Employee Recognition Can Drive Success

Posted on May 15, 2012 by Ley Borlo

More and more research is showing us that employee recognition programs produce results.  As mentioned in our last post, organizations that implement non-cash reward and recognition programs have annual revenue increases averaging 9.6% vs. just 3% for all other companies.

Yet, there are still many companies (the majority actually) that don’t seem to heed the data, or at least their management doesn’t understand the importance of employee recognition within their organizations.

A recent survey conducted by OfficeTeam in collaboration with the International Association of Administrative Professionals looked into how administrative staff viewed employee recognition. 

Some interesting findings include:

  • 42% of support staff said their supervisor fails to recognize them even on Administrative Professionals Day®. And one-third of respondents reported that they receive “not enough” or no recognition throughout the year.
  • 2/3rds of administrative professionals would leave their current position if they did not feel appreciated by their manager.
  • 70%+ of support staff said that an organization’s recognition programs would factor into their decision to accept employment with that firm.
  • 25% of managers surveyed said they never ask employees if they are satisfied with the recognition they receive.
  • 55% percent of respondents said the feedback they receive is merely “somewhat specific” or “not very specific.”  Support staff wants managers to be specific when giving recognition. 
  • Top factors that motivate administrative staff to do a good job?  Challenging assignments and a feeling of accomplishment/satisfaction.

Implementing a well-designed employee recognition system does take some effort and time.  It also takes a budget commensurate with the results you are trying to achieve.  Those results can provide an ROI dramatically greater than the cost and the effort expended. 

Because of the tough economic times, there will continue to be negative pressure on recognition budgets.  But now is not the time to hold back.  Retention of your best employees will be critical to your future success.  There is no doubt that economic conditions—and the competitive stresses and pressures that come with it—have negatively impacted your culture and your employees.  Recognize their performance now!  It could be the one thing that keeps them on the job when the business climate changes.  

 

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What Do Blathersnipes and Award Industry Experts Have in Common?

Posted on May 8, 2012 by Ley Borlo

Blathersnipe.  Great word huh? 

Not sure of the origin but we’ve seen it recently in some literature and certainly on a Google search.  But I haven’t as yet seen a valid definition for it (although I assume there’s one somewhere out there.)    Here’s one way to define it.  When you divide it into two words and then check those definitions, you come up with:

  • Blather…to talk in an inane manner, especially at length
  • Snipe – to shoot at an exposed enemy from a concealed position

So from our perspective blathersnipe is a perfect name for the all those  incentive award industry “experts’ who expound on truths that are only half truths, twist facts totally out of context and all too often deal in out and out lies.  They do this from a safe perch in their one on one conversation with congenial unsuspecting folks who actually think they are telling the truth. 

Recently we had a client contact us after having one of these “experts” try to twist the Award of Choice card out of their program and replace it with their merchandise award product.  Our client, who was a little disturbed by what they heard, wanted to hear our side of the story.  Here is what they were told, and here is the truth.

Expert says…

The Award of Choice card uses an expiration date to drive non-redemption as up to 50% of cards in these types of programs are never redeemed. Even without an expiration date the non-redemption would be 25%.

Our response…

Frankly we were amazed that a competitor would even make this silly assertion as on the card printed clearly in bold letters is “No expiration date and No fees.”   From a legal position, these cards can be redeemed at any time, and we are financially liable for them at all times.   While non-redemption can approach 5% in some programs, on the average it is much less.  Gift cards have been, are and will continue to be the best value in the award industry. 

Expert says…

The Award of Choice card has absolutely no trophy value as an award.  The company that issues it does not get credit for it.

Our response…

Nothing could be further from the truth.  The Award of Choice card was designed with trophy value in mind.  It gives the person who receives it complete choice of the gifts, ones that fit their own lifestyle.  With the Award of Choice you get three times the recognition bang for your buck.  Once when you present it to the employee, another time when they redeem it for the gift card of their choice, and the third time when they use that gift card for the item they really want

Expert says…

You should never use $ denominated awards in your recognition program, the award should appear “priceless” as it will provide more motivational appeal.

Our response…

That phooey has been around for years.  Traditional merchandise award companies have always tried to hide the price or value of the award from employees.  They feared the problems that had historically occurred when employees found out that the awards cost so much more than what they felt it was worth.  With all the technology that exists for employees today, to determine the cost of any merchandise item is only a click or two away.  Employees appreciate the Award of Choice card because they can see the $ for $ value that exists and can even take advantage of discount pricing in the marketplace.

Competition is a fact of life when you’re selling anything, and we welcome competition and the chance to tell our story whenever we can.  When clients look at the facts our story is always powerful.  We welcome competition; we encourage it and look forward to de-bunking the next blathersnipe that comes along.

 

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Non-Cash Incentives- More Popular Than Ever

Posted on May 1, 2012 by Ley Borlo

For years the incentive industry has tried to convince corporate America that non-cash incentives were a better award to use than cash to motivate performance.  Sometimes they succeeded but often they failed.  Cash incentive plans have been in place for a long time, and always will be, especially when the cash incentive is considered as part of the overall compensation package. 

But the gap between cash and non-cash motivation efforts is narrowing.  Many companies are finding that non-cash can be very instrumental in changing behavior and engaging employees.  There is definitely a heightened awareness of the benefits of non-cash awards as has been seen in research conducted over the last year or so.  There is an increased acceptance by the academic and scientific communities as well as within the C-suite.  This latest article in Incentive Magazine cites several studies that speak to this interest in non-financial awards as another way to improve performance.  Some of the interesting conclusions from these studies are:

  • Pay-for-performance has not been as effective as expected
  • Performance management in sales found that organizations that used non-cash spiffs outperformed the ones that didn’t use them.
  • Best-in-class firms were more than twice as likely (21% vs. 10%) to use non-cash incentives as industry average or laggard firms
  • Year over year increase in annual revenue for firms that used non-financial rewards and/or recognition was triple that of firms that didn’t use them (9.6% vs. 3%)
  • For people with satisfactory salaries, some non-financial motivators are more effective than extra cash in building long-term employee engagement
  • In a global CEO survey when asked to what extent they intended to change their strategies in nine human-management categories the biggest change they planned was to use more non-financial rewards to motivate the staff…47% planned some change and 18% planned significant change

So why now?  What happened to get thought leaders to more readily recognize the benefits of non-cash rewards than in the past?  Well, for one thing in bad economic times companies are realizing that non-cash awards are less expensive.  Not only do they cost less to deliver, you need less of it than cash to motivate the same performance level.   As noted in a past White House on Productivity, it takes $3 in cash to produce the same results as $1 in non –cash. 

The best  part of what is happening today is that the data being published is not coming from the incentive industry but from giants in business world like McKinsey & Co in conjunction with the Harvard Business Review, The Aberdeen Group, Price-WaterhouseCoopers, and World at Work, the world’s leading compensation and benefits association. 

Decades of experience by the incentive industry has shown that non-cash awards like gift cards, merchandise and travel are both more motivational and cost-effective than cash.  Now the C-suite is starting to realize the same thing.  

 

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Why give your Employees a Choice of Gift cards?

Posted on April 24, 2012 by Ley Borlo

This article from Lucky Magazine caught our attention not so much for the subject and what it said, but for what it didn’t say.  It talks about giving a gift card, the pros and cons and whether we are a “lazy” shopper if we do.  Wouldn’t it be nice if we could offer several gift cards to choose from and then let the recipient pick the one that suits their needs?   But you can’t realistically purchase a dozen or so cards, let them choose the one they want and then bring the rest back, can you?  That’s just not practical. 

The ubiquitous gift cards from Visa, MasterCard or American Express are popular because they have true choice.  They give the recipient the option of using them where ever they choose to shop.  But for that flexibility you have to pay exorbitant fees, (sometimes as much as 10-20% of the face amount of the card (a $25 card with a $4.95 fee is almost 20%).  That’s not practical when you’re trying to manage your budget.

But with new technology that’s all changed.  There are systems now that do provide a service without fees that allow anyone receiving gift or award to choose from hundreds of different gift cards making them almost as flexible as a bank card.  Programs like Array Gift for consumers and Award of Choice for employee recognition offer over 500 of the most popular cards and give the recipient a tremendous choice. 

Gift cards have become the number one gift year after year and they have become the number one employee award as well simply because they are the least expensive to use, provide a tremendous value to the issuing person or company and do provide a much greater choice than simply giving them a gift that you choose yourself.  Because of this, hundreds of thousands of businesses, small and large alike use gift cards as employee recognition awards.  That’s what the employees want.

Unfortunately the majority of businesses have not caught on to the new systems that offer so much choice.  They simply purchase a bunch of the same gift cards and assume that will do the trick.  Unfortunately, they’re wrong.  It may be easier for them to do that and just supply one card, but one size doesn’t fit all and never will.  Sure if you give them a gift card from Wal-Mart or Home Depot or Best Buy, they’ll probably try to use it at some point, but it won’t be the one they really wanted. 

An entire new industry has sprung up around buying and selling unwanted gift cards.  Places like Plastic Jungle will give you a discounted rate of cash in exchange for your unused card, the rate determined by the popularity of the card.  Then they sell those cards at a lower rate than what they paid for them.  It’s simple arbitrage.  But it starts with folks receiving a gift card that they didn’t want.

So, as mentioned in the blog, you can spend lots of time thinking of what card to give like the little boutique they really love, a spa or a manicure close to the office, or a credit to those things that they really need or want (sounds like cash to me).  Or, you can give them gift card systems like the AwardofChoice where they can choose the card that really fits their own lifestyle. 

What would you rather have?

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To Improve Customer Service, Treat Your Employees Well

Posted on April 17, 2012 by Ley Borlo

This concept didn’t come from the mouths of all the pundits in and around the employee award industry, but from the hallowed halls of Wharton, one of the country’s most prestigious business schools.  “Treat your employees well.”  Not a very novel approach to say the least, but in our experience something an amazing number of companies still don’t do. 

In this article from Knowledge@Wharton, it mentions that

“Customer service standouts tend to have extensive employee training and talent management programs. They also tend to treat workers well by giving them incentives, robust career development paths and other benefits.”

Certainly this concept is not something new; the idea has been around for years, and companies who understand it have long been using employee awards to recognize customer satisfaction.  Companies intuitively understand this principle, but what we find compelling is…

“the national level of customer satisfaction has not budged since the mid 1990s”.  According to the American Customer Satisfaction Index (ACSI), consumer contentment stands at 75.8 on a scale of 100.  In 1994, when the index was created, consumer satisfaction stood at 74.8.”

So even with all the attention and money spent on employee awards, it would seem that there is lot of room for improvement.  As this index rating is an average, there are undoubtedly a number of firms far ahead of the curve, but as such there will also be as many companies who haven’t heeded the concept. 

Employee recognition programs for customer satisfaction are relatively easy to implement.  They can be as simple as a small reward for customer “orchid” letters to a more substantial award for positively handling an issue that might have been costly if left unattended. 

We all instantly realize those companies we do business with on a daily basis that pay attention to keeping their customers satisfied.  Conversely we all stop doing business with companies at the drop of a hat when we don’t receive the customer service we want. 

According to Peter Fador, professor of marketing at Wharton and co-director of the Wharton Customer Analytics Initiative,

 ”We have a ‘customer is king’ mentality, and we have come to expect world-class treatment. We want everything to be easy: simple customer returns, constant telephone access to the company and perfect products in every color. We’re just spoiled, plain and simple.”

An interesting dichotomy exists when economic downturns reduce the money that companies have available to invest in the programs that train and motivate employees how to provide great customer service.   Yet lack of these programs can also breed a decrease in customer satisfaction and the resultant loss in business.  It’s a two edged sword.  When companies load up with incremental fees for services previously provided for free, (ex: bag fees on airlines) the entire customer service equation can shift. 

Like it or not, we are at a time when companies are tracking the usage of their products or services in order to segment their customer base.  In this model, the larger customer get the service, and the smaller less important ones get the twenty minute “on hold” call that goes into the black hole.

Bottom line is that if you treat your employees better, they will treat your customers better.  A $25 gift card for a job well done can return tenfold in customer satisfaction and bottom line dollars.  Customer service budgets may be a natural area to cut costs in lean economic times, and gain in the short term, but that can cause a loss of customers and profits in the long term. 

 

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Paying Income Tax on Employee Recognition Awards

Posted on April 10, 2012 by Ley Borlo

First, we are not tax experts and you should consult with your tax attorney or accounting department before you decide on whether you should or shouldn’t tax employee recognition awards.  That being said, let’s begin by making a simple factual point…according to the IRS, all awards you give to your employees are considered taxable income.  End of point. 

Now, there are occasions when recognition awards would not be taxable and these are mentioned in section 274(j) of the Internal Revenue code.  By and large most award companies quote this section of the code and try to convince their client that their program is not taxable, and by and large almost all of these award companies forget to tell their clients that to really qualify they must not give awards in the aggregate to more than 10% of their employees.  As many of these programs are for years of service they assume that the non-tax issue holds true for any recognition effort, but that’s not the case.  Somehow that point is often conveniently left out of the conversation, and consequentially that client is vulnerable to IRS audit when they start to issue awards to many more than just 10% of the employees.  It should be noted here that gift cards can be included as awards that qualify for favorable tax treatment if they are “non-negotiable certificates conferring only the right to receive tangible personal property.”

The tax argument between traditional merchandise awards companies and gift card  award companies regarding taxation has been around for a while.  Frankly, from our perspective it is a conversation that is a waste of time.  In fact, the actual tax that might have to be paid on gift cards, even if you think it is taxable, is often minuscule.  And your employee will always receive far more value from gift cards than a traditional merchandise award, not to mention far better choice.

Let us explain.  For awards to be taxable in the first place, the recipient who receives the award must be in a taxable situation.  Did you know that 46% of working Americans don’t pay any Federal Income tax at all? This article from USA Today shows how few folks actually pay income tax, and that number is growing.   Having done research on many of our past clients we have seen that the vast majority of employees who are in safety-sensitive jobs in the country are usually in the lower effective tax brackets or might not be paying taxes on the awards anyway. 

But let’s just say they will be paying taxes, what then?   Interesting data from this article from the Tax Policy Center shows that the effective tax rate for individuals for the last 20 years or so has been hovering around 10%.  So if you awarded and employee a $100 gift card they would pay $10 in tax for that award.  Of course the sponsoring company can decide to pay that tax for them which would increase their program budget, but would that make sense?

We have research that shows that traditional merchandise awards are ridiculously overpriced.  We have shown client after client that their merchandise awards are at least 50% more than retail, and often much higher than that.  Even paying their own taxes your employee gets a much better deal with gift cards than the actual merchandise item.  With gift cards, the sponsoring company can reduce their budget by 25% and still give their employees a much better overall value. 

Look at it this way. 

What good does it do for your employees when they receive a traditional merchandise item tax free award that cost you $200 that they can find at everyday retail for $95?  What will the employee think when they see the disparity?  With the internet finding that disparity is not hard to do.  Don’t you think your employees would much rather have gift cards valued and priced at $150, than the $200 item? 

What would you rather have? 

 

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Get Into the “Thank You” Habit

Posted on April 3, 2012 by Ley Borlo

This article follows on the heels of similar blog posts we’ve seen lately that discuss the need in business today to create a culture of “thank you.”  This is something we posted on over a year ago and it is something that all businesses should be thinking about all the time.

I can’t recall a single manager I ever worked with that didn’t say they wanted to do more in this area, we all do.  But inevitably we get caught up in our day to day lives and concerns and these intentions get pushed on the down the road. The end result is we do not spend enough time in one of simplest forms of decent human behavior that we should… extending a sincere thanks when someone does something for you.

Everyone deserves thanks when they perform well, achieve higher standards and accomplish goals.  I would argue that everyone deserves thanks at least once a day for something, but to do that you need to be cognizant of doing it and it has to become a habit that you reinforce all the time.  Some people just do it naturally, some don’t have it their makeup to do it at all, and others do it when something prompts them to.   

We have all seen times when a face will brighten, and a smile will appear when we take just second or two to sincerely thank someone for what they did.  People will remember how you treat them.  Not only does it help people feel good about their work, and that their manager noticed, but it can help your employees feel good about themselves.

Don’t underestimate the positive impact you can have on an employee’s self-esteem and self-respect.  When you say thanks it tells employees what they did that you would like to see them do more often, and that’s a powerful communication. 

As stated in the article mentioned above…

“We all fall victim to appreciating things people do for us and never say anything”

Isn’t it time to see if we change that one “Thank You” at a time?

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Benefits of Non-Cash Incentives

Posted on March 27, 2012 by admin

Are you still on the fence on whether to use cash or non-cash incentives to motivate employees to perform better? According to this article from Business Line…

“most Human Resource professionals  would opt for offering non-cash incentives”

While we don’t know where the author received his data to support this conclusion, at Award of Choice we tend to strongly support this position, with a caveat that it is important to make sure that the total cash compensation package is sufficient to get satisfy performance.  If not, you will need to fix that as non-cash incentives cannot solve that problem.

The author goes on to provide a couple of arguments in support of his position.  One, a fairly common one in the industry, that non-cash creates trophy value and a lasting memory for the recipient.  He maintains correctly that cash likely ends up being used to pay everyday expenses and the bills, where non-cash will not.

The second argument he makes from a slightly different perspective.  He states that in these down economic times, income is often less than what most need to maintain a similar standard of living as in the past.  People are living within their means trying to satisfy their necessities and don’t indulge in the luxuries without feeling guilty.  Non cash incentives in these cases are very powerful motivators as they provide for guilt free shopping giving the winner permission to indulge.  As he states,

“offering only non-cash incentive would cause a positive reaction; for the employee, having tasted luxury, is likely to further improve their efficiency. Besides, sharing their experience with fellow workers could tickle their urge to experience the luxury for themselves, driving them to work harder too! “

The Award of Choice card is an ideal non-cash award because it offers a true value to those receiving it.  And with the almost unlimited number of choices, each individual is sure to get the award that they want, the one that will fit their lifestyle.

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Are Gift Cards Impersonal Awards?

Posted on March 20, 2012 by Ley Borlo

Some managers honestly believe that gift cards are not a good award to give to employees simply because they are too impersonal.  And in some cases maybe they are correct.  But the acceptance of using gift cards as employee awards has come a long way in the last several years.  In fact, Incentive Magazine has rated them as the #1 employee award for many years now. 

From our perspective it would be wonderful if managers who are in charge of employee awards had the time and knew their employees well enough to be able to purchase that award or collection of awards  that truly hit their hot button.  But realistically how often does that happen? 

I recall one time in a presentation when the VP of the department wanted to give all of his people an engraved sterling silver desk ornament for a specific goal achievement.  The ornament had a cost (value?) of over $50 each.  There were over 1000 people in the department.  To a person, every one of his managers in the room didn’t like that idea and wanted to use gift cards instead because a survey of the employees prior to the meeting indicated that they would have preferred to buy something for themselves. 

While we are certainly not opposed to monogramed or engraved or company identified items, the cost and limited personal appeal of these types of items rarely offer the kind of employee satisfaction for the money spent.  At times they can even be de-motivating.   

How many of these types of items are consigned to the desk drawer the day after they are received?  How many are found in the desk drawer or the trash the day after an employee leaves?  How many end up in garage sales or on EBay because they have no meaning to the recipient?   

Often it is how you present the gift card and the recognition surrounding the event that is more important than the gift card itself.  But the addition of a gift card along with the meaningful presentation can make it just as special as knowing  your employees and exactly what they want.  To avoid determining what gift card or selection of gift cards to use, you might want to review the over 500 card options available with the Award of Choice.  You can’t always give the perfect award, but this would come as close as any. 

Some frequent questions and answers about gift cards as awards can be found here from the Incentive Gift Card Council.  You will find  answers to questions such as the advantages of gift cards, how they provide trophy value, what makes them different from cash and other important questions. 


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Don’t Give a Gift Card as an Award… Give 500 of Them!

Posted on March 13, 2012 by Ley Borlo

Wouldn’t you just once like to give a gift that was guaranteed (well at least almost guaranteed) to be the one that the recipient really wants?  Take a look at this article on Consumer Reports that speaks to the new electronic options for gift cards.  While somewhat unrelated to the subject, it starts by mentioning that…

“the number of people getting a gift card of any type this year has dropped over the last few years.”

Has a gift card become less popular as gifts this year, or is it that the economy has caused most of the decrease?  In another Consumer Report article it shows that eight in ten consumers intend to give a gift card this season.  In fact gift cards were the #1 gift this year as they have been for the last several years.  So why do folks like Consumer Reports like to look on the negative side of gift cards?  Because in the spirit of full disclosure, they think they owe it to the unsuspecting public that there are some negatives in purchasing and 

giving gift cards, such as fees, expiration dates, the fact that people often add money to them to get what they really want, and of course that some of the cards are never used, estimated at below 10%.  And, they’re right, although recent legislation has dramatically decreases the problem of fees and expiration dates. 

What about gift cards as used for employee awards…do they have some of the same problems? 

Sure, when you purchase them on your own, but to a lesser degree because you supposedly know what your employees want. 

So, if you want to use gift cards as awards, consider using the Award of Choice, it will almost guarantee that your participants will get the award that they really want.  And when you can buy the  for the same price as purchasing a card on your own, it will save you lots of time in acquiring it which can translate into money as well.However, when you use an Award of Choice card, the answer is a resounding “NO!” they don’t have the same problems.   When you use an Award of Choice card you give your participants a choice of over 500 of the most popular gift cards to choose from.  And there is a decided difference when someone gets to choose the gift card that they really want, one that fits their own lifestyle.  When they really want that card, they use it, and they usually use it within a short time of receiving it.  All internal focus groups that we’ve conducted as well as survey’s to participants after programs have issued rewards show that the vast majority use the cards for items that they want, and often items that are discounted at sales by the retailers so they actually get a bonus on the amount on their card.

 

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