Improving Legacy Incentives Leads to Better Engagement

Transcription

1 Improving Legacy Incentives Leads to Better Engagement 2013 Maritz All rights reserved

2 Improving Legacy Incentives Leads to Better Engagement LIMRA, an association for the financial services and insurance industries, and Maritz, a sales and marketing company including Maritz Travel, Maritz Motivation Solutions and Maritz Research, conducted an in-depth market research study in July 2012 to help member companies understand both the appeal and effectiveness of reward and recognition strategies. The results showed that while legacy incentive strategies continue to motivate financial services agents, those strategies could be improved to create even higher levels of performance effectiveness. The study indicated some disconnects between what companies offer and what participants want in an incentive program, often yielding lower levels of potential participation and engagement. It also provided additional insights on more effective design for financial services agents, helping companies develop better incentive programs to further ensure that every dollar invested provides the best business results. The study specifically evaluated the impact reward and recognition programs have on individual agents, and how specific program elements could further engage and motivate them. According to survey respondents, reward and recognition works. Some key findings that advocate these claims include: 65% of agents attributed improved job satisfaction as a result of reward and recognition. 67% of agents believe supplier relationships are strengthened by reward and recognition. 83% of agents attribute some portion of their production efforts to reward and recognition. Companies must design reward and recognition programs to ensure participating agents continue to be motivated and engaged. Designing Incentive Programs around Participant Values and Goals Program designers can make better business decisions and increase program effectiveness when they further understand what is important to agents who are eligible for their programs. The LIMRA/Maritz study helped to gain insights into attitudes, interests and opinions regarding personal values and goals of agents. According to the study, using a values scheme from academia, with permission of Shalom H. Schwarz and in cooperation with The Maritz Institute, more than half (54%) of respondents fell into one of three personal value categories: One-of-five agents (20%) identified self-direction as a primary personal value. Self-direction represents independent thought and action with regard to choices, creation and exploring. Achievement was a close second (18%), representing individuals striving for personal success by demonstrating their ability to perform based upon identified performance expectations. Third place, security (16%), involves the sense of safety, harmony, and stability of peer and organizational culture, along with what those relationships represent at the individual level. SELF-DIRECTION 20% ACHIEVEMENT 18% SECURITY 16% TRADITION 13% UNIVERSALISM 10% STIMULATION BENEVOLENCE HEDONISM POWER CONFORMITY 9% 8% 2% 2% 2% % most important FIGURE 1: Prioritization of Producers Personal Values According to to study results, producers ranked self-direction as their as their top top personal personal value followed value by followed achievement, by security, achievement, tradition, universalism, security, stimulation, tradition, and universalism, benevolence. Hedonism, stimulation, power and and benevolence. conformity were Hedonism, ranked as the power lowest and conformity three, with only were two ranked percent as of the producers lowest identifying three, each with as a only top personal two percent value. of producers identifying each as a top personal value Maritz All rights reserved 1

3 Typically, in a sales-oriented audience, achievement is often found to be the predominant value. However, as the independent agent is a key subset of this audience, self-direction rose to the top personal value category. The study also analyzed personal goals important to agents. Overall, improve my financial security was their top goal, followed by effectively balancing work and personal responsibilities and being healthier (quit smoking, eat better, exercise more, etc.). In addition, the study indicated a correlation of perceptions about a company and the way agents respond to the reward and recognition program it offers. Most often seen among companies goals are growing revenue/selling more (in the top three for 53% surveyed), followed by providing superior customer service (48%) and improving bottom-line profitability (41%). Respondents indicated cutting costs and globalization are seen least often as company goals. The study showed agents are more engaged when working for or with companies perceived to care about providing superior customer service; innovating/developing new and industry-leading products; and growing, developing, supporting, and engaging employees and partners. However, they are less engaged when they perceive the top company goals to include improving bottom-line profitability and cutting costs. Finding the Reward and Recognition Balance Companies and Producers There s a fine line when designing incentive-based programs finding the balance between what program participants want and what the companies want from them. The study tested two situational opportunities to improve reward and recognition program design among financial services agents. In the first situation, the study specifically tested the preferred reward and recognition types of top-performers in a program. A top-performer is an individual who performs above expectations relative to a large or long-term performance objective, and/or is among the highest-ranked performers in a program. This individual receives special recognition or reward for that performance. Of 16 top-performer reward and recognition types tested, cash (within the top-three choices for 63% of producers) is followed by travel (family group travel 41%, group travel 38% and travel certificates for individual travel 34%). To reach nearly 90% of top-performing producers, the study indicated a company should consider a reward and recognition program that mixes family group travel, travel certificates, non-family group travel and gift cards. In the second situation, the study also tested those achieving a smaller performance objective or making progress towards a larger goal. Of 12 progress reward and recognition types tested (some the same and some different from those tested in situation one above), cash (within the top-three choices for 75% of producers) is followed by gift cards (53%), travel certificates (50%) and award earnings/points (31%). Companies can reach more than 90% of progress performers by developing a reward and recognition program that mixes gift cards, travel certificates, business support and award earnings Maritz All rights reserved 2

4 Thus, looking at reward and recognition types across situations, almost nine of 10 agents would be motivated with something in their top-two most types if they were offered a mix of family and non-family group travel for top-performer situations, complemented by gift cards, travel certificates and business support for progress situations. Overall, the study results indicate reward and recognition types should be complementary to motivate the most people. More Effective Incentive Trip Program Design The study also identified elements to design a more motivating travel experience, including the value it provides the program participant, the destination, the length of the on-site experience, schedule or itinerary flow and the number of guests allowed. These elements not only affect the appeal of the travel award and how hard an agent will work to earn it, but also affect the company s budget and bottom line. According to the study, agents most often want to escape somewhere relaxing with no schedule or demands on their time (marked in the top three by 45% of respondents). In addition to relaxing, there was an expressed desire to share a getaway with a spouse or guest, to be treated like a celebrity and to go somewhere unique or different. In addition, the destination is perceived as a highly influential motivator in reward and recognition programs. Escape to somewhere relaxing, with no schedule or demands on my time 45% Share a memorable getaway with my spouse/guest 42% Be treated like a celebrity 31% Go somewhere unique and different not a typical travel destination 27% Go to the beach and/or somewhere with better weather 25% Go somewhere with beautiful nature and scenery 22% Attend a top sporting event 20% Go somewhere with my child(ren) and participate in family-oriented activities 18% Explore a historical city or site and learn/experience its history and significance 14% Explore a thriving city and experience its food, sites, entertainment, and shopping 13% Expend some energy, such as hike, bike, raft, deep-sea fish, etc. 10% Participate in activities available to a special group but not to general public 10% Participate in a unique learning experience Meet and/or catch up with other attendees Attend a private concert or show just for trip winners Get face time and interact with sponsoring-company hosts/leaders Participate in group activities contributing to the renewal or health of a destination s local community Other 7% 6% 4% 4% 2% 2% % ranked (top 3) FIGURE FIGURE 2: Prioritization 2: Prioritization of Trip of Focus Trip Focus Appeal Appeal Producers Producers were were asked what they they find find in in a a group group award award trip. trip. Most Most is to is escape to escape somewhere somewhere relaxing relaxing with with no no demands demands on on producers Producers time, time, followed followed closely closely by sharing by sharing a memorable a memorable getaway getaway with a with spouse/guest. a spouse/guest Maritz All rights reserved 3

5 Through an interactive exercise in the study, agents indicated the optimal travel experience they would work the hardest to earn is (based upon aggregated responses): Length # of Nights 5 nights Destination Island (Hawaii, Caribbean, etc.) Hotel/property type Individual activities (not pre-scheduled) Inclusion of a business meeting or session during the on-site travel experience Scheduled evening dinners/events 5 star, all inclusive Sponsor provides a pre-paid debit card to use on select individual activities No Some nights, but not all Time of year May-June Scheduled daytime activities Attendee[s] (in addition to winners and hosts) None Guest plus up to 2 children included, with option to pay to bring additional children Three-fourths (76%) indicated they would make some effort to earn that travel experience, with seven of 10 (70%) making a high effort (rating of 8-10 on a 10-point effort scale, where 10 is a total, all-out effort ). Additional design insights from the study are: A four-star inclusive property is more than a five-star (not inclusive) property. Limit scheduled daytime activities, as producers prefer more relaxing experiences and activities cost additional budget. Keep on-site business meetings to a maximum of two hours. Consider summer travel experiences (July or August) for the youngest agents. Optimizing Reward and Recognition Programs Overall, incentive programs remain successful motivators for agents in the financial services industry. However, motivational design can be more informed and better positioned to provide greater value, for both the company and the individual, if it is designed with elements that are truly motivating to a company s program participant base in meaningful and relevant ways. This study provided a snapshot into the commonalities of financial services agents preferences for reward and recognition. However, it is important to understand there are many differences from one organization and set of program participants to another. For companies looking to improve the performance of their recognition programs, the key is for them to adopt design and practice approaches based on the different wants, needs and perspectives of their program participants Maritz All rights reserved 4

6 Additional Segmented Study Findings Younger agents: Achieved increased sales goals when offered reward and recognition (93% of agents ages 29 and younger reported they are motivated by reward and recognition). Value achievement, self-direction and stimulation. Less motivated by family travel or business support, but instead value gift cards, travel certificates and non-family travel with one-on-one recognition and merchandise displaying a company s logo. Public recognition and unique experiences (such as backstage concert passes, passes to a television show, sporting event tickets, interaction with a popular entertainer, etc.) are much more (still not quite as high as the travel or cash options). Female agents: Achieved higher sales goals when offered reward and recognition (87% of women reported they are motivated by reward and recognition, compared to only 82% of men). Shift value priority around, placing security first (21%), followed by achievement (18%), then self-direction (16%). They value universalism (15%) more often than men. Older agents: Place highest importance on self-direction (specifically, those over the age of 45). Value tradition as the second most important personal value (ages 55 to 64). The appeal of cash and family group travel decreases as industry tenure increases, while appeal of non-family travel, travel certificates award earnings/points, charitable donations, and fees/travel for an industry conference increases as tenure in the industry increases. Independent agents: Consider choice-based rewards (such as gift cards and award earnings) to be more than other types. Business support, while fourth overall (26%), is notably more to independent agents (30%) than exclusive agents (16%). Canadian agents: Canadian agents prefer a certificate for individual travel over group travel (family or non-family), contrary to their U.S. counterparts, who as a whole prefer the group options. Canadian agents find gift cards most (68%), even more so than cash (61%). For more information, please visit Maritz Travel at or call (877) 4 MARITZ Maritz All rights reserved MTC