THERE’S NO SUCH THING AS A BUDGET INCENTIVE PROGRAM

I have been asked countless times in the past few months how to design a ‘budget’ incentive program. The answer is simple: there’s no such thing as a budget incentive program! It’s a bit like digging half a hole; a hole is a hole whatever the size. There are certainly ways of ensuring that you don’t pay too much for some elements of the program or the reward but the bottom line is that if the people you’re trying to motivate don’t ascribe any value to the reward they’re not going to be motivated by it.
Incentives rely on the fact that there is a positive correlation between effort and performance; that favourable performance will result in a desirable reward; that the reward will satisfy an important need and the desire to satisfy that need is strong enough to make the effort worthwhile.
Let me say for the umpteenth time: an incentive program, properly designed and managed and appropriately rewarded will always be self-liquidating. Targets should be set so that if 60% of the participants meet their target your anticipated result and the all the costs of the program will be coved. If this figure is unachievable then you have to go back to the drawing board and reconsider your options. Perhaps a week in Dubai at the Atlantis Hotel is a reward the program can’t afford, but maybe individual items of merchandise will still be highly desirably and cost a lot less. This has to be done before you launch the program, don’t ‘realigned’ it afterwards.
Be strict with the rules and abide by them. If an individual target is $1million then achieving $999,990 will not do! Rewards should only be obtainable by participants who meet or exceed their targets - once they know you’ll accept less they won’t put in as much effort.
Make the program a ‘closed’ program - one in which only a limited number, say the top 50, will receive a reward. This increases the competition between participants and limits your financial exposure to the cost of the reward.
I generally discourage ‘buy-ins’ - allowing people who haven’t met their target to purchase their place on a group travel reward by paying what it would have cost to make up the reward cost - this dilutes the reward value to those who have worked hard to achieve it. But some clients like it and as long as the contribution to make up the costs is appropriate, so be it.
Don’t allow too many ‘hangers-on’ - people, usually senior management, who haven’t participated in the program and are adding to the cost without contributing to it. There is considerable value in being able to interact with senior staff members but too many will cause resentment.
Unless your program is very straightforward don’t be tempted to do it yourself. This could be the recipe for disaster! Use an incentive practitioner but ensure that the one you choose can demonstrate their ability. Far more can be achieved from an incentive program than may be immediately obvious and an incentive practitioner will be better able to advise you. Make sure, too, that everything is included in the price quoted. It’s all too easy - and, I regret to say, common - for an agency to quote one figure ands then suddenly present you with a long list of extras.
Make sure that the agency specifies the items on which they will earn commission and ask whether this is part of their fee. If by adding this amount into the fee they’ve quoted you’re not happy with it...go back and renegotiate.
If you’re using a group travel reward (always good for doing things and going places that individual travellers can’t) and there’s a Destination Management Company (DMC) involved make sure they know that you will either pay ‘fee for service’ or allow them to accept commissions from their suppliers, but not both! I thought this practice had died out long ago but it seems it’s back in fashion. ‘Double-dipping’, as it’s called, inflates the price of the reward and, of course, ultimately increases the targets the participants have to meet.
Using a points system for individual rewards? Confirm in advance that the amount you pay for each point covers the services of the company providing them. Ensure, too, that merchandise offered, is obtained at the lowest price, preferably from the manufacturer and not through umpteen intermediaries.
If you do all of the above you can still motivate your staff and others and get good value from the reward - and know you’ve done the best for your bottom line.

Peter Gray is the Managing Partner of Motivating People
and an Accredited Incentive Practitioner.
E peter.gray@motivatingpeople.net
W www.motivatingpeople.net