The newly released 2022 Incentive Travel Index (ITI) reports that, overall, the incentive travel industry is strong....
Research / 2015 IMA Landmark Study: Participant Award Experience Preferences
by Melissa Van Dyke
In light of the $77B spent annually on non-cash awards, what drives an effective award experience for today’s employees? This question is at the heart of a new landmark study on employee motivation. In the spring of 2015 the Incentive Marketing Association commissioned the Incentive Research Foundation and Intellective Group to produce the largest, most broad-based, theoretically grounded, statistically complex study on the total award experience performed to date.
Pulling from core motivational theory, the study defined the employee total award experience to include not only the specific physical reward itself, but also the person who recognizes the recipient, how the award is communicated, and what professional impact the award carries (for example being allowed special networking, mentors or assignments). Using advanced marketing research techniques, the study helped uncover and debunk a number of myths surrounding employee awards, showing how organizations should focus more on individual employee needs and not their generation as often posited.
While the physical reward is still a big part of creating a motivational experience, the study found that on average between 40% and 50% of an employee’s preferred total award experience has nothing to do with the physical reward itself. On average, the award presentation and professional development implications for small awards drive approximately 40% of an employee’s preference for a given award experience. While the award itself does still determine almost 60% of the preferred scenario for small awards, the study shows the surrounding experience factors heavily. For small awards on average, how the award is communicated drives 16% of an employee’s preferred experience, professional impact determines 14% of an employee’s preferred small award experience and who is recognizing the employee determines 9% of an employee’s preferred experience.
Counter to what one might assume, the larger the actual award in question, the less an employee’s preference for a given experience are determined by the specific award itself, with over 50% of an employee’s preferred experience being determined by award presentation and professional development. The study found that when providing a large award to an employee, on average the professional development implications tied to the award will determine 32% of an employee’s preferred experience and the award presentation (who and how the award is presented) determines 21% of the employee’s preferred experience. This is not to say the award does not count however. Nearly half – 48% of the preferred award experience is still driven by the award itself for large reward scenarios. But organizations should be aware that the perfect award poorly presented would have half the impact.
Although there is much discussion of how different the Millennial generation is from the other generations in the work force, the 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 and even generation, with one small exception: Baby Boomers place somewhat more emphasis on how the award is communicated. The study did uncover, however, the large impact an employee’s work locale has on their motivational preferences. For example, factory and retail workers place a much larger emphasis on award presentation and professional development than the rest of the population. In fact, these elements determine almost 70% of a factory employee’s preferred large award experience, with only 30% of the experience focused on the award itself. Similarly, compared to other groups, home office workers place a higher 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, etc.), place a higher emphasis on award presentation and professional impact than office or home office workers.
Contrary to popular belief, when provided a robust award experience that aligns with their personal preferences, employees do not automatically choose cash as part of that experience, especially for large awards. The study found that on average the most preferred award experience for large awards is a travel award, presented by travel executives, communicated in a public announcement, and combined with the opportunity for special networking. While small awards do correlate to a high preference for cash on average, 65% of people would select a non cash award if all other experiential elements were optimal.
Finally, and perhaps most importantly, the study shows how important it is for organizations to truly understand the individuals they would like to recognize and reward. Out of 452 respondents, 99% had a unique set of preferences – different from every other person in the study. This is, again, a strong indicator that just as we are unique individuals in our consumer shopping and lifestyle habits so also are we unique in our preferences for reward and recognition. Businesses should continue to expand efforts to help managers understand employee’s interests, likes, and dislikes. It can start as simply as asking employees’ favorite activities, movies, hobbies, and music. Using these personal interests to personalize a reward makes the impact and expense all the more worthwhile.
Overall the study findings point to employee award programs that should be as heavily vested in the presentation and professional development as they are on the award itself. These programs should also be moderated for the employee’s work environment, and sensitive to an employee’s individual preferences. Given its rich database, the Incentive Marketing Association, Incentive Research Foundation and Intellective Group will continue to mine this study for additional insights into employee motivation.
Conducted in the summer of 2015, the study used scenario-moderated conjoint analysis to explore 26 different high level variables and over 110 different preference options in the total award experience for 452 individuals within the United States. The study employed fully-randomized experimental design. To maintain proper representation researchers ensured the sample contained quotas for both gender and household income, and was a normative cross-section for age, education level, household composition, tenure, industry and company size. The strong theoretical base for the study was rooted in work from Professors such as Dr. Rabindra Kanungo, Dr. Nitin Norhia, Dr. Paul Lawrence, and Dr. Scott Jeffrey. Although Dr. Scott Jeffrey’s work outlined non-cash award benefits including memorability, social reinforcement, separability, and justifiability, this IRF study focused solely on employee preferences.
On top of behavioral and career questions, respondents were first given the opportunity to choose personally meaningful awards in the areas of travel, perks, gift cards, and merchandise. They were then presented with seven small award experience exercises and seven large award experience exercises. Each exercise presented three unique combinations of four experience characteristics: who is recognizing the respondent, how the award is being communicated, what reward is being provided, and what professional development implications are included. Additionally, the study was designed to allow the researchers to present the pre-selected personally meaningful non-cash awards to the respondent as part of these scenarios. Respondents selected their most and least favorite options from the three award experience scenarios and repeated this exercise fourteen times overall.
The Incentive Research Foundation’s Industry Outlook for 2023: Merchandise, Gift Cards and Event Gifting reports an optimistic outlook for 2023 despite continuing challenges to the global economy. With a critical focus on attracting and retaining talent, businesses consider non-cash incentive programs to be a valuable tool to motivate a changing workforce.
IRF President Stephanie Harris and IRF Chief Research Adviser Rick Garlick present this useful analysis of how incentive, rewards and recognition programs are being designed and budgeted for 2021.