Non-cash Incentives: Why they work and why more companies should use them

A new study from the Incentive Research Foundation and research firm Aberdeen Group
finds that best-in-class companies are nearly one third more likely to use non-cash incentives in their sales incentive programs. While incentive program participants often state that they prefer cash to non-cash rewards, research has shown that cash is a poor motivator due to its lack of trophy value. Additionally, cash is quickly forgotten as many participants tend to spend it on everyday items or use it to pay bills. Given that most people do not generally talk about cash awards, cash programs do little to generate the interest required to create an effective incentive program. Research shows that pay for performance often gives only short term gains, frequently gives no gains at all, and may give reduced performance. Merchandise and other non-cash rewards are more often perceived as separate from compensation. Accordingly, non-cash rewards tend to stand out as rewards for performance, which enhances their long-term effect. Branded merchandise and other non-cash rewards have high trophy value, which brings greater recognition to the recipient at the time of the award and possesses a long-term lasting effect that can result in increased engagement in the organization’s goals.

This study conducted by the Incentive Research Foundation and the Aberdeen Group surveyed 246 end-user organizations on their sales performance management best practices. Through a number of metrics, including the percentage of sales reps achieving quota, the average deal size or contract value, and overall team attainment of sales quota, it rated the companies as best-in-class (20 percent), industry average (middle 50 percent) and laggard (bottom 30 percent). It found that the best-in-class companies are “more aware of the need to manage their sales professionals holistically”.(1) What was revealed in this study is that best-in-class firms are less likely to focus only on monetary awards than they were only a year ago, and that they are 31 percent more likely to rate non-cash incentives as “must have” in rewarding sales performance. While laggards are also likely to agree with this sentiment, the research found that these companies are also more likely to use non-cash incentives too late in the process or to use them ineffectively. Companies report three different behaviors that achieve measurably better sales and the data supports these for different recommendations for sales operations to consider. These behaviors are including non-financial incentives as a formal component of sales compensations, turn to external providers to help design and manage non-cash incentive programs (these can be complex and makes it easier for sales leadership to focus on main prize), and remember that non-payroll, channel sellers and distribution arms are often the lifeblood of a sales operation’s success story.

Like any other business expense, the funding of reward programs attracts intense scrutiny from business leaders looking to cut expenses and it is for that reason that it is important that these findings cannot be over scrutinized. Travel and merchandise awards often produce greater bottom-line benefits than other incentive alternatives and capture employee attention. As time passes businesses need to evolve, and with that their awards programs need to as well.

The IRF study and its full range of findings are available on the foundation’s website.



1. Ostrow, Peter. Incenting Success: Best-In-Class Sales Management (2015): n. page. Apr. 2015. Web. 19 June 2015.

The Ups (and Downs) of Airplane Travel

Studies show that those who travel have healthier minds, bodies, and relationships. They are known to have a reduced risk for heart attacks, less likely to suffer from depression, and a decreased amount of cortisol (the stress hormone) in the body.(1)  With travel proven to decrease the amount of stress in a person, then why does travelling seem like such a time consuming hassle that includes endless planning and often times the dreaded airport trip?

On any travel day, you're on edge. Whether it's due to the angst of flying and goodbyes or dreading the extensive processes and long lines, something that was once a luxury, has turned into a hassle. Shoes off, bag weight, TSA pokes and prods, carry-on size, delays, and over bookings are all inconveniences that we fight through before taking our seats. Most of the stress with flying can be controlled: plan ahead, arrive early, and pack smartly. But what if others don’t plan their trip as well as you have? Despite there being no official printed rules, there are certain airplane etiquette guidelines all airplane travelers should follow when flying. Issues like the armrest challenge (who deserves to use it), use the overhead bin over your own seat, board when you are supposed to and not before, and bathe are guidelines travelers can follow to make other trekkers not hate them. After polling the FIRE Light Group team, there are two main pet peeves our staff have that they encounter when traveling that make their flight less enjoyable. These are: when and if travelers should recline their seats and those who bring more than they can carry.

When asked what bothered her most about airplane etiquette, Sandra, FIRE Light Group CEO, stated “Mine is the reclining seat from the person in front of you who seems to have no regard for the fact that you now have their seat in your lap! Just because seats recline on an airplane does not mean you should not think about the person behind you when you recline – less than 100% would be appreciated!” According to a study by Expedia, “Seat Back Guy”, defined as the passenger who reclines his seat fully once the plane has left the ground, ranks #7 on the list of travel-etiquette offenders. Thirty-five percent of Americans report having experienced major discomfort due to reclining seats, and 42% would like to see reclining seats banned entirely! This being said, 80% of fliers admit to reclining their seats during flights, with 1 in 5 reclining right after take-off.(2)   While flying, try to remember how it feels to get the seat in front of you shoved in your face, and be considerate of the person sitting behind you. Be cautious when reclining your seat back, and make sure to NEVER do it during food service because it makes eating near impossible for the person whose tray is attached to your seat.

The second main pet peeve our staff has is dealing with those who pack more than they can carry for a flight. Dustin, Director of National Accounts, stated that he dreads when people bring more than they can carry and rely on everyone else to lift their luggage for them, or their bag is too heavy and they can’t put it in the bin themselves and expect stewardesses to help them. Expedia ranked this annoyance at #8 in their poll, showing that 10% of Americans admit to ignoring the airlines carry-on baggage rules entirely.(3) When passengers have to stop and fight with their luggage to fit and shove it into the overhead bin, it not only takes up valuable space for others to put their luggage but it also holds up the line and makes boarding the plane take even longer. When packing, take the time to make sure your luggage not only fits the airplane’s size guidelines but also is a weight that you can manage to lift yourself. This will ensure a smooth boarding of the plane and shorten the time it takes you to get to your seat and relax.

Despite all setbacks, most Americans feel warmly about their fellow passengers with 84% agreeing with the statement: “For the most part, fellow flight passengers are considerate of other passengers”.(4)  Simply remember what bothers you when you fly, and take the time to make sure you are acting in a considerate why towards others and your flight will go smoothly and peacefully!


- Ashley



Citations
1. Parker-Pope, Tara. "How Vacations Affect Your Happiness." Well How Vacations Affect Your Happiness Comments. The New York Times, 18 Feb. 2010. Web. 10 June 2014.
2. Gavin, Sarah. "Expedia News." Expedia Viewfinder. Northstar, 9 Dec. 2013. Web. 10 June 2014.
3. Gavin, Sarah. "Expedia News." Expedia Viewfinder. Northstar, 9 Dec. 2013. Web. 10 June 2014.
4. Gavin, Sarah. "Expedia News." Expedia Viewfinder. Northstar, 9 Dec. 2013. Web. 10 June 2014.

Millennials: Aren’t we the worst?

"Millennials” is a term that is often heard but many times misunderstood. Born between 1980 and 2000, Millennials have been one of the most talked about, studied, and targeted generations. As a member of this illusive group, I’ve noticed that everyone seems to be talking about us and it’s not just because we are the largest generation by population size, but because we’re different than any other generation that came before us. We are more ethnically and racially diverse than older adults. We’re less religious, less likely to have served in the military, and are on track to become the most educated generation in American history. Our entry into careers and first jobs has been badly set back by the Great Recession. We are history’s first “always connected” generation. Steeped in digital technology and social media, we treat our multi-tasking hand-held gadgets almost like a body part – for better and worse.(1)  I am constantly told that my generation is “doomed”, that the economy we are graduating into is one that is still recovering from recession and with unemployment at a high it’s no wonder people are worried. Yes there is uncertainty, but we are also a generation full of hope. Millennials grew up in an expanding world of choice and options for just about everything they ever needed or wanted. Because of this, they view life very differently. They don’t see just see one path available to them—they see limitless possibilities to make their life their own. All of these characteristics set us apart from the generations before us, so what should businesses do to draw us in and to engage us?

Millennials are approaching adulthood differently than their parents did. Why? Well, the economy for one—the milestones of adulthood (getting a job, buying a home, getting married, and having kids) just aren’t as feasible for many Millennials given the ramifications of the recession and also the expanding world of choice and options for everything. Brands need to stop waiting for us to “grow up” and fall in line with what past generations have done. A lot of us already have; it just looks different than it did in the past. Brands and marketers need to shift and adapt to this reality, instead of waiting for one that won’t come true. The real challenge in this is figuring out how exactly to do it. Many brands feel that connecting with Millennials is extremely difficult. But, in reality, connecting with Millennials is pretty straightforward. In fact, Patrick Spenner of Forbes Magazine narrowed it down to three key strategies that brands should be kept in mind when engaging Millennials. First, understand and speak to the values that drive us – happiness, passion, diversity, sharing and discovery. Second, understand our realistic lifestyles and experiences and find ways to amplify our reality. And, finally, make sure we feel informed and involved, not just marketed to.(2)  By following these three strategies, brands will find more opportunities available to them to gain this generation’s affinity. We are the future of business, and it’s time to not just “engage” us, but to evolve with us and be a part of the future.

If you would like to learn more about Millennials and the research that is available check out some of the videos below!

Millennials: We suck and we’re sorry
Generation Like
TEDxSF: Scott Hess, Millennials: Who they are and why we hate them


Ashley Himebaugh
FLG Intern Extraordinaire

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1. "Millennials: A Portrait of Generation Next." Pew Research Center (n.d.): n. pag. Pew Social Trends. Pew Research Center, 24 Feb. 2010. Web. 4 June 2014.
2. Spenner, Patrick. "Inside the Millennial Mind: The Do's & Don'ts of Marketing to This Powerful Generation." Forbes. CMO Network, 20 Feb. 2014. Web. 4 June 2014.