Help Support the Incentive Legislation Campaign

I’m proud to be on the Board of the Incentive Federation. The Incentive Federation is an umbrella organization founded to promote, protect and research the incentive field, encompassing recognition, promotional products and related promotions.

One of the causes the Incentive Federation supports is national health care reform and measures that can lead to a healthier workforce. As a consequence, the Incentive Federation supports a tax incentive for employers and employees who participate in wellness programs. We believe that a well-designed qualified wellness award that is tax-free to employees would provide the necessary incentive to promote a healthier lifestyle and lead to a more productive workforce.

I’m proud to work with a group of incentive leaders that has been working to establish a presence with members of Congress. Last fall we had a Legislative Summit in Washington to meet with members of Congress on wellness incentives. We need a dedicated voice to “lobby” for legislation that serves our industry, the companies we serve and the hundreds of millions of recipients we touch annually.

As a consequence, the Incentive Legislation Campaign (ILC) was formed in order to make our presence felt on a consistent basis. To do this, we need financial support and input from individuals and companies for our efforts and step in when we need “grassroots” support with lawmakers.

If you would like more information please read the ILC Informational Flyer.

I hope you seriously consider this great opportunity to strengthen our voice in Washington and support of our industry.

Goldman Sachs & Incentive "Rip-offs"

Not too long ago, I did a post on the lessons to be learned from Amazon’s exit from the incentive fulfillment business. Many others commented on Amazon’s departure as well.

For the most part, these commentaries were even handed and balanced but some were very self-serving. One recognition company opined that one of the primary reasons Amazon exited the business was because it was concerned about its brand image… apparently customers were complaining of feeling ripped off by the prices they were paying to their incentive reward provider partners. The writer then went on to denounce the “massive markup rip-offs on merchandise reward items”.

Talk about the pot calling the kettle black!

This is coming from a recognition company whose only redemption vehicle are “award vouchers” that can be exchanged for gift certificates. Don’t ask them for instant awards with a company logo or for symbolic awards that can be used in service awards or for your prestigious President’s award… they simply don’t have the supply chain that can deliver these types of rewards.

Any recognition company that says there is only one type of reward redemption system doesn’t know what they are talking about. Period! They are being totally self-serving and are not looking out for the interests of their clients. Make sure when you pick a supplier to work with that they don’t operate under a "One Size Fits All” redemption model.

But let me go even further…

Mid April the SEC charged Goldman Sachs with civil fraud. It alleges that Goldman helped a hedge fund client create a financial derivative based on US sub-prime mortgages. The hedge fund bet against the derivative… i.e. they hoped it would fail. The suit alleges that Goldman knew this and then went out and marketed the derivative to investors without disclosing the hedge fund’s side bet that the investment would fail.

I think there are a lot of similarities at the charges leveled against Goldman Sachs and companies who provide award voucher recognition programs to clients when the award voucher has an expiation date.

Let me explain…

In these type of programs, when an employee is recognized by the employer the recognition provider sends the employee an award voucher. This award voucher can be exchanged for a variety of gift certificates in different countries. The recognition provider charges the client when the award voucher is sent to the employee. The catch is when the award vouchers have an expiry date on them. If they are not exchanged before they expire, the recognition provider gets to keep the revenue. This is called breakage. In essence, the recognition provider is betting AGAINST recipients exchanging the award vouchers before they expire. Often the clients are not even aware of the breakage.

Lovely! The client recognizes its employees and the recognition providers hopes they never hear from them again!

Talk about a “massive rip-off”!

Every time we come across these award voucher type of programs clients all complain about the same thing… lack of reporting. No wonder! The reality is that they are doing exactly what Goldman is alleged to have done. We are not talking about insignificant sums of money. The Consumers' Association of Canada estimates that one in every four gift cards goes unredeemed. I imagine the same breakage percentages would apply to award vouchers.

All recognition providers are entitled to make a reasonable profit, including those who provide award vouchers. But it is incumbent upon all providers to provide totally transparent pricing.

It is also important to call out those few who tarnish our industry.

Lessons Learned from Amazon

A few of years ago Amazon announced with great fanfare that it was going to go into the incentive and rewards fulfillment business. Companies would be able to take advantage of Amazon’s volume purchasing and free shipping. Recipients would have access to millions of reward items! Companies could become incentive suppliers without having to invest in the requisite supplier and distribution network.

WOW… too good to be true!

I admit Rideau explored the Amazon option. We even went to the considerable expense of integrating directly with Amazon (most companies went through third party integrators).
But we never flipped the switch on for any of our clients. We just weren’t comfortable with Amazon’s extremely short cancellation clause. It just didn’t make any sense. Logic said Amazon should try to lock us in for a longterm contract but they didn’t want that. We questioned their longterm commitment to our marketplace and the possible implications for our clients' employees.

We laid all this out to our clients in an open and transparent fashion. Fortunately, our clients agreed!

Last week Incentive Magazine reported that Amazon is exiting the Incentive fulfillment market and leaving many incentive companies hanging. Amazon’s departure has huge ramifications for our industry. Amazon made it easy for a lot of companies to jump into our business and become quasi competitors. These companies will either be forced out of business or have to invest a significant amount of time and money building their channel partner and distribution networks. More importantly, it will have a very negative effect on the companies and the employees they serviced.

I find it very amusing to see all the companies who so readily embraced this solution as the be all and end all, trying to distance themselves from Amazon.

As John F. Kennedy said, “success has a thousand fathers and failure is an orphan”!

BTW... I love Amazon. I was one of their very first customers when they opened their website. I bought their Kindle when it first came out and to this day believe that they are an amazing company that has forever changed the nature of the way we do business.

The Horse Should Come Before The Cart

A lot of companies have it all wrong when it comes to recognition and rewards.

They put the reward before the recognition.

Why?

I think it has a lot to do with the history of our industry.

The recognition industry was created by old line manufacturing companies. Many of these companies date back to the early 1900’s. While some no longer exist, others, including Rideau (1912) continue to thrive. These companies all had one thing in common. They were looking for an outlet for their manufactured products… pins, logos and emblematic jewelry etc…

Some of the very first recognition award programs were used in the automotive industry. These programs celebrated years of service and safety and emblematic jewelry became the award/reward of choice. As years went by, different products were added to the product selection.

The key takeaway was that the product drove recognition… not the other way around.

Today, more and more companies are realizing that recognition needs to be in the proverbial driver’s seat.

If real recognition is not there, it doesn’t matter what award or reward product is given to the recipient.

So here’s a simple question… how much of your time is spent worrying about your awards as opposed to why and how you deliver real recognition? If the answer is the former you may have the cart before the horse!

Ask the Experts

Looking for more information on recognition? In the Janury edition of Incentive Magazine’s “Ask the Experts,” my colleagues Michelle Smith, Dee Hansford, Kevin Cronin and I answer the following questions:

• What is a good New Years recognition resolution?
• Last month, your column discussed the high percentage of employees intending to change jobs in 2010. What can I do to prevent my staff from leaving?
• A recent 360-degree feedback survey of my staff, my peers, and my boss indicates that I need to do some work in the area of recognition. I’m not sure how to begin.
• What are the key elements of a performance recognition program?

My contribution dealt with the last question. Find out how to get the very best out of your employees here!

Do you have any other recognition questions? Drop me a note in the blog’s comment section below!

Dan Pink - Rethinking Carrots and Sticks

One of my favorite websites is TED.com.

TED stands for “Technology, Entertainment, Design.” The group started out in 1984 and has a loyal following because it organizes conferences that bring together some of the world’s brightest people who are challenged to make an outstanding presentation in 18 minutes!

Dan Pink, a lawyer by training and a former speechwriter for Al Gore is one of the bright people who accepted the TED challenge. He gave a TED talk last summer at Oxford University on “Rethinking the Ideology of Carrots and Sticks” in the workplace.

Everyone in the incentive field should watch the clip for no other reason than Dan challenges many conventional beliefs on workplace incentives. Basically, he says there is a huge mismatch between what social science has proven about extrinsic “carrot” incentives and what business practices. Dan states that carrots can hinder our abilities because we focus far too much on the incentive to the exclusion of everything else. In other words, extrinsic incentives can suppress and distort our innate intrinsic values.

You can expect to hear a lot more on this topic because Dan will be releasing a new book called, “Drive: The Surprising Truth About What Motivates Us”. It will be published in late December.

Dan believes that “Autonomy, Mastery and Purpose” are key intrinsic motivation drivers. I understand where he is coming from and think Dan makes some very valid points!

We need a new paradigm that goes beyond the traditional carrot and stick approach. One that will unlock employees' intrinsic drivers and create environments that allow them to grow as individuals, because when they grow, so do our companies.

HRO Today – Building Moral Trumps Monetary Rewards

Every year, HRO Today magazine devotes an issue to recognition and rewards.

One of the main stories in this year’s issue is how recognition forms a crucial part in creating and improving moral.

It also explains how recognition can trump monetary rewards. Remember, for recognition to be received the way it was intended, you must make sure to connect with the recipient on an individual and emotional level: cash rewards seldom convey the personal aspect paramount to effective recognition.

Though you must register to read this story, it is free and well worth it! Register and check out the story on rewards here.