We are approaching the last quarter of the year and it may well be time to submit your budget requests for keeping your offline and online recognition programs in place, or even asking for funding to add new programs.
It can seem like a nail biting exercise each year to go through. One way to make this angst less ominous is to get your executive sponsor’s support ahead of time. Follow these practical ways to get your leader’s commitment to your recognition program budget.
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Maybe you’ve already gone through a budget cut. If not, it might still happen. And then again, if you’re lucky, hopefully you’ll never have to experience one.
Recognition programs, like education and training, and other areas perceived as “soft” things, are easy targets to cut.
How can you handle these budget cutting situations when they happen? What helpful advice can help you?
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We need greater accountability for the success of our incentive programs. Planning to calculate the ROI of incentive programs from the start will help us focus on results. Following the Top 10 Ways to Measure the ROI of Incentive Programs will be a handy checklist to ensure the success and ROI of your incentive programs.
1. Identify the problem you want incentivized. Assess the current performance problem to determine the needs, conduct a gap analysis, and look for potential improvements you think could be incentivized. Too many accidents, not enough sales, losing too many people, or not reaching performance targets.
2. What are the costs of the problem? Analyze the direct and indirect costs currently associated with the identified performance problem or need. Like: What are salary and operational costs for a retail store? What are turnover costs? What is the number of lost-time days due to accidents?
3. Determine the achievable objectives. Propose one or two key measurable objectives to be targeted by incentives. Example: percentage of reduced voluntary turnover; increased quarterly productivity indicators at retail stores; percentage of sales performance numbers; or, reduced number of annual accidents per year.
4. Figure out the best measures to use. Identify the specific behavioral measures you will use to determine the right program success measures. When you define the performance well enough you will know the behaviors you want more or less of. You’ll then know if the behaviors occur or not and how to measure them.
5. Calculate the costs of incentives. Project the overall costs associated with conducting an incentive plan to improve the performance problem. Determine the value of incentives, the frequency or number of behaviors required for an incentive, the time period of the incentive plan, and multiply to determine total costs.
6. Keep tabs on budget spend. Monitor the costs associated with producing the improved performance results along with implementing the incentive plan. ROI is about return on investment of monies spent, which includes administration costs, monitoring, data collecting, and analysis.
7. Gather the data you need. Collect baseline data of target performance results from the period before the incentive plan began as well as during the implementation period (e.g. year before versus current year). Do as much as you can before the incentive plan so you can deal more with data following implementation.
8. Create a before and after analysis. Analyze and calculate the costs of the targeted performance problem before and after the incentive plan. Here you monetizing as much of the data as you can. Make friends with the folks in finance to help you put a dollar figure on as many data points as is possible.
9. Consider reasons for the success, or not. Give a general interpretation of the results observed of performance outcomes achieved while using incentives. This is putting the human observation and deductive reasoning as to whether things worked or not. Your hypothesis can then be validated by the data collected.
10. Work out the ROI. Calculate the actual return on investment. The math is easy: It’s the estimated dollar amount of the impact made by the incentive plan minus the combination of the annual incentive payout costs plus administration costs, then divide the previous total by the impact dollar amount, and finally multiplied by 100. Previously published in Incentive Magazine
Previously published in Incentive Magazine
Roy is no longer writing new content for this site (he has retired!), but you can subscribe to Engage2Excel’s blog as Engage2Excel will be taking Roy’s place writing about similar topics on employee recognition and retention, leadership and strategy.
If you had a magic lamp and were allowed three wishes of the genie that would appear when you rubbed the lamp, what resources would you ask for to help you with managing your recognition programs better?
And, I am not just talking about money alone. There are people and organizational resources you can draw upon that could help drive recognition practices and programs for you.
It’s fascinating how some company leaders bemoan the lack of employee engagement in their organizations. But they won’t invest wisely in one of the top drivers of engagement, namely, employee recognition.
What are the resources you need to really drive employee recognition? Consider the following list just for starters. (more…)
When times are tough and profits are low, budget lines for things like education, employee events, and recognition, often get cut.
It’s easy to blame leadership – either for the financial failings of the company or for the budget fallout. But not all financial issues come from poor leadership.
Leaders have a difficult position to fill when it comes to prioritizing how company monies are spent.
While you are the defender of employee recognition practices and programs, you must also be transparent about the success and impact of your recognition and rewards programs. Are your programs producing their intended results? Is there a positive ROI? What is your program’s impact on people and performance?
On your leader’s behalf: Is there ever a right reason to cut a recognition and rewards program? (more…)
What is it about recognition budgets? They seem to get decimated at a blink of an eye.
Too often recognition is one of the first budget lines to be cut. This happens when recognition has not been positioned properly as a strategic tool to engage talent and lift results.
The summer months are a great time for you to begin your preparations for protecting next year’s budget.
There are two phases to protecting your recognition budget – preparation phase and presentation phase.
Follow along to see what you can do today to get things ready for your next budget submission. (more…)
When talking about recognition and rewards programs the word “budget” is sure to come up. There are few owners of corporate recognition programs who have not dealt with one cut or another over their lifetime. This month I asked 10 seasoned practitioners responsible for recognition programs for their budgeting advice. Their wisdom gives you the Top 10 Powerful Ways to Save Your Recognition Budget.
Previously published in Incentive Magazine, January 2016
Roy is no longer writing new content for this site (he has retired!), but you can subscribe to Engage2Excel’s blog as Engage2Excel will be taking Roy’s place writing about similar topics on employee recognition and retention, leadership and strategy.
You meet Keira, your new boss, in the hallway at work. You now report to her about your responsibilities in administering the company’s employee recognition programs.
She’s a good leader and heads compensation and benefits. But employee recognition is new to her. She’s only just been assigned the recognition portfolio.
You know her qualities and feel you will work well with her. You feel her intentions are solid and sincere towards recognition.
As she converses with you she asks you what your expectations are of her as your new leader. And she also asks you how senior leaders as a whole could help improve recognition throughout the company.
How would you answer this leader? What ideas come to your mind?
Consider the following 7 simple ways that recognition practitioners have recommended to their leaders and shared with me in the last several months. (more…)
How much should you spend on employee recognition programs?
You would think it was a simple question to get an answer for. But budget questions often get evasive answers especially from those in the recognition profession and by vendors.
Why is that?
The main trouble is the question itself. People see different things when they hear “recognition budget”. (more…)