IRF 2016 Trends in Incentive Travel, Rewards, and Recognition
#1 Engagement and a Changing Talent Pool
#2 Budgets Are Up and So Is Oversight
#3 Lead Time and Destination Changes for Incentive Travel Programs
#4 Merchandise and Gift Card Programs Show Confidence and Luxury
#5 Technology Extends Reach
#6 Social Good is Good for Engagement
#7 Authentic, Unique Experience is Essential
#8 New Roles for Non Cash
#9 Engagement is in the Delivery
#10 Move Beyond Generation
From the evolving economic climate to global disruption and new technologies, we live in a time of extraordinary change. Businesses are challenged to keep up with the pace and to continue to deliver on the brand promise.
The Incentive Research Foundation has spotted 10 trends which will affect organizations, their products and services, and the workforce in the coming year.
For the first time since industrialization, companies are now faced with a larger generation exiting the workforce than entering. As the Baby Boomers retire, Generation X is not large enough to replace them and is followed by a large, less experienced cohort – the Millennials. This structural change to workforce itself has helped drive employee rewards and recognition to center stage, as CEOs and senior leaders must strategize to retain as many top performing Boomers for as long as possible, while simultaneously “training up” Millennials at a much faster rate than previous generations. In this changing environment, it is easy to understand why PWC found that over 90% of CEOs said they either need to or are already changing their attraction and retention strategy.
Likewise, Millennials are looking for a much different employment contract, preferring entrepreneurism and much shorter-term thinking than in the past. They are looking for brands that are innovative and values driven; Brands that carry those values through to multiple kinds of benefits and offerings.
Take-away for your business: Be sure to consider your training and retention strategy, so that the know-how of older workers remains in your organization and Millennials are ready for the challenges presented to them. Ensure company values are succinctly stated and well-supported throughout the organization.
The IRF’s 2015 Pulse Study  of almost 200 reward and recognition planners revealed that the biggest current trend is the continued growth of program budgets. Up to sixty-five percent of those running reward and recognition programs will be increasing their budgets in 2016. When economic outlook is positive, data has consistently showed that investments in reward and recognition programs increases and per person spending increases accordingly.
According to 61 percent of respondents to the IRF’s most recent Pulse study  , the economy is having a positive impact on their ability to plan and execute incentive travel programs. Sixty-seven percent said they would slightly increase their incentive travel budgets from 1-10% in 2016. Thirty percent of incentive travel budgets are now between $2,000-$3000 and an additional almost thirty percent are between $3000-$4000 per person.
Merchandise and gift card programs are also flourishing. 54 percent of respondents said the economy now has a neutral impact on their ability to plan and execute merchandise and gift card programs; 40 percent said that the economy was having a positive impact, while only 6% indicated a negative impact. Almost half of all merchandise and gift card programs now have per person budgets from $100-$250.
As budgets rise, there is increased scrutiny of the value-add of incentive programs, resulting in an on-going demand for better analytics. This trend is driven by a greater assessment of all expenditures, as well as the higher visibility of employee engagement and the rewards of work.
In order to reduce risk and increase value, many companies rely on procurement for incentive and recognition purchasing. In our recent pulse survey, most respondents (55 percent) anticipate no change to the involvement of procurement and purchasing for incentive travel programs in the coming year, and 43 percent agree that procurement involvement will increase by some degree in the coming year. Our Procurement Study  revealed considerable dialogue around risk mitigation that included financial, reputational, operational, regulatory, and safety issues. Interestingly, the study showed that while some of the risks procurement was managing were traditional (such as financial or security risks) the changing environment now sees Procurement Scanning for new threats such as Brand Risk and Core Values risks.
Take-away for your business: Recognition and reward initiatives should grow with your business and fall within industry norms. Share the successes with the people who make it happen, but be prepared for increasing oversight on risks beyond just financial, including brand and core value risks.
Bigger budgets mean that organizations can consider a wider array of destinations for their incentive travel programs. For the first time, the Caribbean is tied with the U.S. as the leading incentive travel destination, with 50% of respondents saying they would use the Caribbean for their programs.
The lead-time to book the most desirable destinations is also growing. While 41 percent of respondents said they are still booking 7-12 months out, a full 45 percent said they are booking more than a year out. A stronger faith in the economy and rising demand for higher grade hotels with little new supply, means that lead times will continue to grow and supplier’s market take hold.
Recent global disruptions are likely to have an impact on destination selection, potentially driving demand for domestic or near-haul destinations even higher. Incentive travel planners must be prepared to address client concerns and are likely to be asked increasingly for contingency and emergency plans. Following on the risk concerns noted above, expect for planners to develop and share more and better tools to manage risk in events moving forward.
Take-away for your business: Be prepared to look farther outside your borders for destinations and book incentive travel well in advance to be able to choose from the most desirable destinations. Additionally, be prepared to invest in new and different tools to understand and mitigate risk in all destinations.
Merchandise and gift card reward trends from the IRF’s most recent Pulse Study also reveal increasing confidence in the economy and a return to luxury items.
Among merchandise options, electronics (31 percent), Open Gift Cards (28percent), luggage (24 percent) and watches (23 percent) top the list.
Likewise, 47 percent of merchandise and gift card program owners will be said outlook for merch/card incentives positive in to coming year. 38 percent increasing their award budget in 2016, 37 percent will be increasing number of qualifiers, and 23 percent will be increasing their use of incentive houses.
Take-away for your business: Aspiration boosts inspiration. Provide merchandise and gift card options that appeal in a stable economy.
Emerging technologies are being integrated into recognition and incentive programs to keep pace with the technologies participants adopt in private life. There is also a perception that Millennials are particularly engaged with technology tools and expect them in the workplace.
Social media use continues to expand in reward and recognition programs. Heading into 2016 the IRF Pulse Study showed over half of the market using social media to enhance their programs, and over 30 percent using game mechanics and techniques.
J. Walter Thompson  cites virtual reality as a trend to watch in 2016. With increasing accessibility through devices such as Google Cardboard, VR may soon find its way into incentive or recognition programs as a means of communication.
Increasingly, incentive houses are reporting using technology tools to personalize participant experiences by creating profiles. While organizations seek to collect and more strategically use data, however, the J. Walter Thompson report also points to privacy and trust concerns around technology and social media use as an important trend to watch in 2016.
Take-away for your business: Technology engages people in their day-to-day working lives, but balancing privacy and experience will be a growing challenge.
Although driven primarily by an interest in engaging Millennials, corporate social responsibility also connects with other generations and again rose to the top as a popular enhancement to incentive and recognition programs. According to JWT, “having a social mission is like wifi. No longer a bonus, but a core expectation”.
Paralleling consumer trends, employees increasingly expect best-in-class organizations to be good corporate citizens. Incentive and recognition program planners are integrating CSR opportunities in the form of culture-building volunteer days or incentive travel team-building events. Some companies consider the “green” practices of destination hotels and vendors. Likewise, Millennials are demanding “social impact travel” where fun and sun meets the ability to have a social impact as well. This is the impetus of Carnival’s new Fathom lines that allow Millennials to do just that: vacation as well as give back.
As an extension of social good, many organizations are expanding employee well-being programs which can include not only wellness, but also financial well-being, eldercare, and flexible schedules, among others.
Take-away for your business: Find your organization’s social mission. Engage employees, partners, and customers with initiatives to contribute to the community and to their well-being.
Incentive travel has always been rooted in the desirability and motivating power of the experience. A focus on user or guest experience is now part of a strategy to build relationships between organizations and their employees, channel partners, and customers across a wide range of incentive and recognition programs.
Experiences are the “new luxury,” that allow socially acceptable participation and sharing. To point, in the most recent Participant Study, the IRF found that Travel and Experiences beat out cash on average as a desired large award. Like consumers, employees judge the value of a brand or award by the seamlessness and exceptionality of the experience.
Likewise, Millennials are redefining what “luxury” means. Their luxury is not their grandparents’ luxury. They no longer look for “prestige” and “social status” to signify a luxury brands appeal—Millennials want “authenticity, singularity, and social value” from their chosen brands. 
Incentive travel planners are satisfying this trend with one-of-a-kind events, incorporating elements like locally authentic cuisine as a reflection of culture, entertainment that reflects the sights and sounds of the destination, and excursions centered on local practices and customs.
The importance of experience extends to recognition opportunities. According to IRF's recent Participant Study out of 452 individuals, 99 percent of their recognition profiles were unique. Participants not only had preferences about the rewards themselves, but also had strong preferences about the experience of receiving them – where the experience was of equal or more importance than the physical award itself. In order to be meaningful, businesses need to help managers understand these unique preferences to deliver personalized reward and recognition experiences in real time.
Take-away for your business: Take the time to consider the participant experience.
Three quarters of all U.S. businesses leverage non-cash rewards and recognition to motivate and engage their workforce on some level, spending over $77 billion annually.
Contrary to popular wisdom, when given the choice between a robust reward that aligns with their personal experiential preferences, employees often do not choose cash, especially for large awards. The Participant Study  found that the most preferred award experience for large awards is travel, presented by executives, communicated via a public announcement, and combined with the opportunity for special networking. Although recipients of small awards do show a high preference for cash, 65 percent would select a non cash award, if all other award experiential elements were optimal.
Likewise, there is increasing information to identify where non-cash awards work best. In “Engaged in What” researchers found that targeting non-cash awards at an organization’s critical non-core job roles such as brand ambassadorship, innovation, etc.) has shown to be a significant component to successful talent pool engagement in the new agile economy. 
Take-away for your business: As part of a balanced Total Rewards Framework, a non-cash travel, merchandise, or gift card reward can be more effective than cash, if delivered appropriately and targeted at the right non-core job activities. Determine the non-core job roles that are most important to your business and Target non-cash rewards and at these roles and activities.
While the tangible reward is still an important part of creating a motivational experience, the Participant Study  found that between 40 and 50 percent of an employee’s preferred recognition experience has nothing to do with the physical reward itself.
On average for small daily awards, how the award is presented and what professional development implications are included with small awards determine approximately 40 percent of an employee’s preference for a given award experience. While for small awards the reward itself does still determine almost 60 percent of the preferred scenario the study shows the surrounding experience factors heavily. How the award is communicated drives 16 percent of an employee’s preferred experience, while professional impact determines 14 percent. Who is recognizing the employee determines 9 percent of an employee’s preferred experience.
For large rewards (e.g. annual or year-end awards), even less of an employee's preferences for a particular experience were determined by the physical reward itself. For large awards over 50 percent of an employee's preferred experience is determined by the award presentation and professional development. The study found that when providing a large award to an employee, on average the associated professional development implications will determine 32 percent of an employee’s preferred experience. The presentation (how and by whom the reward is presented) determines 21 percent of the employee’s preferred experience.
Take-away for your business: The perfect reward poorly presented would have half the impact. Businesses should invest as much time and resources in understanding the total award experience employee, channel partner, sales people desire as they do in the award/reward purchases themselves.
Although there is much discussion of how different the Millennial generation is from the other generations in the work force, the Participant Study  found this does not hold true for award experience preferences. The weight employees give to who presents the award, how it is communicated, and the professional development implications are generally the same regardless of a person’s income, role, gender or generation, with one small exception: Baby Boomers place a slightly higher emphasis on how the award is communicated.
The study did reveal, however, the large impact an employee’s work locale has on their motivational preferences. For example, factory and retail workers place a much greater emphasis on reward presentation and professional development than the rest of the population. In fact, these elements determine almost 70 percent of a factory employee’s preferred large award experience, with only 30 percent of the value of the experience driven by the reward itself. Similarly, home office workers place a greater emphasis on how a large award is communicated. Additionally, the study found for small awards, factory workers, retail employees, and those whose listed work locale was ‘other’ (policemen, nurses, et cetera.), place a higher value on reward presentation and professional impact than office or home office workers.
This mirrors a great deal of additional research that shows, while generation can be directional in understanding employee wants, it is not the only determinant. Life stage, past work experiences and current work environment are equally critical.
Take-away for your business: Understanding the distinctions between employee segments is key to delivering meaningful recognition, but don’t lean to heavily on generation as the only determinant of employee expectation – life stage, past work experiences, and current work environment play a key role.
1 PWC CEO Survey http://www.pwc.com/gx/en/services/peopleorganisation/publications/ceosurvey-talent-challenge.html
2 IRF Fall Pulse Survey 2015 http://theirf.org/research/irf-fall-pulse-survey-2015/1571/#12
3 IRF Fall Pulse Survey 2015 http://theirf.org/research/irf-fall-pulse-survey-2015/1571/#12
4 IRF Fall Pulse Survey 2015 http://theirf.org/research/irf-fall-pulse-survey-2015/1571/#12
5 IRF Procurement Study http://theirf.org/research/2015-irf-procurement-study/1423/
6 IRF Fall Pulse Survey http://theirf.org/research/irf-fall-pulse-survey-2015/1571/#4
7 IRF Pulse Study 2015 http://theirf.org/research/irf-fall-pulse-survey-2015/1571/#14
8 The Future 100 https://www.jwt.com/en/worldwide/thinking/thefuture100trendsandchangetowatchin2015/
9 Incentives 2020 and Beyond Panel: IRF http://theirf.org/research/third-thursday-incentives-2020-beyondpanel-with-damion-riddle-todd-zint-greg-bogue-and-mike-may/1675/
10 Redefining Luxury for the Millennial Market http://fctechgroup.com/2013/05/14/redefiningluxury-for-the-millennial-market/
11 2015 Landmark Study: Participant Award Experience Preferences http://theirf.org/research/2015-landmark-study-participant-award-experience-preferences/1619/
12 2015 Landmark Study: Participant Award Experience Preferences http://theirf.org/research/2015-landmark-study-participant-award-experience-preferences/1619/
13 IRF Paper: Engaged in What? http://theirf.org/research/engaged-in-what-part-4---role-theory-to-link-engagement-and-performance/1314/
14 2015 Landmark Study: Participant Award Experience Preferences http://theirf.org/research/2015-landmark-study-participant-award-experience-preferences/1619/
15 2015 Landmark Study: Participant Award Experience Preferences http://theirf.org/research/2015-landmark-study-participant-award-experience-preferences/1619/