My readers are either working in the meetings and incentives industry or are clients of this industry and may intuitively know why incentive travel works. In this article we will explore the “whys” of incentive travel: why incentive travel works for loyalty and engagement, and how it can be used as a tool to foster behaviour change. We will examine motivation, engagement, reward and recognition concepts, and then use these concepts in developing the rules for an incentive program. From this, you will have the foundation for positioning incentive programs as an investment, rather than cost, for the business. A business tool to drive performance.
Behind every behaviour is a motive
Let’s take a couple minutes to explore your personal motivation. What motivates you to change your behaviour? Examples of behaviour could be going to the gym, complying with a partner’s request to clean the kitchen, using a new software feature etc. What keeps you doing the new behaviour?
- There are different levels of motivation for different people.
- If you have the ability (that is, the skills and knowledge) and the motivation, performance can change.
- People will typically repeat behaviors that are rewarded – and not repeat behaviors that aren’t. Reward the things that are important intrinsically to the individual.
- To be rewarding, people need to believe that the behaviour is valuable.
- Recognition is a powerful motivator tied to appreciation and belonging needs. For long-term change in behaviours, recognition must be tied to self-worth, purpose and meaning.
- When an incentive is included with a goal, the individual is further motivated to achieve the goal. Incentive programs that work include both internal and external motivation elements. For incentive travel to have more impact, we need to find ways to internalize the values and goals – and tie the behaviours to the internal drivers. The trip experience demonstrates something about the importance to the individual, but also recognizes the behaviours required to earn the trip.
In 1943, psychologist Abraham Maslow published a theory in the Psychological Review based on his clinical studies of what motivates human beings to seek fulfilment in all aspects of their lives. Even though there’s more recent research, it still provides a core framework for understanding the different types of motivation:
- Physiological needs – food, water, shelter
- Safety needs – economic and physical security
- Love/belonging needs – social, love, family team (affiliation)
- Esteem needs – importance, recognition, respect
- Self-actualization needs – challenge, opportunity, learning, creativity
These needs exist all at once, but are driven by different things at different times. For example, you may arrive at work without having eaten breakfast. The first thing on the agenda is pitching a proposal to your superior management. While you’re hungry, your need to maintain your position will trump! One needs to realize that there’s not always evidence to suggest that people need to fill one level before moving to the next.
Where do cash, gifts and incentive travel fall within Maslow’s hierarchy?
The need for food, water, shelter, safety, and security are already fulfilled. In the incentive industry we are working in the top of Maslow’s hierarchy and we are mainly focused on the need for entertainment. Compensation and benefits support a fundamental need, but recognition and career advancement support our higher-level psychological needs. Cash means safety. In recognition terms, this translates to compensation and benefits, whereas gifts are about esteem, love and belonging and they translate more to recognition. Incentive travel is also about esteem but more so about self-actualization. This can include recognition as well as career development opportunities, depending on how the program is designed. So what is the impact of incentives on performance? Cash, being an immediate reward has a short-term effect on behaviour. Gifts are more tangible and result in a mid-term effect. The case for incentive travel is tangible but at the same time an intangible reward because of the long-term effect on behaviour and on perceived value.
From a different perspective: gifts are relational; cash is transactional. Think of cash as 1-dimensional, gifts as 2-dimensional, and the travel experience as 3-dimensional. It’s the difference between attending a live sports event or concert and watching it on television: the impact of the experience is much deeper and memorable.
Employee engagement: the most important employee metric
First of all you must ask yourself, what does an engaged employee or distributor look like? Engaged employees exhibit organizational citizenship behaviours – that is, they are interested in the goals, values and culture of the organization, they contribute to new ideas and are committed to doing the job well. Engagement is the level of commitment and involvement an employee or channel partner has towards their organization or business partner and its values.
A recent Gallup research study published in Forbes showed that, in addition, workgroups with high levels of engagement experienced:
- 21% Higher productivity
- 37% Lower absenteeism
- 28% Less shrinkage
- 48% Fewer safety incidents
- 41% Fewer defects
Among the 19 Western European countries Gallup measured in 2011 and 2012, 14% of employees were engaged, while 66% were not engaged and 20% were actively disengaged. Definitions used were “not engaged,” meaning they lack motivation and are less likely to invest discretionary effort in organizational goals or outcomes, “actively disengaged,” indicating they are unhappy and unproductive at work and liable to spread negativity to co-workers.
Worldwide, only 13% of employees are engaged at work. In rough numbers, this translates into 900 million not engaged and 340 million actively disengaged workers around the globe.
So how can well-designed incentive programs build engagement? Well-designed programs will align behaviors with specific business goals. They will foster commitment to the organization and provide better service to end-customers. Seeing the number and cost of disengaged workers – there is a strong case for driving engagement. Engaged employees create loyal customers. Loyal customers purchase more, provide word-of-mouth recommendation of products and services, and participate more with the business (through the store, the web site or face-to-face activities like webinars and focus group participation).
The link between recognition and engagement
Recent studies illustrate that recognition is highly correlated to improved engagement with both the employee’s work and the organization. A key to the success of the recognition component of the total rewards package is whether it motivates workers in ways that increase the level of engagement with their job and their employer. It is the engaged worker who will increase his/her level of discretionary effort—if the goal is performance—or desire to stay on the job when the goal is increased retention. So, how can incentive programs effectively reward and recognize employees and distributors and what is the unique benefit of incentive travel in motivation? Ultimately, people want to feel good about themselves. People value recognition for their work. An incentive travel program communicates that the company is not just shaving off a percentage of profits to get more sales, but investing in providing an experience for those who meet challenging goals. The cost of the experience is tangible, but the benefit – link to intrinsic and extrinsic motivations – may not. Though people may say they prefer cash, non-cash rewards are two to three times more effective than cash rewards. The perceived value of the award is evaluability and separability. Since it’s difficult to attach a monetary value to a non-cash incentive, participants rely on the emotions, the affective reaction and actually value the award more, since it’s difficult to put a price on good weather, fine beaches, great dining…. Cash awards are therefore typically seen as compensation, not as a reward for above and beyond behaviors. Travel awards clearly stand out. Other values of earning the award are justifiability and social reinforcement. Earning non-cash incentives carries more value than earning the market value of the incentive in cash. It eliminates the need to justify its purchase. The harder the participant works to achieve the award, the more valuable the award becomes. Non-cash incentives are more socially acceptable to acknowledge (participants may be uncomfortable talking about cash, but enjoy talking about the gift or the trip to New York). The award has trophy value – that is, it serves as a reminder about the participant’s performance every time it is used or remembered. This acknowledgement from others provides ongoing reinforcement for the performance. Non-cash incentives make a stronger link between the award and the company. Cash, on the other hand, becomes the participant’s compensation – and whatever it is used to purchase is seen as the buyer’s rather than as an award from the company for performance.
Linking incentive travel to motivation, rewards, and recognition concepts
Incentive travel programs are a motivational tool to enhance productivity or achieve business objectives in which participants earn the reward based on a specific level of achievement set forth by management. The program is designed to recognize earners for their achievements. Memory is linked to emotion. The psychological impact of a travel experience is often very powerful. Reward and recognition has the potential to increase psychological well-being by affecting happiness. It’s the difference between how you feel when you remember a great vacation versus buying a new blender. Incentive travel unleashes human potential through extraordinary motivational experiences. Is not it better to collect experiences than money (can’t lose experiences but you can lose your money).
From a corporate perspective, is incentive travel worth the effort?
It is very important to develop a fair rules structure based on engagement. What will draw people in to want to be involved in this program? When a participant is deciding whether an award is worth the effort, they consider the perceived value of earning the award, that is, the match-up between the value of the award itself and the effort required to earn it. They will ask themselves, is the task worth the effort? The utility value seems to increase when offered for additional commitment to a work goal. People need to want it – and the goals must have meaning. This hinges on understanding what motivates the potential qualifiers.
Participants need to have the knowledge and skills required for success, AND the organizational and environmental supports. Otherwise, the program can be de-motivating. Consider the amount of control the individuals have – if the criteria are based on sales and the industry is going through a boom, participants may have the ability to earn the award. That may not be the case if the sales force is located in a region that is depressed. Goals that are challenging lead to greater performance gains than do goals that are easy or impossible stretch goals. Incentive travel program must result in improved morale and a memorable customer experience. The participants must deem it worth the effort!
In conclusion one can state that incentives increase performance by boosting the value people assign to work goals. The program has to provide meaning, rewards, communication, and support to foster utility. Participants can be highly motivated, but if they don’t have the capability of achieving it they will be frustrated. You may design a great program that’s attainable – but unless you have a process to reinforce the new procedures and behaviours, you will get limited results. Keep the program simple and focused. Behind all behaviour is a motive. Incentive programs include both intrinsic and extrinsic motivators. Incentive travel builds employee/customer loyalty and engagement. Engaged participants are more productive and positive about the company. Incentive programs need to be built around rules that make the award worth the effort, attainable, and challenging. Behavioural principles leverage retention goals – by rewarding the top performers – as well as motivation goals by moving the middle performers to higher levels of achievement.