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Employers struggle with incentives

Wednesday August 27, 2014 Written by 
Incentive programs are an important tool for employers trying to retain talented workers, but many companies are offering rewards that their employees don't value.

Despite the lackluster economy, 69 per cent of Canadian companies report using incentives and rewards to motivate their employees. In fact, half of all employers surveyed for the 2014 Canadian Incentive Trends Study reported their incentive program budgets have held steady year over year.have dropped sharply over the last year.

More than half of those surveyed (53 per cent) offer company-branded merchandise, and almost three-quarters (73 per cent) use retail gift cards as incentives to motivate their employees. Survey participants ranked prepaid Visa, MasterCard or American Express cards the highest when it comes to motivating employees. Those polled prefer  prepaid cards two times more than retail gift cards and nine times more than merchandise.

The survey also indicates that today’s multi-generational workforce can be a challenge for Canadian companies choosing an incentive to motivate employees. While 64 per cent of those surveyed believe their programs take a multi-generational workforce into consideration, 53 per cent find it somewhat difficult to motivate all age groups. Two in five (39 per cent) say the most difficult generational group to pick an appropriate incentive for is Millennials.

“Our research over the past five years has shown that participant satisfaction continues to grow as a key measure of success for corporate incentive programs, yet Canadian companies are still offering traditional incentives that they don’t believe their employees want,” said Dave Eason, CEO of Berkeley Payment Solutions. “This is indicative of the incentive merchandise model that dominates the rewards space. It’s unlikely that administrators are getting the full benefit from their programs if the incentives they choose are not truly valued by their employees.”

Additional industry highlights from this year's survey include:

  • Employee incentive and rewards programs are not just for big businesses. Nearly two-thirds of respondents (64 per cent) indicate they work for an organization with less than 500 employees.
  • Organizations from a wide spectrum of industries in Canada use employee incentives and rewards; 70 per cent of those polled indicate they are in the private sector.
  • Four out of five respondents measure program success.
  • Retail gift cards are perceived as the most cost-effective incentive.
  • Experiential special events or experiences such as concert tickets or sports events are perceived as the least cost-effective incentives.

While it’s clear that budget and lack of awareness hinder Canadian organizations’ use of incentives, perceived difficulties in administration and measurement showed a stark correction in 2014 as the incentive and rewards industry has responded to corporate needs for ease of use and a more measureable return on investment:

  • In 2013, 22 per cent of respondents reported they did not use incentives because they were too difficult to administer. In 2014 this number dropped to 10 per cent.
  • Last year 20 per cent of respondents did not use incentives because measuring results or ROI was too difficult. That number fell to nine per cent in this year's survey.

“Our fifth annual survey shows that employee incentive programs are getting easier to manage and measure. Innovation in the incentives industry is driving the delivery of new and easy-to-use tools that are cost-effective and save time,” added Eason.

The survey also found that prepaid cards continued to grow in popularity, posting year-over-year growth in 2014.

  • Seventy per cent of those polled said they use prepaid cards as part of their incentive or rewards program in 2014 versus 63 per cent in 2013.
  • The top reason for choosing prepaid cards is ease of use.
  • Prepaid Visa, MasterCard or American Express cards rank as the top incentive to motivate all age groups, particularly Millennials.
  • Those who measure program success say prepaid Visa, MasterCard or American Express cards provide the highest return on investment.

This year’s survey was conducted in May 2014 and polled 669 Canadian professionals from marketing services organizations, incentive firms, human resources consultancies, government agencies and corporations across the country. It included companies of all sizes and across numerous sectors including financial services, consumer packaged goods, telecommunications, retail, healthcare, media and advertising, manufacturing, and government. Survey results are accurate +/- 3.7 per cent, 95 per cent of the time.

Click here to download the survey results.

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