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Online Incentives Sizzle - and You Shine

December 29, 2000
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Interested in a barge trip throughBurgundy? How about an African safari? If you’re a Nortel Networks employee,you can choose between these and other exotic gifts if you win one of thecompany’s “platinum” awards. They’re part of a rewards and incentivesprogram that includes everything from electronic bonuses - CD players,televisions - to once-in-a-lifetime travel opportunities.

   Likemany other companies, Nortel is turning to the Internet to streamline itsprogram. The firm has teamed with San Francisco-based Netcentives to produce anonline solution for managing awards with a familiar Web-based interface. Calledthe PRIDE program, the online offering creates a near real-time environment thatincludes approval and validation, processing ofthe transaction, complete reporting and account statements, and awardfulfillment.

    So far, Nortel likeswhat it sees. “The Internet is immediate,” said Shelly Potter of Nortel’sglobal communications and benefits division. “By providing recognition at thetime an employee completes a project, instead of waiting for weeks or months foran annual reward, we’re able to reinforce the reward’s effect.” Just fourmonths after its inception in June of 2000, Nortel’s online program had givenaway 25,000 rewards.

    Incentive andrecognition programs have been around for a long time; they’re designed to bemotivational tools, supporting individual accomplishments in sales, for example,or recognizing employees for work well done. A recognition program can rangefrom a years-of-service award to a structured program like Nortel’s thatrewards outstanding success on a particular project. In a tight labor marketwhere retention of workers is crucial, these programs offer a way for companiesto stabilize their workforces while encouraging higher performance.

    While the earlyadopters of online rewards and incentives programs have been, predictablyenough, high-tech companies like Nortel Networks, the client landscape ischanging. “We’re beginning to see industrial firms, pharmaceuticals, andothers that aren’t obviously technology companies,” said Bill Rusitzky, vicepresident and general manager of enterprise solutions for Netcentives.  

    Putting theirprograms online changes the game for HR managers, who have traditionally beencharged with developing and running them. According to Bravanta.com, an onlinefirm serving the corporate incentive market, nearly 80 percent of these programsare managed offline, with most companies administering their own offerings. Thatputs the burden on HR staff to keep on top of the inevitable minutiae that evena well-designed program generates.

    A simple anniversaryawards program, for example, recognizes employees on significant dates liketheir fifth or tenth year with the company. Run it offline, and the program eatsup time: the HR team must choose merchandise, create a catalog of desirablerewards, and print and mail the catalog. They have to keep tabs on anniversarydates for all employees and track proper delivery of the award.

    “All this is inaddition to other equally pressing HR tasks,” said Allyson Campa, presidentand CEO of Bravanta.com. “With 10 to 20 thousand employees, even astraightforward program becomes a huge job for HR.” And it’s a costly one,given the online alternative. Campa estimates that traditional programs see 40percent of their cost eaten up by administration and upkeep. Bravanta claimsthat it can cut that figure to less than 10 percent.

    And it’s fast. Putthe same anniversary program online, and it can be running in a matter of days.Companies choose the types of awards they want to deliver and enter the relevantinformation about employees. From then on, the awards go out automatically.Employees, using a customized Web site created for the purpose, can shop fromthe rewards catalog at work or at home, and track the status of their gifts. HRmanagers can see which gifts are popular and make changes to the catalog on thefly.

    Hewitt Associates, aglobal management consulting firm, went online with a Bravanta program toprovide more flexibility for managers and new capabilities for recognizingassociates. With its program running for only eight days, Hewitt’s number ofrequests online had exceeded those from its two offline programs, according toYvonne Sisko, compensation analyst in the firm’s total rewards unit inLincolnshire, Illinois. “The gifts are good and easy to order from thedesktop,” said Sisko. “And we value the ability to update gift choiceseasily so the program doesn’t become stagnant.”

    Such flexibility ingifts is a major reason for moving online. SalesDriver.com, for example,provides sales incentive programs that are delivered on the Web. Sales managerscan specify rewards for reaching certain sales objectives, using the site’scurrency - called Driver Dollars - which can be applied to a catalog of morethan 1,500 items, from housewares and toys to unusual travel opportunities suchas a ride in a Russian MiG over Moscow. 

    Driver Dollars canbe accumulated from different programs and saved up to buy a single larger item.“Online,” said SalesDriver.com vice president of marketing Joel Silver,“people select their own prizes rather than having someone else do it forthem. And they can track how they or their team is doing on an onlinescoreboard.”

    Is the onlinemigration gathering momentum? Ask Gift Certificate Center. The company providesgift certificates to the corporate market, where it has been in business forover nine years. And while Gift Certificate Center doesn’t consider itself adot-com company, vice president of marketing Ericka Perrault is quick to citepositive results from the firm’s foray into the online world. “We stilloffer other methods, but it’s been a pleasant surprise to see that 85 to 90percent of the rewards we produce are now redeemed on the Web.” The firm,recently acquired by Hallmark, offers more than 400 gift certificate options inits Premiere Choice program.

    A key to Web-basedincentive and recognition programs is how easy it is to give and deliver therewards. When Alliant Foodservice, a $6 billion company based in Deerfield,Illinois, wanted to create a program to increase sales among its fooddistributors, it turned to GiveAnything.com. At Alliant’s Paducah, Kentucky,division, HR managers can buy gift certificates online and e-mail them to awardwinners. For those who prefer physical recognition, an online order can generatea certificate to be mailed to the recipient.

    Cost savings arelikewise a major driver in the online world. In Winston-Salem, North Carolina,GMAC Insurance is experimenting with an online incentive program for just thatreason. The company’s Cash for Aps program had been set up to reward itscustomer-service representatives at over 3,000 insurance agencies across theUnited States for the applications they turned in. Yet GMAC soon found that thecost of processing the reward was turning out to be two to three times the costof the reward itself.

    GMAC turned toAtlanta-based MMS, a Web-based rewards company. Now its representatives cansubmit their policies online. GMAC can verify them and award points, with alladministrative duties hosted by MMS. The MMS program is currently in pilot format 50 GMAC agencies in two states, according to general marketing manager forthe mid-Atlantic region Rick Pierce. And GMAC had one other thing in mindbesides savings: “We wanted something that would help our people get to theWeb,” Pierce added. “By giving them awards to shoot for, we’re hoping thisprogram will pull people online using the carrot rather than the stick.”

    While a growingnumber of companies are using the Web to offer their own solutions to therewards and incentives landscape, others serve as middlemen to connect marketingand advertising companies with end-user corporations. IncentiveCity calls itselfan “enabler.” Stevi Hanson, the company’s executive vice president, saidthat her company is all about helping veteran marketing firms move online sothey can meet the increasingly wired demands of their clients. “End users,”said Hanson, “are demanding this from their marketing firms, and we help themarketers supply it.”

    And some sitesprovide Web-based directories of resources. Kudoz.com showcases the topsuppliers in performance-improvement products and offers a set of proprietaryassessment tools that lead companies through creating their own programs. Ittargets firms with 1,000 or fewer employees. “Most companies in this rangedon’t know who the players are in the incentives industry,” said Kudoz chiefmarketing officer Gene Meeker. “We try to make it easy for them.”

    Judging by the sizeof the rewards and incentives market, the impact of the online experience couldbe substantial. The corporate incentive market has grown from some $22.8 billionin 1996 to an estimated $30 billion in 2000, according to a survey sponsored bythe Incentive Federation. That trend should keep innovation flying as servicesmigrate to the Web, and a tight labor market keeps the pressure on firms to holdon to their employees.

Workforce, January 2001, Vol80, No 1, pp. 44-47  SubscribeNow!

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