New Research Focuses on Engagement
New findings continue to bolster the assertion that employee engagement, a positive corporate culture with good communication and strong internal marketing practices, are critical to continued financial health and growth. At the inaugural Conference for People Performance Management and Measure-ment (see related story on page 6), professionals in the motivation field heard news that would have been unimaginable only a few years ago: The empirical evidence pointing to the bottom-line impact of motivational practices has reached a critical mass. No longer considered just a fad or the territory of just a few maverick companies, performance and engagement have emerged as critical tools for corporate success in the 21st century.
New Research
Four new pieces of research from the Forum For People Performance Management and Measurement, as well as one from the Society of Human Resource Management, continue to offer empirical proof that the People Performance discipline is a crucial component in a company’s overall financial health and growth. The four studies are summarized below:
The Road to an Engaged Workforce: The impact that an organization’s culture, climate and human resource system have on employee satisfaction and engagement was examined in this 2005 study. Researchers found that the key drivers of satisfaction include an employee’s intention to remain in the organization, the variety of skills employees are able to exhibit in their job, the level of customer service orientation achieved and the degree of coordination between units of the organization. The key drivers of employee engagement include reduced role conflict, proper training, personal autonomy as well as the ability of managers to effectively share power with staff.
Internal Marketing Best Practices: Internal marketing, defined as an ongoing process whereby “an organization aligns, motivates and empowers employees —at all functions and levels—to consistently deliver a positive customer experience that helps to achieve business objectives across the organization,” is a crucial element in creating an engaged, productive workforce. This study of 18 companies found that those with the most comprehensive internal marketing programs shared the following characteristics, regardless of industry: Employee Engagement, Senior Management Support, Human Resources Involvement, Marketing Savvy, Brand Promise Delivery, Relevant Communications, and Integrated Horizontal Organizational Structure. The study analyzes the processes that companies use to create exemplary practices, making for an instructive road map for internal marketing success.
Strategic Guidelines to Managing Cash and Noncash Employee Motivation Programs: The results of this survey—that was conducted at the National Association of Employee Recognition (NAER) Spring 2005 Conference, The Motivation Show (Fall 2005), The Integrated Marketing Summit (Fall 2005) and the Fall 2005 Promo Expo—demonstrate that most people who are responsible for selecting and implementing reward and recognition programs prefer noncash rewards. The study also sheds light on the types of motivational programs that these managers think are best suited to achieve varied organizational objectives and offer guidance for organizations in providing and using reward and recognition programs.
An Exploratory Study of Sales Incentive Programs: This research examined the impact of sales incentives on the bottom-line via analysis of a Midwestern financial services company with operations in 13 states, involving more than 1,300 sales agents. Over the course of the program, sales of the focal product nearly doubled, resulting in a 12 percent return on investment when the dynamic effects of the program are taken into account.
Maximizing Human Capital: Demonstrating HR Value With Key Performance Indicators: The Society of Human Resource Management released the study, which asserts that to drive value and optimize corporate performance, the value of human capital must be quantified and measured, this year. When companies treat their human capital as an asset, the paper notes, they can identify key performance indicators, establish benchmark metrics and establish goals for improving these figures to boost company performance.
Knowledge Bank
Here are some recent studies that should continue to play an active role in the decision-making processes for incentive industry practitioners.
Making the PPM Connection
A study from the The Forum for People Performance Management and Measurement, titled, “Linking Organizational Characteristics to Employee Attitudes and Behavior,” shows that there is a direct correlation between employee satisfaction and customer satisfaction, and customer satisfaction and financial performance.
Among the key findings:
- Effective communication between employees and management is the key factor that impacts satisfaction.
- Employee satisfaction is an important precursor to employee engagement.
- A workplace culture that encourages teamwork but allows workers to “provide a voice for the customer within the organization” is another significant driver of employee engagement.
- Companies with engaged employees have more repeat customers with higher levels of satisfaction.
- Satisfied customers are less expensive to serve, use the product more and are, therefore, more profitable.
Marketing Strides
A 2005 study conducted by the Promotion Marketing Association and Northwestern University, “ROI of Integrated Marketing,” focuses on the impact that integrated marketing has on a company’s profitability. It defines integrated marketing as a strat-egic business process used to plan, develop, execute and evaluate coordinated, measurable, persuasive brand communication programs over time with consumers, prospects and other targeted external and internal audiences.
As a follow-up to the study, the PMA and Northwestern issued a white paper for the Forum titled, “Motivating Employees to Embrace Integrated Marketing.” The white paper focuses on achieving employee buy-in of integrated marketing programs and identifies four key areas that impact organizational adoption of integrated marketing:
- Internal communications
- Senior management sponsorship of integration as a motivating factor
- Consumer orientation of the entire organization
- Incentives and rewards
The Role of Rewards and Gift Cards
The Incentive Federation of the Incentive Performance Center’s Federation Study 2005 offers insight into practices and attitudes among current users of merchandise and travel for motivation.
Gift certificates and cards, building momentum for several years, made a strong showing in 2005, ranking as the number one form of noncash award.
As in its 2003 study, most survey respondents are using more than one type of noncash award. The survey also found that sales incentives and non-sales recognition motivation programs are the most likely applications for non-sales awards.
The Incentive Gift Card Council white paper, “Putting Trophy Value Into Your Gift Program Design,” outlines why gift cards have become such a popular choice in the cash-noncash spectrum, and it explores specific ways to maximize the impact of this tool, which can “provide powerful, ongoing target marketing power,” according to the report.
“The Role of Gift Certificates and Gift Cards in Corporation Recognition and Incentive Programs”
Incentive Marketing Association’s Incentive Gift Certificate Council, 2004
This executive white paper addresses the growing role that the multibillion-dollar gift certificate/card industry plays in a variety of incentive programs and also offers guidelines to program planners for choosing a provider.
Program Tools
“Choosing a Performance Improvement Company”
Incentive Marketing Association’s Performance Improvement Council, 2004
This executive white paper explores performance improvement from a broad standpoint and offers guidelines for choosing the right incentive service provider from three distinct categories: full-service performance improvement companies, full-service incentive companies and incentive fulfillment companies.
“The Benefits of Tangible Nonmonetary Incentives”
SITE Foundation, 2004
This paper addresses the much-debated topic of the value of tangible, nonmonetary incentives versus cash. Through the application of several principles of social and cognitive psychology, the authors found that program participants may perceive nonmonetary incentives as more valuable than their cash value at retail. This reaction is tied to the award’s “trophy value,” such as the acknowledgment of peers.
Return on Investment
“Post-Hoc Measurement and Outcome-Based Measures—Measuring the ROI of Sales Incentive Programs”
SITE Foundation, 2004
This study maintains that, while it is widely accepted in the business world that sales incentive programs are valuable, isolating the program as the cause of sales improvement can be a gray area. Using two actual measurable sales incentive programs as case studies, researchers proved a definite relationship between the incentive program and the net profits after the cost of the program was deducted.
Employee Retention
“The Economics of Retention”
Incentive Marketing Association’s Performance Improvement Council, 2004
Hiring and training is already a substantial HR cost and is bound to rise in the future. This research shows why retention matters in today’s business climate, and how employers can stop employees from leaving and becoming a drain on the bottom-line.
This research illustrates that although compensation factors into turnover, the role of motivation and incentives is far more important, and it may even be cheaper to implement. The study spells out how to develop, market and execute a motivation-based employee retention strategy, beginning at the top.
“Motivation in the Hospitality Industry”
SITE Foundation (now the Incentive Research Foundation), 2004
This study measured key indices of motivated behavior identified in the widely recognized CANE (Commitment And Necessary Effort) Model of Moti-vation: choice, persistence and effort. As the first part of a multiphase study, the results were used to create The SITE Foundation Motivation Index, a national indicator of employee motivation to show the predicted impact of motivation on economic performance in the service sector. The index also is a turnkey tool for use by any type of organization to predict employee motivation and its impact on business results.
Researchers, who used the 10-part CANE Model to survey employees of hotels and fast-food restaurants in the Orlando, Fla., area in 2003, found that a targeted incentive system can solve the problem of motivation in both the short and long term.
For More Information…
Many full-text research studies and executive white papers can be accessed on the Web from the following sources:
Sales Marketing Network: www.info-now.com
Incentive Performance Center: www.incentivecentral.org
The Forum for People Performance Management and Measurement: www.performanceforum.org
Society of Incentive Travel Executives: www.site-intl.org
Incentive Research Foundation: www.theirf.org
Promotion Marketing Association: www.pmalink.org
Incentive Marketing Association: www.incentivemarketing.org
