Five Key Decisions for your Employee Recognition and Incentive Program
Apr 29, 2015 by Elaine Buxton
We seem to be in a “rewards” economy, with participants constantly asking “What’s in it for me?” It’s difficult to shop, dine out or buy much of anything without being prodded with a reward for doing so: loyalty points, frequent customer apps, secret offers for special customers, “Kohl’s Cash”, “CVS ExtraBucks”, etc.
Your employees live in this economy, too, and are conditioned to look for rewards. Do you offer employee incentives as part of your mystery shopping plan? Incentives and contests are great ways to add fun to mystery shops, drive new behaviors and encourage employees to focus on those key behaviors that drive customer satisfaction and loyalty.
There is nothing wrong with enjoying your job. And customer service associates who enjoy their work tend to serve customers better. Incentives and contests can inject some fun into an often repetitive job. Even your best and brightest customer service and sales stars can burn out occasionally. Re-introducing fun and rewards can make a huge difference in results.
There are many ways to design an incentive program and choices can often seem overwhelming. Some companies reward associates with a cash payout included in their paychecks. While employees love extra pay, sometimes these rewards get lost and, worse, become expected over time. Your team may not notice this type of reward as much as they would with other options.
Consider incentives that stand out, like gift cards. Receiving a gift card on the spot or even after the fact is a tangible reminder of a successful mystery shop. While extra pay is mixed in with the rest of a regular paycheck, a gift card offers associates a reminder of success each time they purchase something with the card. The card can also include a short message of congratulations and can be branded with your company name.
To start your employee rewards, review these five factors with your budget in mind:
1. Decide who will receive the incentive reward. Make it crystal clear.
- Highest performers only. Reward associates who earn a perfect score for the shop. Scoring 100% is more challenging, and fewer associates may earn the success. This means that you may need to budget for fewer prizes but possibly at a higher value per award. While maintaining the challenge of a perfect shop, ensure that your program is within reach enough so that associates feel it is worthwhile to try for it. It’s not an incentive if no one can possibly earn it.
- Good performers and up. Reward those scoring correctly on certain key questions of the shop. This will most likely mean that more associates earn prizes. You will want to budget more for prizes with this option so we suggest offering more awards for a lower value each. In addition, with this option, the key questions can change periodically. This is a good way to work on key behaviors and then “raise the bar” to higher level questions over time.
- Individual Rewards or Team Rewards. Reward the team on duty during the successful shops. This option recognizes that no one works in a vacuum. Good service behaviors – and sales behaviors – usually require a team effort. A winning experience at a restaurant requires a winning server, but it also requires a winning kitchen staff, a winning host, etc. Consider some level of award for all involved in the guest experience.
- Drawings and contests. Reward everyone in some way with a grand prize drawing opportunity.This can work as a stand-alone program or in conjunction with individual rewards. For example, you may decide to reward your top performing servers in your restaurants and then, for everyone on duty at the time of the mystery shop, put their name into a drawing for a trip, a day off with pay, or something of value.
2. Determine when the incentives and prizes will be awarded.
- On the spot prizes offer instant recognition and great positive reinforcement of the program with the team. There are some logistical concerns to be aware of, namely, the return of unused prizes into inventory and the shipping costs for the returns.
- Prizes are shipped to all shoppers so they may be distributed on the spot.
- Prizes can be distributed as virtual codes rather than plastic gift cards.
- After-the-fact prizes are mailed later to successful associates, which means you save on shipping costs. Prizes are only sent to winners and not to all shoppers.
- The prize package is another opportunity to recognize the employee’s success.
3. Decide on the type of reward you will offer.
- Gift cards that may be used anywhere (Visa, Discover, etc)
- Store gift cards (Target, Walmart, gas cards, etc.)
- Visa gift cards for use at certain stores or for certain types of purchases.
- E-prizes (iTunes cards, e-gift certificates)
- Logo merchandise (Mugs, t-shirts, keychains, etc.)
- Payroll bonus included on paycheck
4. Plan for the back-end work of tracking winners, ordering inventory, shipping and managing inventory.
- Handle these tasks internally if you have a small program and your staff includes someone with enough time to manage incentives and set up and run the program.
- Engage a fulfillment house to handle these tasks if needed.
- Engage a mystery shopping agency with expertise in managing on the spot prize and incentive programs.
5. Rewards and incentives are personnel matters. Know the laws and maintain compliance.
- Remember – incentive and reward programs provide remuneration to employees whether the reward shows on an employee’s paycheck as a bonus or not. Giving an employee a gift card is compensation and, thus, must be reported on all payroll tax filings. (Confero has an easy solution that can send aggregated information to large HR or Shared Services departments so they may include the card value in employee compensation calculations).
- If your suppliers sponsor the rewards, be sure that all rewards totaling $600 or more during a calendar year are reported on a 1099 Misc. Income Form that the supplier issues to the winners.
- If you distribute gift cards, be sure to provide the disclosure documents that come with them. Typically, the cards are contained inside an envelope or are stuck to a hard card that will show the Terms and Conditions (or these will show on a redemption website). It’s important for employees to know whether there are any fees associated with the card, such as a fee removed from the card each month if the card is not used. Dates of expiry are also important. There are multiple card issuers, terms and conditions. Shop around for the best fit for your needs.
- The laws governing “payroll cards” also cover incentive and reward gift cards issued.
The options may seem endless but, after considering these five factors, it should be easier to narrow down the choice of options for your organization. The time you invest in devising an open, fair and “rewarding” incentive program will serve your organization well. It’s worth the effort.
NOTE – if you are interested in other posts about incentives, take a look at these: