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How deep does non-cash incentive spending go?
In an economy that is often described as mixed-- more uncertain than predictable--it would seem that businesses would be hesitant to ratchet up investments in anything including non-cash reward programs. But recent research conducted by the Incentive Research Foundation contradicts that notion and suggest that spending not only continues, but that the aggregate dollars allocated for sales invectives and employee recognition programs may actually be underestimated.
First what we do know. In the recent study; Benchmarking Resources for Non-Cash reward and Recognition Programs: Budget and Support, we see that companies continue to fund incentive and recognition programs at a rate of 67%. About 21% goes to sales and dealer programs with the rest allocated to business gifts. Information captured in a separate upcoming study conducted in conjunction with Corporate Meetings and Incentives puts some parameters around award and suggests that sponsors spent and estimated average of $197 per person for each merchandise award, while the card gift card expenditure was closer to $157 per person. Likewise, the IRF's Award Type Study found last year that the median award for incentive travel was $2500 per person.
You would think the story ends there. But in that same analysis the IRF also discovered that incentive utilization runs deeper across companies and in most cases is underestimated. Between 20-50% of all program decision makers readily admit that they could not identify all programing spending across their enterprise. In other words, businesses acknowledge that there is broader and deeper program activity across all levels of executive sponsorship. In some cases they estimated the spending to be about half of their “know” budgets. And when you factor in the range of supporting services that go into running these programs (ranging from additional administration along with to digital and web based communications) it is fair to conclude that incentive spending runs deeper than many practitioners and providers first thought.
Mike Ryan is SVP, Marketing Intelligence at Madison Performance Group and Vice Chair of the IRF