-42mm lens. This 12.3-megapixel camera features interchangeable lenses, the new Live Guide, one-touch HD video, six in-camera Art Filters, built-in Image Stabilization, built-in pop flash, in-camera slideshow with sound, 19 shooting modes, TruePic V Image Processor, Face Detection, Shadow Adjustment and more. All for a suggested retail price of $599.99. Nikon’s D5000 is the best-selling DSLR camera from Nikon, according to Crawford. “It has integrated high-definition video and has an articulating LCD screen,” he said. The 12.3-megapixel D5000 empowers your recipients with the ability to capture stunning images, as well as HD video. It features logical and easy-to-use controls that first-timers will appreciate, while those already experienced with DSLRs will love the combination of features, technology and performance. It features a 2.7-inch vari-angle LCD monitor, D-Movie mode and expanded automatic Scene Modes.

Point and Click When you’re ready to make your camera selection, check out these resources. The companies listed here can help you find the right digital cameras to suit your needs. Canon USA Inc. 866-50-CANON www.usa.canon.com/corporategifts Write 200 on reader inquiry fax card Fujifilm 800-869-8600 Ext. 5806 www.fujifilmusa.com Write 201 on reader inquiry fax card PHOTO COURTESY OF NIKON INC.

Available as a kit with the AF-S NIKKOR 18-55mm f/3.5-5.6G VR lens, the D5000 is available at a suggested retail price of around $850.

Parting Advice Whatever you do, make sure you take this last bit of advice from Canon’s Carrette: “Don’t forget the basics. What your mother told you about ‘it’s what’s inside that counts’ still holds true—including how a camera is constructed. Make sure you’re considering cameras with quality, all-glass optics to provide the best image possible; an image processor that is designed to be used for digital imaging to capture and store the highest quality image; and an intuitive design that includes a user-friendly control layout to ensure you can figure out how to use it when the PIP moment you are trying to capture presents itself.”

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Mar-San (for Olympus, JVC) 773-583-5700 Ext. 22 www.mar-san.com Write 202 on reader inquiry fax card Nikon Inc. 888-547-8684 http://specialmarkets.nikonusa.com Write 203 on reader inquiry fax card Sony Electronics Inc. 800-833-6302 www.sony.com/motivation Write 204 on reader inquiry fax card Vivitar/Sakar 718-434-2356 [email protected] Write 205 on reader inquiry fax card

THE GIFT THAT KEEPS ON GIVING Gift Card Reward, Incentive Programs Continue to Thrive

By Deborah L. Vence Gift cards are everywhere. They are convenient to give as a Christmas or birthday gift, are easy to use and offer consumers plenty of product choices. Well-known retailers such as Starbucks, Home Depot and Best Buy, just to name a few, epitomize a market that thrives on offering consumers a chance to try a new product, while repeatedly etching the brand names into their minds. “Gift cards have evolved immensely over the last few years, including new personalization and customization options, and flexible new technology-focused delivery options, including print on demand, e-mail and mobile phone delivery. We believe technology, choice and convenience will continue to be drivers in the gift card industry,” said Marcell King, senior manager of corporate gift cards for e-commerce giant Amazon, based in Seattle. “Gift cards are a convenient way to provide a memorable, motivating experience to multiple populations simultaneously. We’ve seen the popularity of gift cards continue to increase year over year,” said Matt Harris, vice president of marketing at American Express Incentive Services (AEIS) LLC, a Fenton, St. Louis County, Mo.-based company that offers business-to-business reward solutions for corporate incentive and consumer promotions programs. “Part of the appeal of reward cards is their flexibility in numerous applications and programs, including idea generation, safety, anniversaries, employee referrals, lead referrals, bonus payouts and new business development.” For businesses involved in incentive, reward, loyalty and recognition programs, gift cards are considered particularly effective for a number of reasons, including how businesses continue to recruit employees, reward customers, motivate dealers, recognize employee contributions and even get customers to spend their money on a specific brand.

The Nuts and Bolts We’re most familiar with the physical form of gift cards as being a shiny, slim piece of plastic that fits snugly inside a wallet, or an electronic gift certificate—a seemingly growing trend among retailers, according to a November 2009 article in Forbes magazine that indicated that Home Depot, CVS pharmacy and the Container Store are among many national retailers adding electronic gift cards to their Web sites. But, beyond that, gift cards are divided into two distinct categories in the incentive market: prepaid closed loop and prepaid open loop. Open loop cards—single load and reloadable—are issued by a bank, carry a card brand, such as Visa or MasterCard, and are accepted anywhere debit is accepted. Closed loop cards are merchant-specific cards, such as Starbucks or Macy’s, and only are accepted by the issuing merchant. “Single load cards are used very heavily in consumer-oriented promotions. Open loop

incentive sales

New look. New day. Who knew.

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largely replaced a check. And so, now we’re talking about single load in a single promotion. Consumers like convenience and choice—those are two big themes,” said Juli Spottiswood, CEO of Parago Inc., a Lewisville, Texas-based company that specializes in the design, development and management of customer service-focused marketing programs. Reloadable open loop cards, which are largely used in corporate incentive programs, are geared toward a sales channel, such as to sales employees, for instance, anything other than a consumer. “The company will continue to reload [the card]. It’s corporate funded every time there are more rewards earned. They have become more popular in the corporate incentive marketplace,” Spottiswood said. “So, when you think about convenience and choice, single load and prepaid speaks to both of those things. If I get a check, it sits in my wallet. A card can be used immediately. That’s really convenient to me. I can do with that card whatever I want to. I can spend it on a big purchase. There are a lot of choices in how you use it.” Promotional sponsors—the companies that give the gift cards out—have the authority to put their own brand on a specific product, which is really valuable. “It’s a much stronger marketing vehicle than a check. If you are a retailer, you are one of those locations--recycling the reward dollars back to you. So, to the consumer, it’s about choice. For a promotional sponsor, it’s a great marketing vehicle, a chance to recycle reward dollars,” Spottiswood said. “That’s why they have become so popular.” Rory Smith, director of sales at Lisle, Ill.-based Royal Performance Group, a company that provides stored value and prepaid card solutions—both domestic and international— for retail organizations, said gift card incentives can reduce the amount of reported accidents at manufacturing plants, motivate dealers to increase the volume of products sold, incentivize customers to buy more of their products and recognize or thank loyal customers. “Gift cards are very popular in employee safety programs, employee wellness programs, sales incentive programs, sales contests, customer loyalty and reward programs, customer sweepstakes, gift with purchase programs and holiday gifts,” Smith said. “In the business-to-business marketplace, companies set very specific business and performance goals for either their employees or their sales force or their customers.” Moreover, the value of gift cards falls under two types: one to the business giving the gift card, and one to the recipients, King, of Amazon, said. “For the recipient, gift cards offer choice and can provide universal appeal. There are hundreds of gift cards available that allow recipients to choose from millions of items and experiences, whether it be iPods, books, dining at your favorite restaurant or skydiving from 10,000 feet—the recipient is likely to find something they want,” he said. “From a business perspective, gift cards require very little overhead to inventory and are easy to fulfill,” King said, adding that choosing the right incentive or gift to motivate, recognize or reward can be challenging because it’s difficult to know what the recipients might want. In that case, King said, to get the most out of the performance of a reward, recognition or incentive program, “it’s important to provide your audience with rewards they will appreciate or that will inspire them to act or change behavior.”

Plus Points In general, gift card benefits include choice, selection and flexibility for the recipient. But, the payoff for businesses that offer gift card rewards and incentives can be big. That is, regardless of what form they come in, gift cards are an incentive to motivate people at work or to invest in a new product or service. “To earn gift cards in incentive programs, employees or customers have to make a conscious decision to do something before they earn or receive the gift card. So, they have a vested interest in the incentive gift card selected and, therefore, are much more likely to use or redeem it,” Smith said. Everyone wants to be recognized for a job well done, which is why gift cards are one of the top choices of businesses to reward their employees. “What it comes down to is what can companies do to drive the best behavior? More and more, I go back to the same reason—the branding opportunity,” Spottiswood said. “There are several different channels that sell my software. If I pay the channel partners on a reloadable prepaid card, it’s an immediate reward. And again, sitting in their wallet, is a prepaid card as a constant reminder [of the brand].” Smith pointed out that a few years’ back, corporate rewards and incentive programs offered mainly premium merchandise and travel rewards, but then gift cards arrived on the scene. “They quickly became the No. 1 most used and most requested reward or incentive regardless of the type of promotional program—from both customers and employees,” Smith said. “Why? Because of choice and the ease of use for the participant along with value, you can use it in stores along with any discounts or special savings offers. Employers really like them because they’re easy to store, use, issue and once they distrib26 ❘ MAY/JU N E 2 01 0

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at Omaha, Neb.-based Baird Holm LLP. “LAP cards [loyalty, award and promotion], though, are excluded from the provisions of the expiration dates provided that you meet the disclosure requirements. [Businesses] have to mark it as a LAP card. It needs to say it on the card. The first thing you have to do is change the card to include the disclosure on the card face. If there is an expiration date, that has to appear on the face of it, and you have to have at least five years [before it expires]. “If you have a reloadable card, it’s exempt unless it’s marketed as a gift card,” Maher noted. “The LAP card rules were very thoughtful. They aren’t really going to cause much disruption.” As stated by the new gift card legislation, Maher said, non-physical gift certificates also must reveal the disclosures on the code or electronic document. “For example, where the certificate is a code or confirmation that is provided to the consumer online or sent to their e-mail address, disclosures must be documented online. It need not be made on the electronic document if it is accompanied by a supplemental gift card and full compliant card. You would have to include in any e-mail the required disclosures,” he explained. “It’s interesting, if you are a retailer and a consumer signs up to have promotional materials sent to their PDA or cell phone, technically you have to include the disclosure [information]. If it’s sold or distributed and doesn’t meet one of the LAP exceptions … if you decide to deliver in some type of virtual form, you do have to make sure the disclosures are in compliance,” Maher added. Spottiswood pointed out that when the rules were first introduced, they included both open and closed loop cards. “The definition was broad, too broad in our opinion. And so, myself and another member of the NBPCA worked on a rebuttal to request that LAP cards be excluded New Rules from the [legislation],” she said. “The reason we were asking for exclusion is because When Aug. 22 arrives, many businesses that offer gift cards will have to comply [those cards] are not consumer funded, they’re corporate funded. I’m happy to say that with new guidelines approved in March by the Federal Reserve Board. our work paid off.” The new rules require businesses to disclose fees and expiration dates directly on their So, what does this all mean? gift cards—whether they are in physical or electronic form. The decision was made in Basically, Smith, of Royal Performance Group, said that in the long run, the gift the wake of numerous letters sent to Congress last year by disgruntled consumers comcard industry will benefit from the new rules. plaining about early expiration dates and unexpected fees that erode the value of the “In the short term, gift card merchants who have expiration dates or any type of fees cards. associated with their cards will have to make some urgent changes. Almost all of the The rules will apply to all cards—that are subject to the rules—sold or issued on or card brands we represent, which is well over 100 national retail brands, do not have after Aug. 22. Gift card issuers are prohibited from charging monthly fees until after any expiration or any type of fees,” he said. one year of inactivity. Thereafter, only one fee can be charged per month. In addition, Those companies that will need to comply by August, though, have a long road expiration dates must be extended to at least five years after the date the card was ahead of them. issued. “Tens of millions of cards have to be destroyed. They will have to pull all the old Those that are excluded from the definition of gift certificates, store gift cards, and cards off the racks. They will destroy all of them, wasting tons of PVC plastic, which general-use prepaid cards are cards that are reloadable and not marketed or labeled as is environmentally bad. All those cards have to be replaced. It will be a mad dash to gift cards or gift certificates; loyalty, award and promotional cards; cards not marketed get everybody complied. We’re very concerned that a number of gift cards could be off to the general public; certificates issued in paper form only; and cards redeemable the shelves by August,” Maher said. solely for admission to specific events or venues. For some companies, however, the new gift card rules will not be a factor at all, “Basically, [the new rules apply to] any card that is sold or distributed to a consumer such as for JCPenney. for personal or a household purchase,” explained Terry Maher, corporate counsel to “Our gift card doesn’t have any expiration date or fees associated with it. And, in New York-based Network-Branded Prepaid Card Association (NBPCA) and a partner fact, this is stated prominently on the back of the card. [We have] two restrictions: The card is not redeemable for cash except where required by law and the card may not be used to pay on credit accounts. Other than that, we have no fees or other restrictions,” said Cynthia Mielke, manager of national accounts for JCPenney Incentive Sales. “The new rules will not create any changes for the JCPenney card. The fact that our gift card is so user-friendly and can be used in stores in the U.S. and Puerto Rico on jcp.com and through the JCPenney catalog also makes it a very attractive choice.” All relevant information is clearly identified on the back of the card and on the JCPenney Web site. “For incentive programs, we work with our incentive providers to be sure they include any relevant information about the JCPenney card on the participants’ Web sites,” she said, “so that the incentive participant can make an informed choice before choosing the card if it is one of many choices offered.” Mielke added: “Disclosures required by the CARD Act will make it easier for consumers to know exactly what they will pay or experience with the products before purchase. Overall, I think the changes to the U TRUSTED, EXPERIENCED PERSONNEL 877.300.4SVM (4786) incentive industry will be minimal and posU P R O V E N P R O D U C T S , S AT I S F I E D C U S T O M E R S PIP itive.” www.svmcards.com U U N R I VA L E D , R E L I A B L E S E RV I C E ute the gift cards the reward program component is completed. No further involvement is needed from the employer.” Companies like Amazon, which declined to comment on the rumored elimination of its merchandise awards, maintains its service in the incentive industry through its corporate gift card program. “The Amazon.com Corporate Gift Card Program continues to service the incentive industry by providing Amazon.com gift cards to agencies and businesses for employee incentive, rewards and recognition programs, consumer promotion and loyalty programs, gifting for all occasions, payment alternatives, and more,” King said. “Amazon.com gift cards … can be redeemed for millions of items in over 40 product categories, beyond just books and consumer electronics. Other product categories include home improvement, fitness, cell phones and service jewelry, and beauty, just to name a few.” Another benefit of gift card incentives is the fact that businesses don’t need a large warehouse to manage inventory because gift cards are easy to distribute. “And, if you’re distributing gift codes electronically, it can significantly reduce fulfillment, labor and shipping costs,” King said. “I also think businesses like the transparency that gift cards provide on the cost side of the equation—margins on gift cards are generally much lower than merchandise.” In the midst of an unstable economy, too, gift cards are proving to be valuable as more employees are opting to choose more practical gift cards. “Exciting gift cards, like a weekend getaway or a day at the spa, catch everyone’s interest. It appears that due to the continued challenging economy, when it comes to employees actually selecting their gift card reward, they’re picking ‘everyday necessity type’ gift cards, such as gas and grocery,” Smith said.

Card terms and conditions apply.

SINCE 1997

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IGCC Close-Up: Gift Cards That Motivate 2

<< BASS PRO SHOPS ®

Give a Bass Pro Shops Gift Card to your favorite outdoor enthusiast. Whether they hunt, fish or just have an appreciation for the great outdoors, a Bass Pro Shops® Gift Card is the gift that is always in season. Recipients have three ways to shop with a Bass Pro Shops® Gift Card: at all Bass pro Shops® retail stores, through all Bass Pro Shops® catalogs 24x7, and via the Internet at basspro.com 24x7. Bass PRo shoPs: 800-951-1000 Write 400 on reader inquiry fax card.

www.owincentives.com

BEST BUY >>

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corporategiftcards.bestbuy.com

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www.shellgiftcard.com

4

RYMAX MARKETING SERVICES

Rymax offers OSI Restaurant Partners Inc. Gift Cards for incentive programs. OSI gift cards are the freshest way to see for yourself how one card can offer so many appetizing choices. From steak and seafood to classic Italian, OSI restaurants satisfy every craving. The OSI card can be redeemed at any of the following restaurants: Outback Steakhouse, Carrabba’s Italian Grill, Roy’s, Bonefish Grill and Fleming’s Prime Steakhouse & Wine Bar. Rymax maRketing seRvices inc.: 800-379-8073 Write 403 on reader inquiry fax card.

www.rymaxinc.com

5

NO FEES // NEVER EXPIRES // FITS ANY AMOUNT Redeem at over 2,500 locations, online or via catalog. 1.800.690.5996 // www.footlockergiftcard.com

>>

3

Reward loyal customers and attract new ones with the power of Best Buy® Gift Cards. Your best customers can choose the home entertainment and electronics rewards they really want at more than 1,000 Best Buy stores, or online at BestBuy.com®. Easy to use and easy to give in any denomination from $5 up with no minimum order and quick turnaround. Best Buy: 877-370-1234

SHELL

Rev up your family, friends, employees or customers with the Shell Gift Card. There are over 14,000 Shell stations in the United States, serving more than 6 million Americans each day. There’s probably a Shell station near you—in fact, over 80 percent of Americans live within 5 miles of a Shell station. The Shell Gift Card is available in many standard denominations, as well as any custom denomination up to $300. Ask about card customization. shell: 888-shell-04 (743-5504)

<<

1

<<

The Incentive Gift Card Council (IGCC) is a strategic industry group within the Incentive Marketing Association (IMA) that aims to educate the incentive marketplace and corporate community on the benefits of using gift cards. The IGCC member directory, available online at www.usegiftcertificates.org, is your source for leading merchandise, travel, food, accommodations and services gift card suppliers in the incentive market. Here are profiles of some of those IGCC members:

NIKE INC.

The right gear can make a huge difference in performance and comfort. Your recipients can shop Nike’s complete collection of high-performance footwear, apparel and equipment at NIKETOWN, NikeFactoryStores, NikeWomen, NikeStore locations and online at NikeStore.com. Nike Gift Cards may also be used to create individually customized Nike product at NIKEiD.com, where a gift card user becomes a part of the design process. No expiration. nike inc.: 877-220-6453 Write 404 on reader inquiry fax card.

www.nikestore.com

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>> SVM

7

JCPENNEY >>

Gift Cards from SVM help grow your business when used as customer or employee rewards, product enhancement offerings and attractive sales incentives. Take your promotion to the next level by displaying your logo or brand on the gift card to create a traveling billboard for your company. SVM has built trusted customer relationships on accurate, quick, on-time deliveries and convenient one-stop shopping with more than 150 national brands in stock and ready to ship. svm: 800-972-7481

JCPenney has made it their mission to bring a level of affordable style to their customers that they cannot find anywhere else and offers a more exciting shopping experience than ever before. As one of America’s leading retailers, JCPenney operates 1,108 department stores throughout the United States and Puerto Rico, as well as one of the largest apparel and home furnishing sites on the Internet at jcp.com, and the nation’s largest general merchandise catalog business. Through these integrated channels, JCPenney offers a wide array of national, private and exclusive brands, which reflect the company’s commitment to providing customers with style and quality at a smart price. maRketing innovatoRs: 800-832-4438

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www.jcpgiftcard.com

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<< MAUI JIM

With more than 60 styles of world-class sunglasses along with apparel and accessories, Maui Jim has everything you’d expect from the leading brand of eyewear. And with the flexibility of Maui Jim’s new gift card program, it’s even easier to give the Aloha spirit. Consider Maui Jim Gift Cards for incentive programs, corporate gifts, loyalty awards and consumer promotions. maui Jim: 800-614-6790

<<

www.svmcard s.com

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FOOT LOCKER

Foot Locker is the world’s largest athletic specialty retailer. Foot Locker GiftCards are redeemable for the latest in athletic footwear and apparel at more than 2,500 Foot Locker, Lady Foot Locker and Kids Foot Locker stores in the United States. Foot Locker GiftCards can also be redeemed through catalogs and online. Foot Locker GiftCards have no expiration dates or dormancy fees. Foot lockeR inc.: 800-690-5996 Write 401 on reader inquiry fax card.

www.footlockergiftcard.com

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www.mauijim.com

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Taking Employee Recognition Back to Square One

The ABCs of Engagement

output of additional and discretionary effort rather than with employee satisfaction. For example, an employee may be perfectly satisfied with strolling into work late each morning, pretending to read e-mails while surfing the ’Net, and turning in one or two mediocre projects a week. That individual is gliding through the workday, slipping through the cracks and certainly not giving any discretionary effort—and possibly not giving any effort at all—toward the company’s overall goals. Instead of the mantra, “Happy employees equal happy customers,” a more accurate phrase would be “Engaged employees equal engaged customers.” No matter how great the product is, how wonderful the pricing is, or how convenient a location a company is to the customer, there is anywhere from a three-to-six-times greater impact on future loyalty based on how the customer is treated by employees. And bad news travels fast. Word-of-mouth is one of the most powerful influences for people making buying decisions. A customer who has a bad experience will tell four times as many people about it as they would a good experience. And, chances are, the negative experience will be exaggerated, and not to the organization’s benefit. Statistics show that employee engagement is more than just a corporate buzzword. According to a study by the Corporate Leadership Council, which surveyed more than 50,000 employees in over 59 organizations worldwide, increased employee engagement can lead to a 57 percent increase in discretionary effort. The same study found that the increased effort results in a 20 percent performance improvement. To go a step further, the improved performance can lead to a 42 percent increase in the financial performance of the company.

By Heather Racansky What does it mean to have an engaged workforce? Over the years, the definition of the term, “employee engagement,” has been muddied. It has been thrown around as a buzzword in companies, at workshops and at management training seminars as the key to corporate success. And while it is very true that having an engaged workforce is crucial for survival—especially now—the true meaning of engagement seems to have been lost. So, let’s bring it back to basics. Engagement, in simple terms, is an employee’s willingness to give discretionary effort. Discretionary effort is the difference between the level of effort that an individual is capable of, and the level of effort required to “get by.” Engaged employees feel an emotional bond to their employers. Those individuals see the company’s goals as their own and are willing to put in additional time and effort to see those goals met, explained Michelle Smith, vice president of business development at O.C. Tanner, a Salt Lake City-based company that provides employee recognition awards and programs for service, sales, performance and employee motivation services. Meanwhile, Patty Saari, vice president of client services for engagement and events for Minneapolis-based Carlson Marketing, a global marketing services company, said that engagement is the emotional connection that an employee has to an organization. This emotional response translates to the employee being more productive. In addition, she said that an engaged employee with a positive emotional connection benefits from an enriched work-life balance while the organization benefits from increased productivity. “The emotional connection between an employer and an employee is the most valuable and meaningful component to driving business change,” Saari said. “And as a result of that commitment, the discretionary effort and productivity is what the organization is able to see as a positive consequence.” The biggest point of confusion, though, is that people often substitute the term “employee engagement” with “employee satisfaction.” Engagement and satisfaction are two completely different mindsets. Smith suggested equating engagement with the

Is It Worth It in This Economy? In a word, yes! Not only is engagement worth it, but it is likely crucial to a company’s survival. Smith believes that the economic turmoil of the last 18 months has proven that, for some organizations, having an engaged workforce literally has meant the difference between success and failure. She also said that we have yet to see the full impact of engaged employees versus disengaged employees when it comes to surviving the current state of the economy. In order to make it, companies must concentrate on recog-

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nition and appreciation to stimulate an engaged workforce. Now more than ever, it is critical for employees to be engaged. Many companies are working with a smaller staff—meaning that more and more employees are doing the job of many. During this economic downturn, a company’s survival relies on engagement. Logically, it would seem that the current economic climate would hardly allow for employees to require an engaging work environment. Though the unemployment rate is beginning to drop, it is still close to 10 percent. Having a job at all should be enough, right? Wrong. The Right Management survey of workers in North America asked workers this question: Do you plan to pursue new job opportunities as the economy improves in 2010? The results showed that 60 percent intend to leave; 21 percent said they might leave and are networking; 6 percent indicated “not likely,” but have updated their resume; and 13 percent said, “No, I intend to stay.” The fact that more than 80 percent of the current workforce intends to change jobs is a sobering statistic. This doesn’t mean that individuals who are working aren’t grateful to have a job, but it does mean that at the first sign of recovery, a huge chunk of the current workforce intends to leave their current jobs to search for one that will recognize and appreciate them for the work they do. What is even more startling is that the majority of disengaged employees are the highest-potential employees, and the numbers are growing. These high-potential individuals are the majority of those who are actively pursuing new opportunities and planning to change within the next 12 months. “Companies need to be aware that if they don’t engage their top people, they will lose them and be left with those who don’t want to put forth any additional effort,” Saari said. Many organizations are making short-term changes to help balance their budgets. “While employees certainly are thankful to have jobs, they are not ignorant to the changes happening around them,” Saari said. “Benefits are being cut, co-workers and friends are being let go and walking out the door. That doesn’t leave the ‘survivors’ with much of a positive feeling.” The effect that these changes have on employees goes far deeper than the typical cost savings. The short-term savings might be justified, but the long-term impact often is detrimental down the line. Right now, workers are feeling overworked and underappreciated. For the most part, that is unacceptable. There is no excuse for managers to not use “please” and “thank you.” A simple, “I appreciate your effort,” is fundamental in any economy. That’s not just good business, that’s good manners. And studies say it works. According to a study by Whitewater Strategies in the United Kingdom, two out of three employees don’t receive the thanks they deserve. Furthermore, they say that a simple and sincere “thank you” evokes the same emotional response in employees as a 1 percent raise in pay. Though it might seem that pulling the plug on employee recognition programs could be a quick fix for “trimming the fat,” corporations should keep in mind that the company could not run without its people. “Because of discretionary effort, the current workforce is exactly who is going to help us recover more quickly during this economic downturn,” Smith said. “To disengage people at precisely the time when companies need the extra effort, need their entire workforce pulling in the same direction, and need all their employees to be focused on the same goals is extraordinarily unfortunate.” Some companies do realize that their employees are the heart of the company. Others have chosen engagement to be an area where cuts can be made. Whether out of desperation or just plain misinformation, some employers believe that their staff is lucky to have jobs at all. But, that is no way to run a business. Smith noted that even in this economy, people are unwilling to settle for working at a company that doesn’t treat them respectfully, or doesn’t appreciate the effort and the value that they bring to the organization. “These factors will play a much larger role when we begin to see recovery. Companies that have not treated people well during the downturn are going to find themselves in rather lonely places,” she said. “Organizations that have continued to support, encourage and engage employees will have the pick of top talent out there. Clearly, this is going to be an advantage to those organizations going forward.”

How Do We Do It? Now that we know what engagement is and why it’s so important, how do we ensure that employees are engaged and that they stay that way? “The first step in creating an engaging environment is to start at the top,” explained Smith. One of the greatest fallacies that leaders believe, which is a disservice to themselves and their employees and organizations, is that employee engagement is something that should just be delegated to human resources. This is not to say that human resources shouldn’t be involved in the process, but it needs to start with the leaders. Top-level management needs to care about the initiative, they

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Measure It The 12 questions in the Q12 Index, taken from the Gallup Management Journal, “Feedback for Real,” by John Thackray, include the following: 1 Do you know what is expected of you at work? l 2 Do you have the materials and equipment to do your work right? l 3 At work, do you have the opportunity to do what you do best l every day? 4 In the last seven days, have you received recognition or praise l

for doing good work?

5 Does your supervisor, or someone at work, seem to care about l you as a person? 6 Is there someone at work who encourages your development? l 7 At work, do your opinions seem to count? l 8 Does the mission/purpose of your company make you feel your l is important?

job

9 Are your associates (fellow employees) committed to doing quall

ity work?

10 Do you have a best friend at work? l 11 In the last six months, has someone at work talked to you about l

your progress?

12 In the last year, have you had opportunities to learn and grow? l

need to understand its impact, and they need to set an example. The most widely used phrase that seems to define engagement and recognition is, “Practice what you preach.” If upper-level executives fully understand and support the engagement initiative, it will trickle down to managers and employees. The reverse also is true. If employee engagement doesn’t seem to be a priority to the higher-ups, it won’t be a priority to managers, either. “Beyond the upper-level executives, the other group that is also very important when it comes to employee engagement is the line management team,” Smith said. Saari agreed. “Workers quit their boss, not their company,” Saari said. This is an interesting observation—especially in larger companies. It only makes sense that an employee’s only impression of the overall company is, oftentimes, the immediate supervisor. If employees love their managers, despite any problems the organization might be facing, they’re more likely to stay. The opposite also is true. Even if the company has everything going for it, if employees are unhappy with their relationship with management, it is highly probable that workers will leave the company. When starting at square one, Smith said to have the leaders of the organization begin by engaging management. It must be made clear that employee engagement is important. Saari agreed. She stated that, “The most immediate engagement results are provided by the immediate supervisors.” Be sure that managers understand how to give recognition, starting with a simple “please” and “thank you.” Managers should be trained on how to show appreciation and acknowledgement to employees, and also know why it is so important. Next, managers should be encouraged to use the recognition program. Many times managers look at their recognition program budget as a place where cuts can be made in case of overages in other areas. This is a huge mistake. Smith said that the No. 1 reason why managers don’t give recognition to their employees is because they don’t know how. Organization leaders need to give managers the confidence they need to be comfortable when demonstrating appreciation to employees. A simple solution is for leaders to lead by example themselves—by recognizing and showing appreciation for managers. Also, recognition should not be limited within departments. If someone in marketing does something great to help the sales team, a sales manager should feel comfortable acknowledging and recognizing the effort put forth by that employee. Smith noted that a challenge that many organizations face is when the company suffers from siloing. This, of course, is when each department works independently from the others and minimal communication transpires interdepartmentally. “Recognition and incentives are a great way to break down those silos,” Smith said.

Saari said that improving the manager-employee relationship is easy: start by listening. To listen is to hear with thoughtful attention and consideration, whereas hearing is just the capacity of apprehending sound. The two words are so often swapped that, like engagement, the terms’ subtle meanings are lost. Saari recommended taking a formal approach, like a survey, for example. Gallup Inc. compiled the Q12 index, a 12-part survey designed to measure employee engagement. (See “Measure It” on page 34.) Nine of the 12 factors have virtually no cost. Half of the survey points focus solely on communication. Experts across the board seem to agree that the cornerstone of successful employee engagement relies heavily on constant, consistent and free-flowing communication. The number one Q12 survey question really hits it home: Do you know what is expected of you at work? The impact of an employee answering this question with “no” is disastrous. How can people in the workforce right now not know what is expected of them? Managers should not be afraid or embarrassed to ask seemingly stupid questions. It can’t be assumed that employees know what is expected by managers, especially since so many workers are doing the job of more than one; so many positions have been consolidated. Clear and concise expectations and goals should be laid out for each employee. This first step to engagement is free. Another easy place to make improvements is with No. 4 on Gallup’s Q12 survey: In the last seven days, have you received recognition or praise for doing good work? Managers should not feel embarrassed to commend workers for a job well done. Again, it should never be assumed that an employee “just knows” he is appreciated. The fix is simple: As a manager, if your employee does something well, say something about it. If a project is handed in early, acknowledge it. Say “thank you” more often. People often see their co-workers more frequently than their families. Talk to each other. “The recognition element doesn’t have to be tangible, it could literally be a non-monetary recognition item,” Saari said. “But of course, there are definitely incentives that can be utilized to promote the idea of ‘the carrot’—something you’re trying to lead someone toward.” Saari suggested using tangible rewards, such as merchandise or travel incentives, when they are the result of changed behavior over a course of time. “In our experience, tangible rewards are most appropriate when given as part of recognition process or series of events that culminates in a fantastic trip or some sort of tangible items that symbolizes a job well done,” she said. Smith pointed out that the recognition or reward should be appropriate for the work done. “Three months of grueling overtime may be deserving of more than a ‘thank you,’” she said. “In this instance, a tangible reward may [be more] suitable: a dinner out with family or a merchandise piece of his or her choosing.” If the scale of the reward isn’t adjusted accordingly, it often can prove to be a disincentive. A reward is essentially putting a tangible value on efforts of the individual. Tangible rewards should also be used with discretion and with consistency across the board. If in January an individual works some serious overtime to get an important, last-minute project completed by deadline—clearly going above and beyond the normal job description—and is rewarded with a weekend getaway, that employee likely will be motivated to repeat that behavior in the future. But, if May rolls around, and the same individual again exceeds expectations, but is given a pat on the back, that employee may now be disengaged. If the entire company is given a goal to meet, say, a contest to measure which unit can make the biggest positive impact on customer satisfaction numbers, it would be a great idea to incentivize the employees with a tangible reward. However, if the manager in one department uses a pair of movie tickets motivates his staff, and another manager is offering a 12-month lease on a BMW, it’s clear which department will be putting in the most discretionary effort. All managers must communicate their employee engagement plans with one another so as not to have unfair expectations and goals. For financial reasons, many companies have understandably made cuts in tangible reward budgets. But cutting back doesn’t mean cutting off. Offering a more modest selection at lower price points can help solve the cost problems. Having a healthy mix of tangible and intangible reward and recognition options is optimal for successful employee engagement. “All managers and management styles are unique,” Saari said. “So, creating an environment that appreciates the uniqueness, but also supports a general expectation that recognition is critical to business, is fundamental.” Engagement in the workplace is so crucial to a successful business. If upper management is able to understand the value of an engaged employee, an individual who is willing and able to give additional, discretionary effort, the entire company will benefit. The long-term effect of an engaged workforce is massive. When an engaging work environment becomes corporate culture, the ripple effect is so strong, each individual benefits from a positive work-life balance. In return, the company profits from the additional effort and positive emotional connection with its employees. We are living in a time where hard efforts by individuals are going to get us out of this lull in the economy, and a lack of engagement could keep us in it. It all comes back to the discretionary effort. If people are willing to put forth more effort than is required, if they’re willing to really go above and beyond, we will get through this faster. On the other hand, withholding the effort will have the opposite effect. If people are not motivated to give at least the effort required of them, the organization will fail. The first step is learning where the weaknesses in an organization are, where progress can be made and how communication can be improved. When the entire company is made aware of the overall goals, and everyone is able to see how their efforts affect the company, everybody feels accomplished. Employees know they are appreciated. Each department and individual is working toward common goals. An engaged workforce is a recipe for success. PIP

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Measure for Measure Maximize Value From Your Incentive Program Whether it’s forecasting the return on an incentive award program over time, evaluating financial feasibility or even deciding when to terminate projects, measurement of return on investment is critical. After all, executives and managers are under close scrutiny to prioritize projects based on their expected returns.

By Rick Dandes

Performance-improvement programs that really work often are designed based on a strategic approach to deliver value above and beyond the investment. And, why not? In these challenging economic times, with corporate executives scrutinizing every dollar, chopping unnecessary spending and keeping close tabs on the appearance of excess, only the most essential programs are likely to survive. Department managers and personnel are being asked to do more with less—or in some cases making the tough decisions to do less with less—so understanding how to maximize value from an incentive program is key to its success. “Corporations worldwide are scrambling to find effective ways to not only attract and keep the best talent, but also to elevate their performance, productivity and service levels to new heights,” said Michelle Smith, vice president of business development for Salt Lake City-based O.C. Tanner, a company that provides employee recognition awards and programs for service, sales, performance and employee motivation services. “Embodied in this quest is the ability to align individual behaviors with strategic corporate objectives,” she said. “And, importantly, to motivate and reward those who meet or exceed those objectives. In today’s economy, organizations must achieve maximum return on investment (ROI) in their people to boost corporate performance and gain a competitive advantage.”

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It’s what distinguishes and differentiates top-performing companies from those that might not be around next year. Research suggests that companies that recognize and incent their employees, partners or customers outperform their competitors by at least 30 percent to 40 percent in revenue growth, net income and stock performance. Moreover, the employees influenced by incentive programs are busy spending their day influencing other vital corporate assets—customers. The link between customer satisfaction and loyalty, and employee satisfaction and loyalty has been firmly established: Profitable and loyal customers are the result of engaged employees. “Putting incentive programs to work for you is far more than a good idea,” Smith said. “It’s a profitable plan. In an increasingly competitive market, the data suggests that incentive and recognition programs can no longer be viewed as a discretionary expense, but should be viewed as a vital and strategic tool to ensure corporate growth and survival.” But how do you prove that an incentive-award program is effective? How can you ensure that the program will not end up costing you more than it’s worth? The answer, explained Todd Hanson, president and founder of Appleton, Wis.-based Catalyst Performance Group, a company that specializes in performance management, is to make sure that you have a properly planned and structured campaign that accounts for not only what you’ll gain from the program, but also what you’ll need to spend to implement the program. “If you can clearly define your return on investment, such as delineating costs, results and benefits, then you will have successfully accomplished a major portion of your plan,” he said.

In some cases, companies are tossing out conventional thinking about the need for ROI on incentive program initiatives and focusing on how to advance their overall business strategy. Certainly, improved morale, increased level of competition and overall employee or customer goodwill all are direct benefits of any incentive award program.

Most experts agree that designers and managers should first gather input from top leaders as the program is being developed, to engage them in the planning process and gain agreement on key assumptions and desired outcomes or improvements.

Effective incentive programs begin with the design of the incentive plan, and making sure that the designer and managers of the program have clear objectives.

Thus, the first key to measuring ROI, Smith, of O.C. Tanner, added, is creating the program around specific, measurable goals and activities. Those criteria should be firmly established at the onset of the program and clearly communicated to the program participants, with an equally clear message of what they can do to contribute to the achievement of those goals, along with how and what they will be awarded for meeting and exceeding those goals.

Rodger Stotz, chief research officer for The Incentive Research Foundation (IRF), said that having clear objectives is the first step in designing an effective incentiveaward program.

“The most successful programs,” Smith said, “track and review progress throughout the program so that adjustments can be made rather than waiting until the end to analyze the results. Put a process in place to track and measure the results.”

“Make sure you’re looking at what you are trying to achieve, and then go about monitoring it and measuring it as you go along,” he said.

Smith also recommended a follow-up survey to all participants after the completion of the program to gain additional feedback on the experience and to gather ideas to improve the program in the future.

Develop Clear Objectives

Secondly, Stotz said, “When you talk about ROI, understand that the concept itself has evolved. There are financial as well non-financial returns. So, as you are looking at a program, it’s important to understand both the financial implications and the nonfinancial benefits.” For example, some of the areas impacted in the arena of non-cash awards are engagement of suppliers, employees, channels and consumers. This engagement—the ability to have individuals at each level of the value chain committed to the organization and its products and services—is something that more and more people are measuring. It is seen more as a non-financial measure, but it’s still critical. Jennifer Kallery, vice president of marketing at market research firm Maritz Inc., based in Fenton, Mo., agrees that looking at both behavioral and attitudinal measures to evaluate effectiveness can be almost as important as the financial ROI. “In terms of behaviors,” she said, “identifying key drivers or activities that lead to improved performance and measuring changes in these behaviors before and after incentive solutions are implemented is critical. Linking these behaviors to financial outcomes like increased sales or profitability to support building return on investment models provides an even stronger case. “When we look at attitudinal measures,” Kallery said, “it’s important to consider program participant’s pre- and post-program perspectives. In this way, we offer participants the opportunity to provide input into program design to ensure maximum effectiveness; after that, you measure how motivating they found the program to be after it runs.” There are several additional ways to show a program is effective.

If a program will be running for a year or more, it’s often beneficial to survey participants midway through the program to garner helpful insights. Then, there is what Stotz, of IRF, called an “ad hoc” or after-the-fact review. One way to accomplish this is to measure the results of those who participated in the incentive program versus a control group of employees who did not. This is particularly effective when analyzing the effectiveness of a sales incentive-award program. “Another way to show a program is effective is to provide both a pre- and post-simulation,” explained Stotz. “In other words, looking at designing a program and then going through the ‘What ifs?’ scenarios: ‘What if sales improve by 10 percent? What would that means in terms of increased revenue, increased gross profit and increased cost, based on the fact that we have to fund the program?” Stotz gave the example of how this kind of an analysis can prevent a program from becoming ineffective. “The IRF conducted a study where company executives learned that a particular program would result in a negative return on investment,” he said. “The reason for the negative results,” Stotz explained, “was that as they went through the analysis of simulating the different possible outcomes, this company realized the issue was they could perhaps sell the product, but they could not manufacture and deliver the product without experiencing huge increases in cost. They asked what if the sales force went out and sold new customers, could the finance department do the credit checks in a timely fashion to make sure that the customer was credit-worthy? Number two, they went to manufacturing and said, if we increased by 10 or 15

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percent the requirements, what would you need to do to produce those in a timely fashion to meet our commitments? And they found out they would have to add more people or pay overtime, which is an expense, and secondly, they would have to buy more material for which they did not have a current contract.”

Meanwhile, researchers at Maritz agreed that there are some bottom-line basic practices or standards that go with measuring ROI for incentive programs. They include looking across the business to see where other groups may have impact or issues that should be considered in the program.

Those kinds of statistics provided designers and managers with enough data to transform the program into a successful one.

For example, if a sales incentive program is implemented and it’s designed to drive 25 percent growth in sales in a company where new accounts require significant support from customer service, but the customer service group isn’t informed or engaged in the program, sales growth will be short-lived.

Best Practices To maximize your incentive program results—and your ROI—include recognition and non-sales employee incentive programs in your arsenal of tools for success. These initiatives will help you gain the support of all the people who can influence your goals and influence all the areas of your business. “If you’re not actively engaging employees in your goals,” cautioned Smith, “they may be working against your efforts, even if it’s done unintentionally or inadvertently. None of us can afford to take that chance in the increasingly competitive environment we find ourselves in. Smart leaders are addressing a broader audience of employees in their programs to reinforce and ensure the corporate results they set out to achieve.” Research validates Smith’s pronouncements: A study by the Forum for People Performance Management & Measurement found a direct link between employee satisfaction, customer satisfaction and corporate profitability, even when the employees involved did not have direct customer contact. “There is a growing body of other research linking incentive initiatives to increased shareholder return, revenue growth, stock performance, job growth, profit and market capitalization,” Smith said. In a sense, this has transformed incentive programs from a nice-to-have to a must-have business tool, which can maximize results by including all the people who can help you succeed. Another best practice is to consolidate programs to increase their effectiveness and ROI. Traditionally, companies run a number of disparate incentive programs that span numerous departments. The most popular approach has been to allow each department to implement a unique incentive program with goals and rewards specific to the individuals in that unit. The sales department will reward quotas met and exceeded, while customer service might reward customer retention figures or telemarketing metrics. However, when you have misaligned and separated incentive programs within an organization, there is poor accountability to ROI and overall success. Most companies don’t even realize how much they’re spending on incentive programs, let alone how much value they’re extracting from them. Smith explained that running a multitude of disparate incentive programs also undermines the opportunity to create a consistent, over-arching performance-based culture throughout the company. “Incentive programs,” Smith said, “should counteract divisiveness, not encourage it. In many organizations, certain departments are in the spotlight more than others, despite the fact that their individual contributions are every bit as important to the overall goals of the organization. Don’t make that mistake. Having a single overarching program—customized to each department’s unique goals—helps to maximize the return on the incentive investment. It also gives a snapshot of individual and departmental performance, and the progress of the company as a whole, something that effectively demonstrates ROI.” Stotz added that one of his key best practices is very basic: making sure that the performance you are trying to achieve is influenced by incentives or recognition. “Sometimes the problem is not motivation,” he said. “Sometimes the problem is actually a systems problem or an equipment problem. I did a project in Europe with a major software supplier. They were not getting their sales force to sell at the rate that was projected and needed. I looked at a variety of issues and found out that the computers the software salespeople had was inadequate and were not full-featured enough to showcase their software product. Our first step was not to improve the incentive program but to get the proper computer update. Make the computers fast enough to keep up with the software. They were having problems demonstrating the software to potential customers.”

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Other best practices include: clearly identifying and reasonably setting program objectives; understanding and accounting for external influences—market, industry and competitors; proactively identifying ways to engage the broadest participant base by asking participants in advance and designing the program to reach the maximum number of participants. “Programs should set budgets relative to program objectives versus setting the budget first and not properly funding to drive the targeted growth,” explained Jennifer Kallery, of Maritz. “More aggressive targets may warrant bigger budgets. Also, ensure program fairness. If program rules are perceived to favor one group or another, participants will disengage and desired results won’t be achieved. Objective and rules modeling as part of building ROI models is key.” Consider multiple scenarios that appropriately account for risks. “Monitor and adjust during the program. Look for areas of weak performance and quickly address to capture improvement for the balance of the program,” Kallery added. Monitoring during the program shows management which team members are meeting or exceeding goals at any given time, so they can calculate immediate returns on the program investment. Additionally, and particularly important in a down economy, it enables executives to link program costs to measurable activity costs and periodically observe how the program has affected the overall performance and goal achievement. All of these suggestions help show executives that a program is actually working.

Critical Elements Among the basic practices are some critical elements that are essential to any successful incentive program. This applies to managers, employees and stakeholders. “Identifying key objectives is critical,” said Hanson of Catalyst Performance Group. Engaging communications and rewards, and management support or advocacy all are drivers of effectiveness, he added. Participants need to understand how to play and believe they have a shot at achieving their goals and being rewarded for them. Communications—both at the time of program launch and ongoing performance-to-goal reporting and communication— help fuel engagement up front and throughout the program. A strong mix of reward choices that align to an individual’s preferences helps them visualize the reward they will receive when they achieve their goal. The right reward and right target help focus attention. We know through the human sciences that attention is the gateway to choice and strong goal pursuit. The best way to know that all of these program design elements are on target is to ask—through participant surveys using advanced choice techniques that allow program designers the opportunity to make trade-offs and reach the majority of participants with a highly effective program. “Lack of consistency in program execution and a perceived lack of fairness in program structures and/or award distribution are the most common factors cited in programs that fail to meet their intended objective,” observed Smith. She advises program planners to heed the following best practices: • Decide up front specifically what you wish to accomplish with the program and choose the participants who will enable you to achieve those goals. • Established goals must be realistic, fair and consistent. • Awards should be commensurate with the effort one must expend to achieve them. • Program objectives and the qualifications to achieve awards must be clearly communicated to all program participants at the beginning of the program. If the

program is expected to run for several months, it’s important to offer frequent reminders. • Consider whether some training is needed for participants to achieve the stated goals.

With more and more leaders making the shift to a strategic view of incentives, the powerful dynamics around incenting, and recognizing those individuals who can directly contribute to the success (or failure) of the organization, the gap will widen between the companies that thrive and those that don’t.

• Progress toward goals should be tracked and measured meticulously, and this information should be available to all program participants on a regular basis.

Advice for Beginners

• Awards need to be compelling and relevant to the participants.

All of our experts agreed that setting up an incentive program requires considerable forethought and good design.

• When awards are earned, they should be presented as soon after the achievement as possible. • Gather feedback and analyze results throughout the program.

Proving Value to the Boardroom Too many businesses view incentive programs as fuel for the corporate furnace when they should be looking at them as a tool to shape a better workforce and, more importantly, optimize performance, Smith said. The best executives understand this, but not always the people who sit in the boardroom. The boardroom obviously looks for hard benefits, in terms of dollars saved or gained, but is there a way to communicate soft benefits to them in a language they can understand? Essentially, there are two types of programs, measurable or immeasurable. Once you determine which type of program you’ll be implementing, you can calculate the ROI. Measurable programs are funded from bottom-line cost savings or incremental sales that are generated by the incentive award program.

Proper program design is absolutely essential, said Hanson, of Catalyst Performance Group. Smart program objectives ensure that you know what to measure. In fact, in many cases, you can forecast results, measure them intermittently, and adjust the program midstream if necessary, he said. Clear program objectives and proper rule structures guarantee that there will be as few unintended consequences as possible. Kallery, of Maritz, added her advice: Gain agreement with key stakeholders and decision makers on assumptions (market, company, industry) and target growth and set reasonable targets; use past historical performance where available to construct possible scenarios; know profitability so you can calculate ROI; and set your budget based on targets and calculate target ROI upfront. An existing program that is not being used correctly is fairly ineffective and very costly to implement if management, supervisors and even employees are confused. There also are issues of communication and promotion to consider. A poor design inevitably will lead to poor results. Finally, rather than referring to ROI, Stotz and his colleagues at IRF generally pre-

On average, most companies strive to invest 5 percent to10 percent of incremental sales, or bottom-line cost savings, to cover the total cost of the incentive award program. Total costs include communication, administration, and of course, the awards. The key is to allocate a large portion of this budget on the awards (75 percent to 80 percent), then divide the remaining portion for administration and communication. With an immeasurable program, the ROI is a little more difficult to determine with concrete numbers. Good examples of immeasurable programs include a “years of service” award, as well as any program not involving sales. And since you won’t be generating revenue or measurable cost savings through a program like this, the mathematics become a little more ambiguous. But, mathematics isn’t everything. Soft benefits are becoming increasingly important, Stotz said. “A CEO I’ve been working with said soft incentives were increasingly a critical part of their corporate culture. These kinds of incentives have become an integral part of their employee environment and motivation, in a way that is almost equal to the financial impact they get from a program,” he said. What Stotz, and others, are talking about is employee engagement. As workplaces continue to change in this new economy, employees are being asked to adapt, learn, re-adapt and relearn in order to ensure that companies themselves retain a competitive edge. Recognizing and appreciating these employees is very important to corporate survival. In this way, there is a linkage between employee engagement, customer engagement and financial performance. As a result, many organizations are measuring employee engagement and seeing how recognition and the use of incentives is increasing that engagement. People within a corporation, at all levels, are increasingly being recognized as the “means” with which companies can gain a competitive edge over their competitors. People also are increasingly identified as the “method” to achieving those results.

fer to use the term “return of value” (ROV), which records not only a financial impact, but also employee engagement, morale and new customers signing up. Sometimes just getting new people to try your product is reason enough to have an incentive and recognition process. Smith of O.C. Tanner added that “ROI is not just about sales commissions or gold watches. Nor is it a simple feel-good intervention. It’s about defining broader business goals, drawing up strategies to get there and aligning them with each individual in your organization. What is it that each department needs to do, and how can each individual contribute to that success?” Every incentive program should revolve around the central idea of giving employees the tools and knowledge required for them to contribute to an organization’s success. It’s only through focusing and harnessing employee efforts that a company can hope to excel, accomplish its goals and achieve a good return on investment. PIP

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Earth-Friendly Motivation

Going Green Still Important Among Incentive Providers

By Dawn Klingensmith Two years ago, the “greening” of the incentives industry was a hot topic. Paper catalogs were becoming passé as major players as well as upstarts took their programs online. And, given that many companies were embracing sustainability initiatives and consumer demand for eco-friendly products was rising, the industry by and large had started to offer—or at least looked into— green reward options, ranging from Energy Star-rated electronics to eco-tour packages. But then the recession hit, and a brouhaha erupted over incentive trips, blackening the industry’s eye. Going green was less of a priority. Adopting and touting eco-friendliness “was being pushed as an exciting new thing,” said Bruce Bolger, executive director of the Enterprise Engagement Alliance (EEA), based in Falls Church, Va. “I think it’s an enduring and important theme, but it’s not being pushed right now, given the challenges we’re facing. It’s certainly not a focus. We’ve got bigger fish to fry.” Yet, some incentive providers, while tending to the fish, are fielding and responding to demands for green goods. “Adding environmentally friendly items to our catalog became common practice before the recession, and green items are still in demand today,” said Amy Trueblood, account manager of Awards Network, based in LaPorte, Ind. “I have experienced more demand for green award programs, and many new clients only want incentive or recognition programs that are completely online and paperless.” Although this industry is sometimes slow to respond to what’s going on in the world at large (the lack of immediate damage control following the unfortunately timed AIG trip is one example), it eventually comes around. For example, after the economy took a nosedive, companies adjusted programs to fit the times. Anecdotally, the Incentive Marketing Association (IMA) learned that companies had added more pragmatic award choices into the mix, such as gas cards. So, perhaps when the industry has sufficiently recovered from its publicity nightmare, incentive product catalogs will better reflect society’s growing interest in green goods.

The Green Demand Grail Research, based in Cambridge, Mass., released a study in September 2009 that found that “85 percent of U.S. consumers have bought green products, and nearly all of them will not revert their course.” And, though the study also found that almost two-thirds of consumers have changed their green purchase behavior in response to the recession, the vast majority has not abandoned the category; they have either switched to less expensive green products or cut back on their use of green products. In a larger survey of 1,000 people, four out of five said they are still buying green products and services today even in the midst of a U.S. recession, according to Washington-based Green Seal (an independent nonprofit product certification organization) and EnviroMedia Social Marketing, which commissioned the research. Half of the respondents indicated that they are buying just as many green products now as before the economic downturn, while 19 percent said they are buying more green products. In addition, a survey of 6,000 shoppers by Deloitte and the Grocery Manufacturers Association concluded that “there is an unfulfilled, latent demand for green products that could be realized through increased product development … and availability.” All studies show that green is here to stay and consumer demand is consistent. This perhaps ought to be reflected in an incentive program’s offerings. “Participants do demand green items and clients have demanded reward programs with minimal impact on the environment,” Trueblood said. Plus, the industry’s reputation and well-being depends on public perception,

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and “greening up” incentive programs and products might make a positive impression. Also, the industry is rebranding, with emphasis on the concept of engagement. Engagement is defined as the level of commitment and involvement an employee has toward his or her employer. An engaged employee feels emotionally connected to the organization and subscribes to its values. A company that shows it cares about the planet might do a better job of engaging employees. Not only are engaged workers more productive, but where they interact with customers, they’re more likely to build relationships that foster loyalty, according to the Human Capital Institute in Washington, D.C. And when they interact with other employees or prospective hires, they are more likely to convey enthusiasm and a positive message about the organization. For all these reasons, “All incentive companies and employers should be offering green rewards and incentives for being green,” said Ira Ozer, president of the Chappaqua, N.Y.-based consultancy Motivation Partners.

Green Actions Grail Research found that each green product category has one or more specific features that are most important for driving purchases. Here’s a breakdown: Category

Most important green attribute

Apparel

Manufacturing causes minimal harmful emissions

Paper and cleaning products

Biodegradable

Food and related products

Packaging is made of recyclable material

What About the Cost?

Health and beauty products

Natural

A discussion last April on the online professional network LinkedIn indicates the industry isn’t as green as it perhaps ought to be—and offers suggestions as to why. The discussion arose from the same questions addressed in this article: Are green products needed for employee recognition and incentive programs? Is the incentive industry doing an adequate job making these reward options available to clients? In a lengthy reply, Michael Norried, agent engagement manager for Microsoft, noted that he’d begun to see green merchandise that was “unique and thoughtful.” “However,” he continued, “I find that many eco-friendly products aren’t in the same realm of pricing that similar non-green products are within. … Your company having an environmental initiative or statement is one thing, but justifying the increased cost of green items for company incentive and reward systems may likely turn some away.” Norried was in the minority in stating that the incentive industry and manufacturers are “doing a super job creating and positioning these green products.” But, he ultimately concluded that price is an obstacle to “routine green incorporation.” Michael Arkes, CEO of Chicago-based Hinda Incentives, who also was involved in that online discussion, later said the potential gains warrant the added cost. “If someone says, ‘Gee whiz, I don’t want to buy this or that because it’s two dollars more,’ they’re really missing an opportunity to build on their reputation for social responsibility,” Arkes said.

Electronics, consumer durables, office supplies

Energy efficient

Furnishings

Packaging is made of recyclable material

Automobiles

Manufactured using minimal resources

Choosing Green Some of the “unique and thoughtful” green goods being offered by various incentive and promotions companies are dynamo hand-crank items, such as radios, flashlights and cell phone chargers; biodegradable pens; solar-powered garden lights; water-powered clocks; and even a recycled bandage dispenser. The list goes on: biodegradable golf tees, water-powered calculators, organic wine, all-natural cosmetics and a BPA-free water bottle that comes with its own little sweatshirt. Most industries and manufacturers have hopped onto the green bandwagon, so finding “normal” green products should not be a problem. For example, the 2010 Consumer Electronics Show featured a “Sustainable Planet Spotlight” including a Greener Gadgets Display. And, of course, anything with an Energy Star rating—computers, appliances and other practical items—counts as eco-friendly. “It’s not the sexiest thing in the world, but it’s in the area of electronics that we’re seeing a significant, quantifiable impact on the environment,” said Dave Peer, Hinda Incentives’ vice president of client services. Many products designated as “green” have eco-friendly features that sound sexy on paper, such as fabrics made from recycled plastic soda bottles. “But there’s not that much commerce around it,” Peer said. By contrast, appliances and electronics have a large impact on the environment, and the improvements that are being made in the category to lessen that impact make them the ultimate green commodity, he said. The problem with incorporating green offerings, aside from electronics and appliances, is that people see them as responsible, but not necessarily rewarding, so redemption rates on these items tend to be low. (Although, interestingly, Trueblood said solar garden lamps of all things have been “very popular.”) “I don’t think these products are popular with program participants in general,” Ozer said. “They look good to see in a catalog, but most program participants redeem for items that are personal ‘nice to haves’ versus things that ‘do good.’” The best way to encourage redemption of these items, Ozer said, is by connecting the redemption with an organization or cause that resonates with the participant. For example, if you choose a certain green item, a specified dollar amount will be donated to a charity or cause. Arkes, who started a separate business called Helping Hands Rewards, which works with social-purpose businesses to bring products to the incentives market, said that Helping Hands products offered through Hinda Incentives are “definitely in the bottom half” with regard to redemption rates. Although Helping Hands offers some popular items, such as a metal basket made from welded washers salvaged from factory floors in India, “We’re not going to do as well as an iPod,” Arkes said. However, if green products are available, “there’s a percentage of people in your total audience who are going to be thrilled about the options,” he added. “The person who sees these

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products and appreciates what the sponsoring company is doing will become a truly engaged participant in the program.”

Beyond the Rewards Incorporating green practices goes beyond offering eco-friendly merchandise, though. “The most common way that clients make their employee recognition and incentive programs green is to take the award program completely online,” according to a blog entry written by Trueblood for Awards Network’s Web site. “…In the case of online incentive programs, employees can receive an e-mail letting them know when their online account has been updated with the goals reached and the points earned. E-mailing employees is an excellent way to engage employees and maximize participation in the award program as e-mails can be sent in a timely fashion and contain up-to-date program and account information.” Another way to “green up” an award program is to reward employees for achieving goals that benefit the environment, such as reducing paper consumption, recycling, and carpooling or bicycling to work. “When companies encourage staff members to adopt a green attitude, they engage employees who feel they are a part of a socially responsible enterprise, which can, in turn, increase employee loyalty,” Trueblood said. Ozer agreed: “Creating more effective green programs that use all of the integrated performance improvement tools we have, such as personalized communications,

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training, measurement, reporting, rewards and recognition, will involve and engage people more fully and effectively.” The idea of going completely paperless gives Ozer pause, though. “Many incentive companies have eliminated print catalogs, but more for cost and timeliness of merchandise considerations versus green ones”, he said. “This being said, even though print can be eliminated since there are online catalogs, for the sake of maximum program effectiveness, companies should continue to use print in most of their incentive programs, at least to some extent. For example, a smaller catalog, or ‘netalog,’ can be used—a representative catalog that drives people to the Web to see the full selection.” The Toronto-based company I Love Rewards! is proud of its sophisticated, Webbased program, but it also sees a place for paper. Its peer-to-peer recognition program can be done entirely online, or in conjunction with co-branded cards with pointredemption codes. For “trophy value,” the cards are designed to be visually appealing in hopes that recipients will “post them on their cork boards,” said I Love Rewards! CEO Razor Suleman.

The Green Revolution Grail Research conducted a study intended, among other things, to help companies improve their communication strategy to green consumers. The study, “The Green Revolution,” was based on a survey of 520 U.S. green consumers in June 2009. Relevant findings: n

Being green is not enough. Consumers want green products that are superior or on par with conventional products.

n

Consumers continue to buy (and switch to) green products, even in a recession.

n

Eighty-five percent of U.S. consumers have bought green products and nearly all of them will continue to do so. However, only 8 percent of consumers choose green for the majority of their purchases.

n

Of the few people who have never bought green products, 67 percent have considered making a shift.

n

Price is the main reason consumers choose not to buy green products.

n

Ninety-three percent of consumers feel that a company being green is important to their purchase decisions.

n

Almost two-thirds of consumers have changed their green purchase behavior in response to the recession. However, the vast majority of these people have not abandoned the category; they have either switched to less expensive green products or cut back on their use of green products.

n

The adoption of sustainable manufacturing practices is perceived as the most important green attribute for companies; involvement in socially responsible projects is less important.

n

Most companies actively involved in sustainable activities do a poor job of communicating to consumers their commitment to “going green.”

Taking Responsibility The greening of the incentives industry falls under the umbrella of corporate social responsibility (CSR), and though the former has become less of a priority in the past two years, the latter is a major focus. “There have been lots of studies about the benefits to a corporation of being identified as socially responsible,” Arkes said. “People want to work for these companies, people stay longer and customers want to buy from them.” Indeed, research has shown that jobseekers with several options to choose from judged potential employers by their corporate social performance and used this factor to decide which offer to accept. In keeping with the goals of engagement, companies can use their CSR track record to boost employee morale and, when the economy recovers, to entice top talent. Research suggests employees not only have higher morale but also better self-images if they are part of an organization known to engage in socially responsible behavior. And, employees expect day-to-day operations to reflect the company’s commitment to what has been called the “triple bottom line” or “the three pillars”—people, planet and profit. “I personally feel that environmental awareness is important to our future, as do my co-workers and the leaders of our organization,” said Awards Network’s Trueblood. “We have made several green initiatives common practice in our office. All employees recycle their paper and plastic waste in our recycling bins. Everyone uses both sides of paper before it is recycled and minimizes printing in color whenever possible. The items that we ship in house, which accounts for a third of our total merchandise, are packaged with recycled materials.” I Love Rewards! considers itself “a leader in social responsibility within our community,” Suleman said. “We participate in a company-wide volunteer day, as well as allow each employee four other days off a year to volunteer at a charity of their choice. On the environmental side, we have a battery recycling program, a water cooler instead of bottled water and a company bicycle.” In addition, “We have always provided our members with an option to donate their points to a charity of their choice,” Suleman said. In the industry’s push toward CSR, offering green goods plays a minor part, said Bolger of the EEA. “I think the bigger trend is charity in travel. Companies want to go back to travel, but they have to put a gloss on it to make it look more defensible,” he said.

—Excerpted with permission from Grail Research’s “The Green Revolution,” September 2009.

Increasingly, volunteer opportunities are included in incentive travel. For example, when one company’s employees convened for an event, they found a box of parts on each table. Working in teams, they assembled the parts, which turned out to be prosthetic hands for civilian landmine victims. Later, the employees each received photos of the recipients of the prosthetics. Although the incentives industry may have bigger fish to fry at the moment, it would be a mistake to ignore the “green revolution.” Ozer agreed that going green has become less important than it was prior to the recession. “But the trend toward recycling and reducing pollution and waste is becoming more important than before, especially to the Millennial generation,” he said. “So, I think we will see more incentive programs and products that are green or have a green component, or a promotional tie-in.” PIP

A Little Input How can you gauge how important participants think it is to have green products available to them as awards? Ask them! Soliciting employee input is a crucial component of a successful incentive program, as described in Amy Trueblood’s recent blog entry, reprinted with permission from awardsnetwork.com. Trueblood is the account manager at Awards Network in LaPorte, Ind. At her company, green goods are in demand. Employee award programs are most successful when an organization takes the time to gather feedback from the people who will receive the rewards. There are at least four different questions a company should ask employees or for a larger organization a sample of employees to determine how to reward and recognize staff members. 1. What types of recognition awards would you like to receive? Offering employees a good selection of tangible employee awards, such as name-brand, lifestyle merchandise, is often the best option for pleasing diverse groups of employees. Sometimes employees will tell my contacts they are looking for particular types of rewards to be included in the reward program. For example, if a client has a wellness incentive program, then including health and wellness rewards, such as exercise equipment as part of the reward selection, is a common request.

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2. How would you like to select your reward? Depending on employee demographics, staff members may want to select a reward online, from a print catalog or even fax in an order. A company can maximize its redemption rates by finding out if there are any preferences for award redemption. 3. How should your reward and recognition be presented to you? Sometimes employees love to shine in the limelight, while other times public recognition can be an employee’s worst nightmare. If possible, managers should determine how each employee would like to be rewarded and recognized. Sometimes companies include this question in the new hire’s initial paperwork to prevent any reward and recognition mishaps. 4. Who would you like to contact and how would you like to receive customer service support? Many of my clients allow employees to contact our company directly for questions about items and customer service support. Others prefer to have all customer service inquiries go directly through the local human resources department. Ninety-five percent of all customer service inquiries I receive are by e-mail, regardless if the inquiry comes from the end recipient or a client.

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Traveling Companions: Luggage & Leather Goods 1

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WORKING FOR THE WEEKEND

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<< ICONIC CONSTRUCTION

Zero Halliburton rolls out a new addition to its Z-Flex Generation III Collection of polycarbonate pieces, whose design principle is based on the trifecta of luggage construction: lightweight, expandable, flexible. The two-wheel expandable carry-on has multi-positions on the telescoping handle, an extra-wide construction for maximum carry-on capacity, TSA combination lock and a fully lined interior.

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Tumi presents the T-Tech Presidio Collection. Intelligently designed, the highly organized interiors feature a multitude of pockets to allow for the most efficient and effective use of the packing space, satisfying expectations of the most serious business traveler. For travel, the assortment consists of two wheeled carry-on sizes, larger travel cases, garment bags, both wheeled and tri-fold, carry-on duffle, collapsible wheeled duffels, wheeled carry-on backpack and travel kit. Distinguishing features include a new lightweight packing construction, enhanced X-Tech fabric for greater durability, welt guards to protect the edge of the packing cases and contemporary styling featuring rounded edges and softer lines. TuMI: 800-669-3181 Write 355 on reader inquiry fax card.

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LUXURY AND LEATHER >>

Rymax offers the Ferragamo Marisa Handbag, pictured here in Black Nappa. This mid-sized satchel is a perfect everyday bag. It features luxurious Nappa leather, a double shoulder strap, one zip pocket, one open pocket and a cell phone holder.

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A.C. Oehmich Leather Company combines traditional styling with full grain leather to create this classic and most useful Underarm Portfolio. This is the industry standard. Designed with a large capacity to hold legal-size papers as well as file folders, it is silk moiré lined and has a 2-inch side gusset and a full-length top-side zipper for ease of access. Logo embossing and personalization also are available. Colors include black, tan and burgundy.

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Heys USA Inc., the inventor of “The World’s Lightest Carry-on Luggage” and leader in innovative, hard-sided luggage, announced BioCase, a business case and a 20-inch carry-on luggage piece that both require the owner’s fingerprint for accessibility. The BioCase features exclusive biometric (fingerprint) technology. Made of 100 percent polycarbonate, the cases are nearly indestructible, adding even more security and protection during your travels. The business case converts to an overnighter, for one- to two-day trips. The 20-inch carry-on fits easily into airline overhead compartments.

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All That’s New & Innovative 1

<< DARKNESS DEFEATER

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<< FORM AND FASHION

The question is what the Kaito “Endurance” lantern won’t do. It won’t make the call for you, but it will charge your cell phone or iPod—and that’s just for starters. Tucked inside the lightweight, heavy-duty splash-proof casing are a 12-LED lantern, 3-LED flashlight in top of unit, loud emergency siren with 3 red LED flashing light, AM/FM radio with built-in dynamic speaker, compass, ultrasonic mosquito repeller, nightlight and charger. Just turn the crank handle to charge the internal rechargeable batteries—you’ll never run out of power and the LEDs last for years. Under a pound, it’s perfect for the car, cabin, boat, camping and all outdoor activities, and it’s a lifesaver at home for power outages.

This Antiqued Cotton Jacket (style # CX2029CAD) is inspired by a workwear staple. Destined to be a favorite, worn stylishly everywhere. Detailed with a beat-back antique finish, this Columbia Sportswear jacket is outfitted with a removable cotton jersey hood and placket liner that zips to change looks in a flash. A waxed finish repels damp, while a channel-quilted lining fends off cold. Three pockets inside, two outside.

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<< A ROSE IS A ROSE

Your program participants will love the elegance of the Orrefors Roses in pure crystal. Malin Lindahl has impressively used the natural shape of the rose when creating a votive, bowl and vase for this series. Rose was launched in spring 2009. And with the votive, the sparkling rose petals conceal a candle at their core. A new small bowl with a soft rose pattern in sparklingly clear Orrefors crystal complements the range in spring 2010. A perfect gift. orreforS/koSta Boda: 856-626-1328 Write 379 on reader inquiry fax card.

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>> NATURE GLASS

Kosta Boda’s spring’s Grass collection is a brilliantly colored tribute to nature and love. Designer Anna Ehrner’s feeling for glass and its qualities makes each of her products unique. The choice of green, orange and black is inspired by the life cycle of the plant, and the vases stand as tall and proud as prairie grass. The technique of applying thin layers of glass to the thicker layer beneath creates additional depth to this pattern. As always, handcraft and artistry are Kosta Boda’s hallmark. orreforS/koSta Boda: 856-626-1328 Write 378 on reader inquiry fax card.

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6 CLEVER CUTTING

The durable Dominica bamboo cutting board features a groove to catch run-off. It also features a beautiful inlay of both the light and dark colors running down the center. The board is reversible, so you can use one side with the groove and then flip over for a flat serving surface. Although bamboo is 16 percent harder than maple, it is soft enough not to dull your knives. totally BaMBoo: 760-471-6600 Write 377 on reader inquiry fax card.

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COOK SOMETHING UP

The classic Staub 5-quart Round Cocotte is a must-have item for serious cooks. Sold in several stunning colors, the Staub French oven is a timeless standby for stews, roasts, soups, casseroles and other one-pot classics. “La Cocotte” (co-cot) French Oven is the choice of some of the world’s best chefs. The traditional round design has self-basting spikes for continuous, natural basting. When your meal is ready, La Cocotte moves beautifully from the stove to your table. Made in France, each Staub piece is unique in color and aspect. These subtle differences add to the unique beauty of Staub products. 20/20 Special MarketS: 513-561-9920 Write 380 on reader inquiry fax card.

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>> MUSIC IN MOTION

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<< A BEAUTIFUL FACE

Your program participants will enjoy this beautiful timepiece from ESQ Swiss by Movado. The ESQ Kali Ladies’ Stainless Steel case and Stainless Steel bangle are a graceful compliment to any woman’s wrist. It features a white mother of pearl dial with four diamond markers and two hands. Mineral crystal. Water resistant to 99 feet. Swiss quartz movement.

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THINKING ON PAPER

Jot down ideas while at a conference with this thought organizer. The Cutter & Buck® American Classic Note Taker (item 9850-63) includes 10 3x5 note cards and a writing surface perfectly suited to fit them. Two internal pockets provide a place to store the cards. Other features include a pen sleeve, two business card slots, a slash pocket and clear ID window. With Signature Cutter & Buck lining. Includes one-piece Cutter & Buck gift box.

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A little bit of MAUI. A whole lot of STYLE. Gift Card Details

The Maui Jim Gift Card

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Maui Jim Gift Cards can be redeemed at www.mauijim.com or by calling Maui Jim Customer Service toll free: 800-614-6790

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With more than 60 styles of world-class sunglasses along with apparel and accessories, the Maui Jim Gift Card has everything you’d expect from the leading brand of eyewear. And with the flexibility of our new gift card program, it’s even easier to give the Aloha spirit. Consider Maui Jim Gift Cards for: • Incentive program • Loyalty awards • Corporate gifts • Consumer promotions

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>> the insider

By Deborah L. Vence

Economic Downturn Influencing Rewards Strategy

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hile more and more companies are realizing how valuable it is to reward their employees, the global recession, in turn, is prompting businesses to change their reward strategies, according to a study released in February by Hay Group, a global management consulting firm based in Philadelphia. “The severe contraction in the global economy brought on by the financial crisis has had profound implications for the way organizations are using reward systems to deliver their business strategy,” said Tom McMullen, Hay Group’s North American Reward Practice Leader. The study, called “The Changing Face of Reward,” examines how the business drivers of rewards are changing due to the impact of the global downturn and other macroeconomic trends in the global economy. In 2009, Hay Group surveyed more than 700 organizations to get their opinions across the spectrum of reward strategy to design to implementation issues—their levels of current focus, as well as their future focus. Respondents were asked to assess the current and future focus of their reward programs as it applies to their organizations. Several months ago, Hay Group followed up its research with face-to-face interviews with reward specialists in 230 organizations across the globe to get a deeper understanding of the drivers of change in reward in their organizations and what specifically they were focusing on two to three years out. For the research, Hay Group gathered information from about 1,000 organizations in more than 60 countries. Hay Group’s research resulted in three distinct findings: 1. Companies are looking for ways to balance the need to reward executives and employees responsibly, with growing interference in the process from regulators and governments. 2. The recruitment and retention of key talent continues to be an important strategy. With the market for these individuals remaining strong despite the downturn, the focus is on motivating, engaging and rewarding critical high performers. 3. The use of bonuses is increasing. Incentives are a critical lever for motivating performance and employee engagement, and provide flexibility of the reward cost base.

“We conducted two research studies in the past year that probed this, and to better understand the changes in reward. The focus of our research was what’s currently happening and what’s changing in broad-based reward programs (as opposed to executive reward programs),” McMullen said. “The interviews we conducted focused on the 48 ❘ MAY/JUN E 2010

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business issues facing clients, their HR/talent issues and reward issues. In this way, our analysis of what’s happening in rewards is rooted in the business issues organizations are facing and what they’re planning for the future.” He added, “We’ve found in our work … that benchmarking of common market practice or even best market practice is of little interest. The real interest to these companies is what organizations are thinking about doing in the future.” The study also indicated that, in certain circumstances, bonuses are back. Variable pay (i.e., bonuses) is a key lever to motivate and engage employees in an organization’s goals. The topperforming companies are using variable pay strategically, which is increasing the opportunity for more to benefit from incentive schemes, and providing incentive opportunities further down through the company to show that individual performance affects the success, or otherwise, of the business. Employers also have learned from the economic downturn that having a higher proportion of compensation linked to performance builds an important component of flexibility into the overall management of costs, and can preserve jobs and talent. McMullen said there’s a strong focus in organizations today on base pay and short-term incentive (STI) design. While this focus will continue, it is expected that more focus in the future will be on STI design as well as long-term incentive (LTI) design. In Hay Group’s interviews, many organizations indicated that their focus in the STI and LTI variable pay space is going to be on tightening up the pay-for-performance linkage and mechanics; rebalancing metrics (short-term vs. long-term, financial vs. non-financial, corporate vs. team vs. individual); improving consistency in plan design and establishment of core financial hurdles; and enhancing communication of the program and establishing line of sight between team and corporate performance measures and individual accountabilities. Furthermore, McMullen explained that organizations are focusing on five core areas in pay-forperformance: one, multiple and differentiated rewards (both tangible and increasingly the intangible rewards, such as non-financial recognition, meaningful work, career development), are channeled more to top performers in key roles; second, building line management skills in better managing performance, including goal setting, coaching performance and recognizing and rewarding performance; third, clarifying what performance really means that includes the right metrics and the communications that are wrapped around this; fourth, balancing individual, team and enterprise targets for variable pay; and, finally, aligning, communicating and reinforcing indiWWW.P IP MAG . C OM

vidual goals and targets to overall strategy. What all this means for rewards, in general, is that more organizations will be focusing on improving the alignment in their reward programs. Alignment, that is, in terms of better alignment of rewards with the organization’s business strategy, human capital and talent strategies and organization, team and individual performance. “We see more emphasis on reward systems that are balanced between the needs of the employee with the needs of the organization, focused on total value of rewards and have a strong focus on implementation as well as design,” McMullen said. “This emphasis on rewards will have an impact on the role and accountabilities of the reward professional, which will in turn have a corresponding effect on the requirements for these roles. We see a number of skills that will need to emerge for most reward professionals.” Those skills, he said, include: business acumen, which involves the awareness of business issues and opportunities and how they affect an organization; consulting work, which relies on persuasion more so than formal organization authority; total rewards, indicating that many organizations have not effectively optimized the motivational value of the suite of intangible rewards; and, finally, HR marketing. Marketing and communications skills are essential in ensuring that reward programs are effectively organized. PIP

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