The Case for Incentives

Why motivation still matters

M&C Web Exclusive: Resources for Proving Incentive ROI
From the Site International Foundation:
• "Measuring Results of Incentive Programs and Meetings in a Down Economy" (

From the Incentive Research Foundation (to access all of the following, log in first to
• "The ‘Evidence-Based' Case for Incentives"
• "Incentives, Motivation and Workplace Performance: Research and Best Practices"
• "The Master Measurement Model of Employee Performance"
• "Determining the ROI of Incentive Travel Programs"
• "Assessing the Impact of Sales Incentive Programs: A Business Process Perspective"

From the Incentive Marketing Association:
• "Making the Case for Sales Incentives to the Tune of 10 Percent ROI," and "Making the Business Case for Your Incentive Program" (

Another great resource for white papers is the Incentive Performance Center, an umbrella group for all of the incentive associations ( 




incentive insideOf the various meetings industry sectors under siege, the one that arguably has been most vilified is incentive travel. In the wake of public outrage over programs run by federally bailed-out firms such as AIG and Northern Trust, reward trips and recognition events have been demonized in the mainstream media.

Getting lost in the bad news is some pretty compelling information on the good things incentive programs can do for companies: boost their bottom line, increase market share, lift the morale of staff in tough times and position firms for postrecession success.

"Now more than ever, companies are battling to retain their top sales talent and customers. Increasing loyalty and commitment of employees and customers, and retaining talent, are all proven outcomes of incentive investments," says Steve O'Malley, vice president, strategy, practice and industry relations, for Fenton, Mo.-based Maritz Inc.

Indeed, Brenda Anderson, CEO of Chicago-based SITE (the former Society of Incentive & Travel Executives), says that "12 months from now, the companies that will flourish will be the ones that kept their incentive programs going."

Following is helpful ammunition for those struggling to retain incentives.

Incentives provide results. When properly designed, implemented and evaluated, incentives provide measurable benefits on which the industry should be focusing, says Anderson. While it's nice to take people on a trip as thanks for a job well done, at times like these, incentive programs need be tied to specific strategic goals. For sales-based programs (the most typical type of incentive), goals can range from trying to move slow-selling products to increasing overall sales or market share by X percent, as well as other considerations such as teaching employees about a new product.

In addition to goals, programs should have a budget, rules, motivating rewards, strong communication with participants and demonstrable ROI. (For more information on structuring programs that pay for themselves and how to calculate ROI, see "Payback Time" from the September 2008 M&C Guide to Incentives,

Recipients are taxed. One fact that has been lost in the current flurry of headlines is that incentive winners pay federal tax on their rewards (companies let participants know the dollar value of the trip and send participants 1099 forms). The white paper "Tax Considerations for Incentive Programs" provides information on the topic. Note: This advice applies to pure incentive programs; for programs that include meetings, consult your firm's legal department.

Cash isn't king. Some firms might be tempted to switch travel rewards to something they consider more "under the radar," like cash or gift cards. But there is good reason not to do so, according to some studies. Among them is "The Benefits of Tangible Non-Monetary Incentives" (available from the Incentive Research Foundation;, which suggests that the perceived value of tangible, nonmonetary incentive awards such as travel or merchandise is greater than the perceived value of cash-based awards of similar actual value.

And as for cash being a less volatile reward than travel, consider the outcry when word leaked about AIG executives receiving bonuses, or the headlines calling out Smith Barney for giving cash-loaded debit cards to its top brokers in place of a trip.

The incentive industry has numerous other white papers, studies and models available to help you make your case. A list of helpful resources, see below.