Ten Costly Misconceptions About Incentive Programs

I recently attended a meeting hosted by The Ohio Valley chapter of the American Teleservices Association (ATA).  The agenda included a contest to determine the best contact center incentive programs.  There were 18 presentations in six categories.  Many of the programs were very creative and innovative.  Everyone learned new and valuable information and there was a lot of interaction among the attendees and presenters.  If your organization is looking for a topic for an upcoming meeting “the best incentive program contest” would be an excellent choice!

I feel, however, that an important element is missing.  Most contact centers can achieve an even greater improvement in KPI’s by avoiding some common incentive program misconceptions. To that end, I offer guidance to offset the most common misconceptions listed below:

Misconception: Incentive programs should be used primarily to solve short term problems: Incentive programs are often set up to be a “shot in the arm” to improve sales, introduce new products, collect more money, etc.  Unfortunately there is almost no residual effect so performance levels revert to pre-program levels at the conclusion.  From my experience, incentive programs which are designed to run continuously can sustain KPI performance improvements of at least 20%, and only require about two hours worth of labor cost per employee per month.  Management should be elated with an ROI like this and question why an incentive program should not be permanent.

Misconception: In order for an incentive program to be effective, a lot of money must be spent: Studies have shown that incremental incentive related improvements stop at around 3% of payroll.  Less a few exceptions, spending two hours of labor cost per employee/month should be enough; anything more will decrease your ROI.  The keys to success are how the program is administered and rewards are distributed: reward the daily homework, make work fun, pay immediately and offer a choice of valued rewards.

Misconception:  It takes substantial time and resources to create and administer an incentive program: I take my hat off to those who create, implement and manage an incentive program, especially the short duration ones.  That’s the problem; a short term program receives little or no help from outside the department.  KPI data is often manually extracted from various applications and manually input into spreadsheets and databases.  If some degree of automation is created, it must be updated with each new program.  A permanently operating incentive program (with an excellent ROI) will have strong management support; thus resources will be extended to create a flexible support infrastructure.

Misconception: Incentives should be rewarded only for achieving long duration goals (monthly, quarterly & yearly):  Rewarding employees for achieving “big picture” objectives is a good practice.  However, it does not address the needs of Gen X and Y employees who need constant reinforcement and praise.  More success will be achieved by breaking down large activities into their smallest measurable components and rewarding them as they occur i.e. “rewarding the daily homework.”

Misconception: Incentive games are silly and counterproductive: In my experience with Snowfly, I have found that 9 times out 10, when given a choice, employees would rather play a random point-yielding game as opposed to being rewarded a finite, consistent amount of points.  Whether it’s spin-the-wheel, draw a ticket from the fish bowl, select an envelope or something else, random intermittent reinforcement is one of the most powerful motivators for task continuation.  Unfortunately, the proven motivational power of randomized reinforcement is not utilized in the large majority of employee incentive programs.

Misconception: Incentive programs should reward only the top performers: You may have heard of the superstar effect.  People stop trying when they realize their chances of winning are slim.  Incentive programs should be set up to reward anyone and everyone that performs at the desired level. That being said, be sure to put the proper amount of thought and research into setting the thresholds for reward.

Misconception: Incentive Programs should solely reward team-based achievements: Teams are great for creating employee bonds, thus very helpful in reducing early-stage employee turnover.  However team rewards can may times lead to social loafing i.e. “I don’t have to work that hard, my team has got me covered.”   To prevent this, team-based rewards should only be used in combination with individual rewards.

Misconception: Refillable debit cards, retail & restaurant gift cards are not as effective as tangible incentive rewards:  The fact that debit cards and gift cards to stores & restaurants do not have the tangibility of merchandise is outweighed by the choice and value they provide.  Incentive catalogs offer a limited selection of items and the cost of the merchandise is more expensive.

Misconception: There should be a few large prizes with a high value: Expensive, trophy value prizes are another “nice to have” but postpones the reinforcement of frequently being rewarded.  Finite incentive budgets will generate more positive behaviors if the employee can enjoy the benefits of their actions often.

Misconception: You have to do it all yourself: Many are unaware that there are companies that specialize in the creation, implementation, and management of employee incentive programs.  They have in-depth knowledge & expertise in the field of contact center motivation and incentives.  Consider outside assistance, test their familiarity with challenges like yours and evaluate their recommendations.  Be sure to question how they make their money and what type and duration of service agreement is required.

About Snowfly
Snowfly is the leading provider of Internet based employee incentives, recognition and loyalty programs.  Snowfly’s incentive system allows clients to harness the enormous motivational power of immediate positive reinforcement to focus employee behavior on company objectives.  Compared with home-grown programs, Snowfly significantly improves KPI’s almost immediately, reduces a huge administrative burden and reduces costs.  The results are easily seen within weeks and there is no long term contractual obligation.  Customers include multiple Blue Cross/Blue Shield providers, Hyatt Hotels, Time Warner Cable, financial institutions, utility companies, cable/satellite providers, various BPO companies (business process outsourcers), and collection departments/agencies.  Snowfly’s web site: www.Snowfly.com.  For more information, contact Snowfly at 1-877-SNOWFLY (766-9359).  Or email Bob Cowen at rcowen@snowfly.com