i2i - Incentive Intelligence

What "Brüno!" Can Teach Us About Incentive and Reward Program Measurement

2009-07-14T08:29:35-04:00

I had a nice chat yesterday with a friend that works at one of my old employers. He's been very good about letting me know when a typo slips through on one of my posts. I appreciate the fact that he reads the blog - and I really appreciate the fact that he knows that typos drive me crazy. We're all subject to them - even when we proof and proof and proof. So Kudos to you Don.

During our conversation we touched on the fact that programs need to be reviewed to ensure that they are achieving their intended goals. I said something about reviewing the program after the first quarter and he said he'd review the program at 30 days to make sure it didn't start out poorly - giving the program manager a chance to react quickly and improve/change the program. I thought for a minute and agreed.

I was caught up in "old school" business thinking. Again, none of us are immune to traditional SOPs (standard operating procedures) - those rules of thumb that are ingrained in us from early on. I'm glad someone called me on it.

But the real "aha" moment came this morning as I was reading some overnight tweets. One caught my eye - "Did twitter Bury 'Brüno!'" From the article:

"...but "Brüno" saw almost a 40% drop in ticket sales from Friday to Saturday, and an even steeper drop in viewership moving into Sunday, which is incredibly unusual on opening weekend."

The industry thought the movie would do $50 million plus and ended up only doing $30 million or so. A huge disappointment. The article doesn't directly blame twitter for the drop off but it does offer this bit of warning...

"...It seems a bit hasty to blame Twitter for the failings of "Brüno" at the box office — the "Brüno" Twitter stream currently has plenty of positive mentions for the film — but it does point to a shift in consumer response times. When people can immediately voice their opinions, there's going to be less room for branding and marketing to go unchallenged."

Twitter - and a variety of other connecting technologies have seriously shortened the time frame for information and feedback. And as more people have the technology in their pockets to connect, the cushion a company has for reviewing, measuring and correcting programs has shrunk significantly. While the "old school" would say review quarterly... the new school would have been in class, taken the final, applied for graduate school and graduated long before you got your first whiff of a problem with your program.

My new thinking based on my conversation:

Solicit feedback immediately upon launching the program with an on line survey to check if the message was delivered and if your audience understands the intent and goal of the program.
Solicit feedback weekly for the first 4 weeks to make sure there isn't a drop off in attention to the program and get feedback as the audience gets more accustomed to the program and how it works.
Monthly check in on the progress of the program. Is there anything new popping up that would limit the program's effectiveness? Are the messages still clear and understandable? Did anything change in the market or the organization that would necessitate a change in program structure, design, direction?

I don't think any of these time lines are etched in stone - but I do think that we need to reevaluate the time line for soliciting feedback.

Our feedback loop should be as short as the communication loop - and that my friend - is getting pretty damn short these days.

Allow Incentive Programs to "Free Form"

2009-07-13T13:11:04-04:00

Believe it or not I had not seen "August Rush" until this past weekend. I think the ending was a bit "dieu ex machina" but you don't come here for movie reviews. I played guitar in grade school and high school a bit - enough to justify buying one but not enough to justify continuing to play. In my day, playing the guitar, having long hair and wearing old army coats was what everyone did. And bowing to consensus (remember that as a behavior influencer?) I did the same. So I was a pretty enthralled with the guitar playing in the movie.

If you haven't seen the movie - watch the clip I've embedded. The clip is a compilation of some of the guitar playing by the "prodigy" in the movie. It runs about 5 minutes so you can either A.) play it through and come back to the post - or B.) play it and let it run as you continue to read.

The first 2:00 minutes of the clip is when the prodigy plays the guitar for the first time. Watch as he starts by pounding on the strings. See how he experiments with making sounds from the guitar. He's not following the rules. He's not playing like others. He's playing the guitar in a new way. My first thoughts when I saw this were - what if we were presented with a situation where we didn't know the rules? How would we solve the problem?

Open Up Your Program Rules
In most incentive and reward programs we spell out the behaviors and outcomes we want and then reward them. And if designed correctly - they will drive the behaviors and the results we expect.

But...

...what if we didn't know "the best practice?" What if we were approaching this for the first time? What would happen? I don't know and neither do you. That's the point.

If we don't allow for "free form" we don't know what's possible.

What have you included in your incentive and reward program that allows for people to "break the rules?" Is there a category or criteria that allows a participant to take a risk and try something new? Is there a way for the group to recognize a tangential thinker in the group? If not, you might just want to see what would happen when you give a group the option.

Your Biggest Employee Engagement Challenge is AFTER the Recovery

2009-07-10T14:04:17-04:00

We are all seeing the articles and survey data highlighting the rise in employee engagement levels. Some say it's due to employees hunkering down, working hard and making sure they keep their heads below the log so they don't get hit during the next round of layoffs. Some say that the layoffs have eliminated the "dead wood" and that remaining "engaged" employees are happy to be working with the cream of the crop now. Others are attributing it to an increase in attention to employees by companies worried about turnover and retention. I believe all of those reasons are true.

I also believe that most companies will be blind-sided once the economy turns around and the employment situation looks better. This article on USNews says similar.

Negative Reciprocity

I'm not just saying that just to be contrary. In a vast majority of cases it may be too late to impact the mass exodus of employees that will occur once the employment situation is better. The reason is something I call the "rubber band effect" but psychologists might use a more scientific term - "negative reciprocity."

Reciprocity is an almost universal human trait that guides our behavior. If someone does something for us, we feel a bit indebted to do something for them. That's a positive. However, when someone doesn't reciprocate, or treats us poorly, we tend to look for ways to balance the equation including "doing them wrong." That's negative reciprocity. I believe that many of the tough measures companies have taken may be creating a negative balance of reciprocity that isn't reflected in the engagement surveys.

I'm Giving More and Getting Less

First of all, the employment contract for many has been pretty stable for a while. I know that last 10 years or so has seen some erosion of that contract but in many companies it's still been pretty much - "if I do a good job I won't be penalized." Unfortunately, this last economic downturn has been more severe than most and the reactions from companies more pronounced. That, I believe, is causing a buildup of negative feelings that will be unleashed at some time.

Employees understand layoffs. Employees understand cutting back on travel expenses and office supplies. They may even understand the "no raises this year" memo from HR.

But what they may not understand is reducing 401K matches - or eliminating them altogether. They won't understand why they have to take a month "off" unpaid - especially salaried workers who's workload doesn't stop and who are probably continuing to keep up with their work even while not getting a paycheck. What they don't understand is that they are negatively impacted and they don't see the connection to the work they are personally doing. And they are being negatively impacted in areas that were prime decision points when they took the job in the first place.

In other words...

"I'm working my *ss off - picking up the slack from the layoffs - and I'm getting less money and less benefits."

Stretch and Snap

No matter what recognition award I get, no matter how many times the boss tells me I'm great, no matter how many emails I get from HR showing me the investment they are making in me - I am still spending more on medical, I have less in my retirement account, I can't afford college for my kids next year. The sacrifice is out of balance. I'm giving more - and getting less. The exact opposite of positive reciprocity.

"Hey - aren't I supposed to get something from this sacrifice? And don't tell me I get to keep my job!"

Unfortunately, employees can only stretch too far before the huge negatives outweigh the smaller positives. And a "culture of recognition" can't completely bridge the chasm that the cuts to employee basic needs has created. Once your employees get the chance they will look to reduce their risk and find a place that has a track record of stability. At some point the rubber band will snap. And that will be when you will need your best employees the most - when the economic rebound happens.

What Can You Do?

First - and foremost - have a strong recruiting effort in place. Prepare for the worst. Start now to identify your "must" keep and find new talent for the pipeline. The best thing you can do is know it will happen.
Second - do put in place initiatives to reward and recognize contributions. While it may be too late to impact all of your employees - some will see it as a way to offset the sacrifices they have already made.
Third - recognize and validate the sacrifices the employees have made. Make sure that the executive staff has made at least as much if not more - and don't give us the "gave up the executive washroom" crap. That will just add fuel to the fire. Make the sacrifices concrete and visible. You know your company and you know what falls into this category.
Fourth - Talk, talk, talk - and then talk some more. Don't think one-way memos, emails and company newsletters will communicate the real issues. Have as many conversations with staff as possible - at all levels. More open and honest communication shows the employees you are concerned and you do understand.
Fifth - Hold on. If I'm right, which I am (I thought I was wrong once but I was mistaken) - the amount of seat shifting that will occur when the economy improves will be "tsunamic." Some will win big by picking up great employees. Some will lose big - losing great employees.

But then again...

To stay with the Yogi Berra reference in the USNews article in the intro paragraph, he has been attributed with saying:

“Prediction is difficult, especially about the future.”

Your thoughts - will we see the rubber band snap or will it simply, slowly, quietly go back to it's previous shape?

Program Peripheral Vision - Why Channel Programs Need to Look For Outliers

2009-07-09T08:40:40-04:00

Many channel programs measure one or two things to determine who earns an award(s). Commonly they will be either sales or product - either revenue or margin - either specific products or bundles of products. The program is designed to sell, push, market, present - whatever the sponsor wants. The program is an inside out program with little if any regard for what the participant wants/needs. (I focus on channel here but it also holds true for other audiences.) But tracking and following those metrics could potentially drive your business in the wrong direction - setting you up for failure in the future.

"What?" you say - "how can driving sales in a product I need to sell be a cause for failure?"

Simple - if you measure one or two things you're missing 100's of other pieces of information. Most program analysis is designed to track the objectives of the program. If the program rewards sales of Widget A - then the reports will show sales of Widget A - by region, territory, customer, etc. When management reviews the program results each month/quarter/year they are looking to see if the program has achieved the objectives for Widget A. That's good. You should focus on program success.

But - if you only see data on Widget A you miss information on Widget B - which could be more valuable than the success of the program and sales of Widget A.

Innovators Dilemma

A very smart guy wrote a book called "The Innovator's Dilemma" - Clayton Christensen - back in 1997. The book primarily looked at the technology industry and made the case that upstart companies have a knack for unseating incumbents. His point was that the incumbents are focused on what they do now - the upstarts are focused on what will be done in future. The focus on now made the big guys blind to the future and vulnerable to the market change. By the time the incumbents saw the change it was too late.

So what does this have to do with channel incentive and reward programs?

This...

If all you measure is the sales of stuff you want now you're missing the information needed to be prepared for the future. But, by analyzing the data from your channel program over time you can be prepared for shifts in the market and be ready to capitalize on them.

When tracking your program results look for things that surprise you. Does your traditionally top-performing distributor selling less of Widget A, but a little more of Widget B? Is that normal? If not, put a pin in it and see if it continues to be "abbey normal." Watch the progression of that outlier. Next reporting period - did Widget B sell more at that distributor again? Was there a similar pattern with other distributors? Make a call - understand what is happening. It might only be a blip on the screen today - but it could be an invasion tomorrow.

By forcing yourself to look at the outliers you can start to see patterns you wouldn't normally perceive. Consider it your "peripheral" vision. Peripheral vision isn't very good at specific images - but it is good for seeing movement - changes in the scene - allowing you to move your main focus to that thing you saw "out of the corner of your eye."

Next time you get the results of your incentive program (heck - any report on performance) as yourself - what is on the periphery - what are the outliers?

You just might find the next objective for your incentive program.