Making the Case to Your C-Suite

20 Stats On Incentives and Why Your Company Needs Them

The first step to a successful incentive program is getting ?buy-in from management.

It is important to clearly identify the purpose for the incentive – retention, incremental sales growth, partner engagement, etc. Then design the rules structure to support those targets. We know incentives work when done well, and these industry stats, can help you socialize the concept with supervisors and coworkers.

Here are some suggestions to organize your business case and prepare for skeptics. ?One of the most common objections I hear is:

“We don’t need an employee incentive program” or “We can’t make a change right now.”

As the old saying goes, don’t put off until tomorrow, what can be done today.

Instead of focusing on the cost, look at the return on investment. If your organization could get back in productivity 2X what it pays for a program, wouldn’t it be a wise investment?

One of the main reasons why decision-makers delay launching?a program is because they can’t see the direct connection with a predictable return. But you can show them employee motivation statistics that support the significant contributions employee and partner incentive programs make to the bottom line.

Stats on Results:

• A recent study found incentive programs— with awards in the form of money or tangible awards—increase performance by an average of 22 percent. Team incentives can increase performance by as much as 44 percent.
• Companies using incentive programs reported a 79% success rate in achieving their established goals when the correct reward was offered.
• Properly structured incentive programs can increase employee performance by as much as 44%.
• Annual revenue increases are 3 X higher in companies that use a tangible sales incentive over those that don’t use an additional incentive.?
• The study found that incentive programs that run for a year or more produced an average 44% performance increase, while programs running six months or less showed a 30% increase. Programs of a week or less yielded a 20 percent boost.

Incentive programs also support human capital initiatives in addition to revenue goals. For instance, when recruiting new employees or retaining top talent. It can also be a differentiator when career searching.

Stats on Talent:

• 90% of business leaders believe that an employee incentives strategy could positively impact their business, yet only 25% of them actually have a strategy in place.
• More than 4 out of 10 (42%) employees consider rewards and recognition program opportunities when seeking employment.
• 51% of sales people and 52% of non-sales employees are already participating in some sort of program where they work.
• 39% of employees feel under-appreciated at work, with 77% reporting that they would work harder if they felt better recognized.

• According to a recent CareerBuilder/USA Today survey, 56% of HR managers are worried that their top talent will leave for another job within the year.
• The presence of a corporate incentive program motivated 66% of employees to stay at their job.
• Organizations that offer at least one recognition program and that have a low turnover rate (0%-5%) report? ? ?statistically more recognition programs in place than the medium or high turnover categories.
• A 5% increase in employee retention can generate a 25% to 85% increase in profitability.
• Only 40% of employees are well informed of their company’s goals, strategy, and tactics.

You may be surprised to learn that incentives can impact ones pride, connectedness or feeling of loyalty to their organization. In fact, these programs can influence the levels of ones engagement in the sponsor organization whether that is a direct employee or a channel partner.

Stats on Engagement:

• Disengaged workers cost the economy $300 billion or more per year.
• Companies that actively engage workers profit more than those that don’t. If you look at Fortune’s “Best 100?Companies to Work For,” these organizations have averaged an amazing 200.6% return over the past decade.
• Organizations with higher than average levels of employee recognition realized 27% higher profits, 50% higher sales, 50% higher customer loyalty levels, and 38% above-average productivity.
• 41% of customers and partners are loyal to a brand or company because they consistently notice a positive employee attitude, while 68% of customers defect from a brand or company because of negative employee attitude. ?

Now that you have the data, there are a few considerations to keep in mind.

1.????? Employees gauge an incentive’s value based on how hard it is to earn. If you set the goal too high, are demotivated as the incentive is unattainable and not worth the effort.

2.????? This is not compensation.? It’s a reward. The key is to choose a reward that both attracts peer attention and stands out from regular pay. Keep in mind that a reward is often more impactful and builds loyalty to the sponsor company.

3.????? Ensure that it produces measurable results and establish those KPIs upfront.

One of the biggest roadblocks for companies considering an employee incentive program is a lack of confidence that the benefit can be clearly measured against the cost of investment.

In the case of incentive programs having a significant impact on attracting and retaining talent, remember that just a mere 5% increase in employee retention can result in a 25-85% boost in profits. When you consider that it costs 25 X more to obtain a new customer than it does to retain a current one, it’s easy to see the connection between small boosts in retention and large jumps in profits. ?

Be open to change if needed.

Finally, an elaborate complicated employee or sales incentive program will not produce better bottom-line results than a simple one. At the end of the day, it comes down to motivating employees by giving them clear, incremental yet achievable goals, and then rewarding them with something that truly motivates them.

?If you need help getting started, get in touch today!

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Thank you to the organizations that provided source material behind these statistics, including?Gallup, the?Incentive Research Foundation,?One10, IMA and?World at Work.