Incentive Intelligence

Standing Next to Einstein Doesn’t Make You an Astrophysicist

I’ve said this a hundred times.  101 today.  

Designing effective incentives, rewards, recognition and influence programs is 1/3rd  Art, 2/3rds science and 1/3rd luck.

Unfortunately, many in the incentive industry believe they can pull the wool over the eyes of potential buyers by “standing next to Einstein” and hoping the buyer can’t tell the difference between them and a real thought leader.  Or in the case of this post on Incentive Magazine - standing next to B.F. Skinner.

A few weeks back Incentive Magazine (full disclosure - I've written articles for them in the past) ran an article called “Designing Employee Reinforcement” written by an Exec from one of the larger incentive suppliers.  The article states:

"We need to adjust our thinking about how we compensate and motivate our workforces. In short, we need to inspire our people in ways that are both effective and affordable. 

A good way to start is to think less about rewarding results and more about reinforcement of positive behaviors required to produce the results. This is a simple and effective methodology that, when deployed properly, can create a positive and enthusiastic work environment."

I am in 100% agreement with those two paragraphs.  Focus on behavior and look at ways to make the environment positive.

Then the author goes insane.

I AM NOT AN ANIMAL!

The article jumps from a good intro to a discussion on the concepts of operant conditioning.

Specifically, the various reinforcement schedules studied by B.F. Skinner in the late 1930’s and further refined through the 50’s and into the 70’s.  If you have spent any time reviewing Skinner’s work you know this... Skinner really did not believe in free will.  

Watch the first minute of this video on conditioning featuring an interview with Skinner.  Pay attention to the comments made 26 seconds into the video... (email/rss readers will have to click through to the post to see video.)

 

 Here's the important piece of information...

“So the pigeon isn’t acting independently.  It’s behavior is shaped by it’s environment.”

The extension of this line of thinking is: the best program design for engagement is a program where your employees aren't thinking independently.

Let me ask this simple question?  Do you really think applying operant conditioning to employees is the best way to get employees “inspired” and create a “positive and enthusiastic environment”?

Standing Next To, Isn’t Being

This article is simply a trick to make you think that because an incentive supplier quotes a famous scientist about behavior, they know what they are talking about.  Standing next to Skinner doesn’t make you right.

I quote a lot of studies and scientific stuff, and in most cases, I will admit if I’m not sure they apply to program design.  I’m always looking for ways to help companies increase the odds of influencing behavior ethically and in a way that benefits both the employee, the channel audience AND the company.  So, I bring up ideas and thoughts based on those studies.  I don't think I've ever recommended that you condition employees (can you say “A Clockwork Orange?”)  I'll be the first one to tell you that the studies are directional - not dictatorial.

Studies and theories are simply jumping off points to help you determine how to best align your goals and your employees.

If you buy the idea that the best way to engage employees is through rote behavioral conditioning than you deserve the program you get – and you deserve the long-term employee problems you will experience.

Engagement Isn’t Conditioning

This article is not only demeaning to employees, it’s demeaning to buyers of incentive programs and frankly – continues to position those in the industry as snake oil sales people that will do anything to sell a toaster or a trip.

Quality influence programs signal the behaviors your company values.  Quality programs reward and recognize behaviors that reinforce your company values, mission and culture.  Properly designed incentive programs communicate direction and allow employees to choose to play and be rewarded.

Operant conditioning can and will drive a behavior.  And that’s great if you want the dog to stay in the yard or get your employees to turn off their computers.  However, if you want thinking, engaged, challenging, happy, innovative and ethical employees - this ain't the right path.  

Forget the “conditioning” and worry about the “conditions”

Spend time finding out what is needed to get employees to WANT to contribute versus listening to this garbage about conditioning your employees like pigeons and rats.  The last thing most companies need is a bunch of drones – pecking away at a dot in order to get a morsel of food or another crystal vase.  

I don’t believe operant condition – no matter if it is effective or not – is a strategy you should NEVER consider.  And frankly – I don’t think it will work anyway.  We have free will, we have the ability to understand context and we can tell (usually) when we’re being manipulated.  And when we smell manipulation – we start looking for a way out of that rat’s maze.

Don’t assume because someone is standing next to Einstein they are as smart as him.

Just approach employees ethically and honestly.  That’s what they really want.

 

Related articles

• Designing Incentive And Rewards Programs - What's the Frequency Kenneth? (i2i-align.com)
• A Great Example of A Bad Incentive (i2i-align.com)

Does Focusing on Great Corporate Culture Cause Unethical Behavior?

Many, if not all companies want their employees to be “pro-organization.”  We want our employees to look out for the success of the company (and avoid things that cause failure.)  Entire industries have sprung up to drive engagement, cultural fit, and to help create an almost zealous focus on success of the organization.  Balancing work-life issues, creating better working environments where we can bring our kids and have them a few floors away in company-sponsored day-care are all ways in which companies strive to get employees to “feel” for the company in a positive way.  These efforts drive retention, recruitment, positive word of mouth – and ultimately – success for the company.

And they also can increase unethical behavior.

Unethical Pro-Organizational Behavior (UPB)

UPB is something I’d not thought of before but I think it will be a bigger issue in many companies as they continue their quest for engaged employees.  The definition  of UPB is: 

unethical behavior that benefits the corporation.  

Think of cooking numbers to boost analyst projections and stock values or withholding information about the hazards of a pharmaceutical product.  

The website Futurity.org highlighted a recent study published in the Journal of Applied Psychology that examined the relationship between UPB and an employee’s degree of organizational identification.  The question they wanted to answer was – are employees more likely to engage in UPB if they identify more with the organization?  

And the answer is yes – if there is a something called positive reciprocity in the mix.  

Meaning, if I, as an employee identify strongly with an organization (think zappos - #hrhappyhour folks must take a drink now) AND if something has been done for them (think daycare, sabbaticals, awards and recognition) they are more likely to behave unethically to benefit the organization.

Engagement And The Force

Like any engagement strategy (heck, any strategy) – there is a good side and a dark side (cue Darth Vader music) – and the more a company does for their employees in order to drive engagement – the more I’d be worried about a few rogue managers, wittingly or unwittingly, creating situations where an employee feels compelled to do something they wouldn’t normally do.  And, like any behavior – it can start small - fudging an invoice to a client, spinning a product flaw as a benefit - and ultimately become a habit.

Take this little word of advice - the more you do to drive engagement in your organization – the more I would train my managers on this little bit of information.

Something to think about on Friday the 13th.  

I know, just when you thought you had this engagement thing all figured out.

 

Related articles

• Ethics Isn't an Incentive Objective (i2i-align.com)

Designing Incentive And Rewards Programs – What’s the Frequency Kenneth?

Probably the hardest thing I do on a daily basis is explaining why there isn’t a foolproof answer to the questions my clients ask.

“What works?”  

“How do I motivate my people?”  

“What’s the best way to craft a recognition program?”

“Who should be involved in the program?”  

“What are the best practices in incentive design?”

 

“What’s The Frequency Kenneth?”

My goal when starting this company was to provide honest, unbiased, untainted by award, quality incentive and reward program design services.  I wanted to give my clients what they weren’t getting – and combat what I saw as malpractice by many incentive and reward companies hell-bent for leather to sell you a toaster, a trip, a debit card. (btw - interesting connection to motivation and the REM song - check it here...)

Unfortunately, as Michael Corleone says in the Godfather Part III,

“Just when I thought I was out... they pull me back in.”

I keep getting the same questions – questions that allow my clients to feel comfortable they are following a plan, a model, a formula.  Formulas make us feel comfortable.  Formulas give us a “foundation”, no matter how weak, for our decisions.  My clients want an answer.  And, unfortunately, the answer many times is “it depends.”  No pat answer

2/3rds Science - 1/3rd Art - 1/3rd Stuff I can’t Control

My canvas is people.  And, as I’ve said at many seminars, webinars, and meetings – people are infinitely variable and therefore don’t fit formulas perfectly.  There are guidelines, generalities – things you can do to increase the odds of achieving your objectives, but there are no rules.  Rules are for physics.  Rules are for children.  Rules won’t work when trying to guide behaviors and drive engagement.  People are just too...different.

The best you can hope for is to know enough about what drives decision-making and leverage as many potential triggers as possible – and even then expect some interesting and unpredictable results.

Frameworks As Security Blankets

Dan Ariely – professor, author of “Predictably Irrational”, and “The Upside of Irrationality” (highly recommend both BTW) – has very interesting video on his blog – I’ve embedded below (email and RSS subscribers may need to click through to see the video.)  I briefly describe the video below so if you want to watch first – go now – about 5 minutes.

 

 

It struck me that like the marketing Execs discussed in the video, many of my clients are looking for “THE MODEL” – the rule book.  But as Ariely says – there aren’t really any models and any model you pick has “some” validity.  Consultants are great at this – find a way to package a thought process – pick some letters – make it fit and viola – you’ve got a sellable solution to a client’s problem.  

Think about Ariely’s model for marketing – FN-LN 

FN Framework = Design  -  Adoption  -  New Products

LN Framework = Attitude  -  Research  -  Image  -   Education  -  Learning  -  Yield

For those of you who haven't seen the video yet... Look at those frameworks – closely.  

Remember the framework was designed and presented by Dan Ariely.  Look again.  

Ah... now you get it.

The “Incentive Model”

The incentive industry has used a few over the years:

• Motivation = Communications x Training x Reward
• Performance = Ability x Preparation x Effort x Will
• Motivational Force (MF) = Expectancy x Instrumentality x Valance
• Performance = Ability x Motivation
• Effort = Drive x Habit x Incentive
• Performance = ability X motivation X organizational support

Sometimes they go all mathy on you and add the “f(x)” at the beginning and maybe even raising it to a power of some sort – usually something to do with their unique and patentable award mix – making it look more like a “real” formula like this:  

My point here is that don’t look for a formula... look for the generalities that explain as much of our human variance as possible.  No formula, model, construct, will explain our behaviors.  Relegating your motivation, engagement and reward discussion to a formula ensures you will be playing into the hands of the incentive supplier.  Remember who wrote the formula.  What do you think their real intent was?  Drive performance or drive redemption?  Just asking.

So What’s The Frequency Kenneth? 

I don’t know – and neither do they.  I do know this – a formula isn’t the right answer.  A thorough understanding of your particular support systems, cultural history, brand identity, and talent make-up is what really drives program design.

Wait... is that a new model?

Coming soon to a four-square PowerPoint slide near you....

Related articles

• Rules for Good Incentive Programs (i2i-align.com)
• One More Time - Worry About YOUR Employees Not Theirs (i2i-align.com)
• Worst. Incentive. Recommendation. Ever. (i2i-align.com)
• Active Communications VS Passive Communications in Reward and Recognition Programs (i2i-align.com)
• A Great Example of A Bad Incentive (i2i-align.com)

Don’t Launch Your Recognition Program If Leadership Sucks

Your CEO says employee engagement is critical to success.  Your CEO asks you to put together a plan to drive engagement.  Your CEO has read all the blogs (year, right) on engagement and knows recognition is key (it is but...)  Your CEO gives you your marching orders, walks down the mahogany hallway, out the front door of the building to the assigned parking spots for “execs,” yells at the employees having a smoke in the parking lot before jumping in his BMW 760Li to race off to dinner and opera with the local politicos.  

Now what?

Don’t do it!  I’m warning you right now.  Take my advice.  Don’t do it.

No recognition program in the world will drive engagement if the employee population isn’t connected to the leadership of the organization.

Want proof?

Check out this article on the new employee recognition program for the state of Wisconsin.  In theory the program is probably a good idea.  In practice and application – not so much.  

Why?  

The spokesperson is the Guv himself.  And, if you’ve followed any of the political news coming out of the great state of cheese, you know that Governor Walker isn’t the most loved guy right now.  I think this sums up the response to the program announcement...

"On behalf of all of us here in the state of Wisconsin," says Walker, "I want to say thank you to the thousands of men and women who work each day as public servants here in the state of Wisconsin."

To which, one wag responds: "What a clueless moron!" And another: "What a bunch of fascist propaganda." At one point, the guv's video had garnered 10 "likes" and 285 "dislikes," although I'm guessing that if they had their druthers, a lot of those dislikers might have chosen a slightly stronger word.

A reader of this column suggested the governor has "chutzpah" for launching the initiative. "

The lesson here is that any recognition program worth its weight in logo-identified mugs has to connect to “people” in the company.  Specifically people in positions of authority.  A recognition program based on signs and posters has zero impact.

I take that back.  A program based on signs and posters has NEGATIVE impact.  

Uh... Thanks, but no Thanks...

I can only imagine what the employees of the state of Wisconsin are feeling right now.  I’m guessing many are embarrassed.  Some may be actively doing a poor job to avoid being nominated and rewarded to keep themselves from being identified with the program figurehead.  This will not end well.  At least not until the person who is the “face” of the program is respected, valued, liked and most importantly – lives the values of the program.  

Your management, executive management and informal leaders are the face of the program.  Either they’re on board – and living the program - or it is a waste of your time and theirs.

If your CEO is asking for an employee recognition program – and doesn’t give a rip about the employees and everyone knows it - just send all the employees a sawbuck and call it a day.  It’ll be cheaper and faster.

 

Related articles

• The most powerful motivator (empwaynek.wordpress.com)
• Counterproductive Employee Recognition Programs: What Not to Do (brighthub.com)

Creating “Never Have” Behaviors – Punishment Is Good

This past week I did a session at the infinitely tweetable and bloggable #HRevolution.  If you’re remotely connected to HR you probably saw it on the twitterstream – almost impossible not to.  My session discussed the various ways in which you can influence behavior in a company and how rewards and recognition can be a part of that effort.

I’ve gone on record here in this blog, and at the conference, that there are behaviors that should not be rewarded.  I’ve also gone on record that some behaviors are patently unacceptable and if demonstrated, should be punished.  As an example, at my session this past weekend someone asked how you influence “bullying” behavior within an organization.  

My response?  Fire the perpetrator.  Punish the behavior.  No incentive in the world will be effective for that kind of behavior.  

Incentives are choice architectures – give an incentive to “not bully” and you’re really saying bullying is okay but if you don’t do it we’ll give you some trinket.  

Ignoring bullying simply reinforces the behavior by “lack of punishment.”

 

The Magic Number 5

I remember a friend of the family telling us that her son would always ignore her when she called for him to come in the house for dinner.  She asked him once why he ignored her.  His answer:  “I wait for the fifth time you call.  That’s when I know I’m in trouble.”  

The subtext – the first 4 didn’t matter.  She had trained her son that 4 was acceptable – 5 was not.

 

Ignored = Reinforced

One of my pet peeves with many organizations is that they shy away from the “punishment” side of the influence coin – at least until it comes up on a police blotter somewhere.  Many organizations let small infractions (small in impact – big in intent) go by without nary a word – positive or negative.  Watching small infractions pass by is the same as rewarding them.  I've called it the "underground recognition program."

 

New Application to Get Kids To “Check In” With Parents

Following this theme of rewarding behaviors that in reality shouldn’t be rewarded is this new app “I’mOK.”  Found it on TechCrunch today and it is described as:

"I’mOK, which is in private beta, is a private mobile application designed to reward kids for staying connected to their parents.

By sharing their location, taking pictures, tagging friends, and telling parents what’s up, kids earn points that can be exchanged for things parents have agreed to, like allowance or special privileges. The more kids share, the more points they get.

All the communication takes place directly within the I’mOK iPhone app, which creates a private network for families. The app will also automatically tally all communications from kids. And an Android app will also be released shortly."

I’m a parent.  I have two children who drive and are involved in after school activities.  They are out of the house a lot (sometimes that’s good... believe me.)  We have always had a rule that whenever they change geography they text and let us know where they are going – and they text when they get there.  That’s all.  It’s not a permission thing – it’s a location thing.  It’s a respect thing.  It’s about the rules of freedom in our house.  You want the car and the ability to move around?  Sure – here’s the payment – you let us know whenever you change geography.  (I’ve also told them that I can easily turn on geo-location for their phones and find them if I need to so there is no point in lying.  Trust but have the ability to verify if needed.)  That's our minimum standard of performance.  

Here’s my long-winded point.   IMHO - If you need to provide a reward system to get your kids to check in and tell you where they are – you’re doing it wrong.  That is our family culture.  I get that your's may be different - but this is ours.  

The payment for freedom is respect and transparency of location.  These are the minimums.  These aren’t negotiable.

I would never use the check-in system outlined by “I’mOK.”  

The real message it sends to the kid is “I don’t’ need to check in if I don’t need awards.”  But I'll predict it will be popular just because punishment isn't fun.  We'd rather reward (that's fun) than punish.  Even when punishment is the correct response.

Culture in an organization is similar.  Some things are “must haves” some things are “nice to haves” and some things are “never haves.”

Never shy away from creating a list of “never haves” – bullying, lying, cheating, stealing – and punishing them when they rear their ugly head.  

 

Worst. Incentive. Recommendation. Ever.

Recently I saw a post in one of my Linkedin Groups about travel incentives that made me embarassed for my industry.  Which group and the author isn't important.  What is important is the description of the program inclusions that made me go "huh?"

Here's the set up.  

Client wanted to cut incentive travel program budget from $600K to $375K.  Incentive designer/Planner presented a $1.6 million budget with busines case rationale that the new program/budget would drive business to the next level.  The client bought the $1.6 million program and sales went way up.  Sales were so good the CEO of the client company held a company-wide celebration that (to quote the post)... 

"that included a video broadcast of the sales team, from their incentive travel destination, telling those employees how much they appreciated being able to exceed sales and margin objectives 'due to your support'. 

The presentation concluded with the Senior Vice President telling the employees, 'No, we can't all be on that trip, but we are all celebrating growth in our business while our competition is meeting to try and figure out who to lay-off".

I'll let you read that again. 

Here is one thing you can count on...

You Will Never Get That Recommendation From Us

I bring this to your attention for two reasons.  

Reason One:

IMHO - It's a terrible idea.  

We would never recommend that the sales people who earned a trip to some great travel location send a "video message" back home to say thanks for the support.  It's one thing to send video messages back from the war - quite another to film 50 tanned, sunglassed, half-baked sales people toasting the folks back home with a 48 oz Hurricane in a logo-identified souvenier glass from Tropical Tommy's Bar, Grille and Tire Shop on some exotic island.

I'm pretty sure all the "little people" back home know they contributed to the sales person earning that trip.  Some of them may even be a little happy they earned it.  Some, not so much.  Sending this message - from the trip participants back home - strikes me as a bit tasteless and elitest.  

Now that's my opinion - and why you'll never see that as a recommendation from us.

However, we might recommend...

• Each sales person send a personal, handwritten note outlining specifically what that individual did to assist that sales person, and the company, hit their goal.  Better yet - make it from their manager with some quotes from various members of the sales team and the Sr. Execs.  Maybe include a gift card as a kicker.  But the note is the real thing.
• Give everyone in the company some much needed extra vacation days (one or two - nothing weird like 30 extra days.)
• Recommendations from their manager to the individuals LinkedIn profiles (if they have them.)

Reason Two:

I want to know what you think of it?  Am I way off base?  Does this makes sense to you all.  Majority will rule.  

Not really - regardless of what you all say I will still think it is crass and demeaning.  But give it a shot in the comments.

 

Related articles

• Webinar - Incentive Design and Wellness April 19 Noon EDT (i2i-align.com)
• Incentive Roll-Over Plan - Or "Don't Run That Same Annual Sales Incentive" (i2i-align.com)
• Active Communications VS Passive Communications in Reward and Recognition Programs (i2i-align.com)

Why The Two Paul’s (Hebert & Smith) Think You Should Attend Their HREvolution Sessions (and it’s not just ego...)

Serendipity is an interesting concept.  The definition is: the phenomenon of finding something good by accident.

Which is what both of us did a few days back.   

In reviewing the HREvolution Agenda the two of us - Paul & Paul (that would be me and Paul Smith - author of the HR Blog - Welcome to the Occupation) - discovered each of our tracks was similar but different.

Similar in that they are both focused on “influence.”  Different in that one focuses on you personally being more influential, the other on how the programs you design can be more influential.  Serendipitously, one helps the other and vice versa.

So that you have it straight from the sources themselves…

Here is Paul Hebert describing his session:

“My session will be about the various subtle, yet effective ways an HR Professional can use social psychology, motivation and behavioral economics to increase the effectiveness of the many programs HR is responsible for.  From ‘recognition’ programs, to simply getting more folks signed up for benefits or 401K programs.  

There are many tactics and techniques that have been proven to increase the number of people who will respond to a request.  These tactics are critical if HR wants to have real impact in an organization.  Based on the responses I got on my recent poll on my site - it looks like I’ll walk through a few of the techniques and then take some “problems” from the crowd and show how these tactics can be used in real-life situations to increase participation and compliance to HR requests.”

So that’s Paul H’s “influence” session.

The cool thing is that the same techniques that help HR Pros design company initiatives to be more effective are the same techniques that can be applied on a personal level to increase your own influence.  

And that’s where Paul Smith comes in....

“My session is based on the closing session at last year’s HREvolution in which Laurie Ruettimann made the comment that everyone in this room should be in high-ranking HR positions making $200,000 a year. As much I was in total agreement with this, especially the money part, I think the gist behind her comment was each of us needs to be in positions of influence in our organizations or our communities. I think this was a great takeaway for the end of HREvolution 2010. But I was left with some questions.

How do I become an influencer? What does it mean to be an influencer? What is influence?

There is no one size fits all for success in being an influence. Each person has to find that within themselves and the life they lead. However there is one constant: after HREvolution 2011 comes to close, there are hugs and good-byes; there are hotel check-outs and airplane rides back home. And Monday morning will come and we will step back into our jobs. The attendees will feel changed. No one else around them will. Everyone needs their own call to action….but what is it? What is the recipe for success? How do we evolve and become more empowered?

Alongside my dynamic co-facilitator, China Gorman, we will explore how anyone at any level can be more influential. “

So here’s the pitch to all you HRevolution attendees... we think the two sessions:

One focused on how HR can design better programs within their company by upping the “influence” quotient…

and...

…the other on how YOU personally can be more influential…

...dovetail nicely for a complete “influence” package.

 

But...Houston  - we have a problem.

Our sessions are at the same time.  So unless you’ve figured out how to bend the space-time continuum, you can’t do both.  But we really think you should.

So...we’re working to see if we can get the Big Kahunas at HRevolution to move some of the sessions around without pissing anyone off so you can attend both.  We’ll let you know when we think we’ve got this worked out.

If the schedule doesn’t change, you’ll have to decide which session will influence you the most…

May serendipity be with you.  Yours in the revolution...

Paul & Paul

Incentives and the Class of 2011

Graduation will soon be upon us.  Millions of hungry job-seekers will be flooding the market place looking for work. A few of them will find it.  And they might find it at your organization.  And you may be responsible for influencing them, recognizing them and designing incentives for them to guide their behavior at work.

And knowing who they are is key.  But do you?

Last week the company I worked with on a webinar, i love rewards, released something called their “Class of 2011” white paper/research study.  It was profiled on Forbes and in the USA Today. 

When I saw the reference I thought of the Beloit College “Mindset List” started about 10 years ago to help Professors at the school understand incoming Freshman and how they may (or may not) interpret references.  Here’s an example...

How do you think a student would react if a professor, commenting on the lack of organization in a student’s backpack... 

“That looks like Fibber McGee and Molly’s Closet.”

I’m pretty sure many of you reading this have no clue.  I only know of it because my father (born 1928) used to use that when describing my bedroom.  Here’s a link for all of you under the age of 75.

Program Design Is About Them

I’ve only said it 239 times on this site - design incentives and recognition for your audience, not for you.  And your audience is probably very different than you.  Want proof... check out what the Mindset List said about the incoming Freshmen in 2008 who will be graduating this year.  

I’ve picked my 11 favorites out of their list of 70.

Beloit Mindset List 2011

1. What Berlin wall?
2. They never “rolled down” a car window.
3. They were introduced to Jack Nicholson as “The Joker.”
4. Stadiums, rock tours and sporting events have always had corporate names.
5. They learned about JFK from Oliver Stone and Malcolm X from Spike Lee.
6. High definition television has always been available.
7. Smoking has never been allowed in public spaces in France.
8. Tiananmen Square is a 2008 Olympics venue, not the scene of a massacre.
9. MTV has never featured music videos.
10. They get much more information from Jon Stewart and Stephen Colbert than from the newspaper.
11. The World Wide Web has been an online tool since they were born.

That’s what we call “perspective.”  Get it.  Use it in your program design.

 

Webinar – Incentive Design and Wellness April 19 Noon EDT

I’ve been doing this blog for almost 6 years (that’s about 154 in internet years.)  My goal has always been to help companies design the best influence program using incentives, recognition and rewards.  

It’s been a slog.  Too many programs are still badly designed and too many clients still aren’t getting the value they should in their incentive programs.  So... to further the cause, on April 19th at Noon EDT I’ll be hitting the internet airwaves providing color commentary for a webinar on designing effective incentive programs.  It's part of the Workforce Management Benefits 2011 Virtual Conference.

Well, not exactly.  I’m providing a bit of an intro section – maybe 20 minutes or so – on the elements of good incentive program design for Virgin HealthMiles.  I’ve not used them for a client, nor am I implicitly recommending them but they asked for some support – and I’ll do just about anything to get what I think is truthful and accurate information on incentive program design out to those that need it.  I’ve checked out their offering and it’s solid so I feel comfortable being part of their efforts.

Still Doing It Wrong

It is still surprising to me in this day and age of “the google” that so many incentive programs are designed poorly.  I have some theories (some involve conspiracies – maybe Coast to Coast AM with George Noory will call?)  Hopefully, after this webinar there will be a few more folks with the proper knowledge of program design out there helping me with the cause.

So Paul, what does the webinar cover?

Thought you’d never ask.  There are two parts.  First, I’ll walk through what designing a good (great?) incentive program takes.  The second part with be a walkthrough of how the Virgin HealthMiles platform takes advantage of the elements I described.  The cool thing is that I put together my section without input or editing from Virgin HealthMiles – and their section pretty much conforms to what I know should be done– so I like that.  We call that alignment folks.

Without giving too much away, I will be discussing...

• Why many programs are poorly designed
• What incentive planners need to think about before designing a program (and what to watch for when your “incentive expert” supplier makes a recommendation
• Some examples of bad vs. good incentive goals
• A pretty good summary – call it an elevator pitch – that you should print out and put on your wall to provide guidance the next time someone asks for an incentive design.

I’m looking forward to the discussion and I’m hoping a lot of you sign up and listen in and provide feedback.

I’ll probably put the slides up on slideshare once I’m done so you’ll be able to download my section.  I’ll let you know when that happens.

Please tune in – it might save you some time and money at some point.  And that’s a good thing, no?

 

Related articles

• Impersonal Incentives Are More Expensive (i2i-align.com)

Impersonal Incentives Are More Expensive

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I’m doing a preso on HR.com’s “Rewards and Recognition Virtual Workshops” at 12:30 pm EDT today.  Listen in.  It will be fun.

But, prepping for that presentation made me think of the whole incentive program goal setting process.  

Typically it goes like this...

ACME Widgets determines its sales goal for the year.  Say it is 120% of last years’ sales.  They go to the Sales VP and tell him/her the goal.  The Sales VP calls the incentive supplier and tells them they need an incentive program to drive a 20% increase in sales.  The incentive company comes back with a program design that:  

A) Sets a sales target of 90% of the 120% goal (approximately 108% of last years’ sales) and awards points for each sale from 90% of the 120% and then doubles the points after that level (btw - from a design standpoint – the company actually gets an 8% increase before awarding a single point;) or 

B) Rewards everyone in the sales force that hits 120% of last year with a trip to Hawaii.

Those are the two basic options.  Reward incremental sales in points driving folks to the 120% number or reward everyone who achieves this years’ goal (20% more than last year.)  There are variations on the theme but the net-net is the program is designed to get the sales person to strive for the +20% figure.

Paying a Premium for Your Goals

The thing that no one seems to recognize in this scenario is that what the company is really doing is paying a premium to get the sales people to focus on the “company” goals.  The 20% increase is not the goal of the sales person.  Nowhere in the example did the sales person articulate what they wanted.  The entire program is designed around the company needs, wants, desires and goals.

This is a lazy way to do the program.  In effect, what you’re saying is...

"Here’s what I want – you go look in the catalog and decide what you want.  If we’re lucky – what you want will add up to a 20% increase I want.  If not, too bad.”  

This is a lose-lose scenario.  The company didn’t get their 20% increase and the sales person didn’t get what they really wanted either.

Because the company didn’t find out what their sales people wanted they are actually (IMHO) paying a premium through higher point rewards for sales effort in order for the sales person to shift their attention away from what the individual sales person wants, to what the company wants.

What If It Was About Them?

What if we worked backward on this (and I won’t take credit for this idea... it came from someone I worked with about 5 years ago)...

Ask each sales person what they wanted to accomplish this year.  It could be to take a vacation with the fam to Disney, could be a new Harley.  Based on their desires, goals, dreams – the Sales VP and the sales person worked together to determine what they would have to sell/produce to get that award.  If it adds up to 20% great.  If not – what’s the next thing on the sales person’s “to-want” list?  Add that to the mix and put that under the first thing.  Between the sales person and the VP, they will come up with a personalized list of goals (not the % kind – the personal kind) that, when taken in total across the sales force, will net the company their stated 20% growth figure.  

Not each sales person needs to hit 20%.  Some may hit 25% growth – based on their needs/wants/desires that year.  Others, may only be in the 10% range.  I won’t be so Pollyanna as to say you should reward folks for below 100% (unless there is some mitigating factor – like the economy!)

But here’s the kicker... I’ll bet my reputation and my fees on this...(if someone wants to take me up on it) the overall cost of the “wish list” will be lower than the cost of points and/or trips would be from a program designed from the goal “number” backwards.  Why?

• It has been my experience that people will set higher goals than the company normally does (remember – a lot of the time the number they hit last year wasn’t them at 100% effort – more likely 70% - and they know it.) 
• When the focus of the sales person’s goal is personal (not some company derived number) it is more desirable.
• When someone has a say in the goal development they are more committed – it’s their reputation – not some no-name in Sales Planning or Finance’s reputation on the line.

It’s easy to test this theory.  If you have a “points” program or other program in place, go to a few sales people, ask them what they really want, work together to see what they need to do to get that and compare the cost of that to the cost of the points/trip that would (will) be rewarded if they hit that number.  Go do it – I think you’ll be surprised.

Does this process eliminate a catalog solution?  Nope.  The process simply translates a company goal in to a personal one BEFORE you start the program.  That is the key influence technique.  When the program is announced, the individual is given their list of “desires” – and you track against that list.  At any time during the program, the sales person can adjust and manage their “wish list.”  Remember – it’s THEIR list now - not yours.  That makes all the difference in the world.

Being Impersonal Is Costing You Money

So ask yourself – are you paying a premium on your reward program just so you don’t have to talk to your sales people?  If you’re running a program that requires sales people to determine their goals after you’ve determined yours, you probably are.

Related articles

• Incentive Roll-Over Plan - Or "Don't Run That Same Annual Sales Incentive" (i2i-align.com)
• Removing Imagination from Your Performance Discussion (i2i-align.com)