Study Details Value Of Incentive Programs And How To Measure Their Effectiveness
The Incentive Research Federation (IRF) has released a new study on measuring and valuing incentive, reward and recognition programs. The IRF’s study, Award Program Value & Evidence, reflects research that shows that on average, incentive, reward and recognition programs result in a 22 percent gain in employee performance, and provides data to help businesses maximize the effectiveness of these programs.
“Most leaders expect their investments in incentive, reward and recognition programs to meet specific goals, such as driving more sales, increasing revenue, or producing some other return on investment,” says Melissa Van Dyke, IRF president. “Award Program Value & Evidence presents a strong case for using non-cash reward programs to motivate employees and practical advice on how to measure the success of these programs to ensure goals are met.”
The study found that people tend to make utilitarian purchases such as groceries when given a cash reward, and that non-cash rewards—like fun experiences—can create lasting memories and positive associations. According to what the study calls “The IKEA Effect,” people put more value on tangible rewards that they have to work toward, and that non-cash rewards have a “trophy value”—they are highly visible, and it is more socially acceptable to talk about merchandise or a trip than about a cash incentive.
In measuring incentive, reward and recognition programs, the IRF’s study recommends clearly defined, measurable objectives, as its research points to these being among the most important success factors. Metrics for tangible benefits include decreased staff turnover, increased productivity, sales, revenue, market share, gains in customer satisfaction and customer acquisition. While more difficult to measure, metrics for intangible benefits include employee presenteeism and satisfaction.