Is My Travel Program "Reward and Recognition" or "Incentive" Based?

Reposted from Meetings & Incentive Travel - click here for link

True or False? “Reward and Recognition” and “Incentive” programs are really the same thing.

Answer: False. Reward and recognition programs focus on reinforcing behaviors by providing awards and personal recognition based upon an observable behavior. Incentive programs inspire participants by influencing efforts that help achieve future business goals.

Think about the basic qualification structure of these programs. Often, open-ended qualification structures are more incentive-based while closed-ended qualification structures reflect a reward and recognition orientation. Closed-ended structures tend to fall in line with the Pareto principle (80/20 rule), where 80 percent of your performance is contributed by 20 percent of participants (“A” level or top performers).

The challenge with closed-ended qualifications occurs when only the top portion of your sales team feels they can achieve the award. Also, keep in mind that the effectiveness of a program’s performance can be misleading as “A” level performers tend to perform despite what’s going on around them. As such, if your next level of participants (“B” level performers) are not motivated by the program design, it will not achieve the best possible results. Representing the majority of your participant base, “B” level performers can easily be disengaged from your program’s sales targets because of a closed-ended qualification structure. They already know who is going to earn the award and don’t feel that they can achieve the qualifying performance objectives.

Consider the situation faced by Pacific Life. While their “A” players were motivated by the incentive travel program, their “B” players weren’t because they didn’t view the sales targets as attainable. Maritz Travel suggested a shift to an open-ended qualification structure that kept the top performer program intact, but extended the motivational value for mid-level performers by establishing attainable sales targets that would not have qualified them under the old closed-ended qualification structure. These targets represented significant new volume for the company and resulted in “B” level performers contributing 80 percent of total sales growth for the year and $14 million in incremental profit.

By focusing on these two distinct concepts companies can create more effective programs.