IRF Releases Study on Valuing and Measuring Programs

With incentive, reward and recognition (IRR) programs resulting in an average 22 percent gain in employee performance, it is generally accepted by US businesses that rewards work to promote productivity. To help business maximize the effectiveness of their IRR programs, the Incentive Research Foundation has released Award Program Value & Evidence, a summary of the advantages of non-cash rewards and an examination of how businesses are measuring the program benefits.

Award Program Value & Evidence discusses the role of recognition in IRR initiatives and the broad benefits of cash and non-cash rewards. It then provides an overview of academic research that explains the psychology behind why non-cash rewards are so effective. Award Program Value & Evidence concludes with a discussion of the measurement of the benefits of IRR programs.

Key findings and takeaways in Award Program Value & Evidence include:

Advantages of Non-Cash Rewards

• People tend to make utilitarian purchases (e.g., groceries) when given a cash reward. Non-cash rewards (e.g., fun experiences, splurges) can create lasting memories and positive associations.
• According to “The Ikea Effect,” people put more value on tangible rewards that they have to work toward.
• Non-cash rewards have a trophy value. They are highly visible, and it is more socially acceptable to talk about merchandise or a trip than to brag about a cash incentive.

Measuring Incentive, Reward and Recognition Programs

• Clearly defined, measurable objectives are among the most important success factors in IRR programs.
• Metrics for tangible benefits include decreased staff turnover, increased productivity, sales, revenue, market share, gains in customer satisfaction and customer acquisition.
• While more difficult to measure, metrics for intangible benefits include employee presenteeism and satisfaction.
• An effective ROI analysis compares the full costs of an incentive program to its gains — both tangible and intangible.

Award Program Value & Evidence was supported by IRF Research Advocacy Partner, Incentive Magazine.

To view or download a copy of the white paper, please visit: Award Program Value & Evidence White Paper

To view or download a copy of the full study, please visit: Award Program Value & Evidence Study