Written by: Neil Helgeson, Director, Insights Lab; Barry Danielson, VP, Decision Sciences
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For decades, companies have used incentive programs for the purposes of maximizing performance. These incentive programs leverage many types of awards. While cash compensation is used as an award, non-cash, inspirational rewards - such as merchandise or experiences - have many advantages.
Recipients are more likely to remember the trip or big screen tv they received than cash, which can get folded into the daily budget and used for buying gas or groceries.
Recipients re-live the positive emotions associated with earning the award each time they use it or talk about it.
Monetary awards often become viewed as part of regular compensation and lead the recipient to expect the same or more cash in the future, an expectation that may not be sustainable.
Despite these advantages, questions persist about whether non-monetary awards are more effective in motivating behavior. Prior research has indicated this is the case, and current research conducted by BI WORLDWIDE examines this in the context of a sales incentive contest.
Salespeople from a leading hard goods manufacturer participated in a BI WORLDWIDE GoalQuest® incentive program. The GoalQuest approach asks each salesperson to select one of three increasingly challenging sales goals with incremental awards. This patented award structure leverages ‘risk-reward’ dynamics to drive salesperson performance—the greater the risk, the bigger the reward.
In this client’s situation, tangible awards are the primary reward (participants receive points that can be redeemed for merchandise or experiences). However, participants in California were offered cash rewards, which were slightly higher at each goal level than the monetary equivalent of the inspirational points award.
A total of 1311 salespeople participated in the program, 116 from California and 1195 from the rest of the United States. To compare California results to the rest of the U.S. a robust statistical approach was used (Propensity Score Matching) to select a matching control group of 116 salespeople from the 1195 participants outside of California. This approach reduced potential bias between the test and control groups by matching on several factors including:
The GoalQuest program operated for five-weeks starting on 8/28/22 through 10/1/22. At the end of the program their performance was determined relative to their chosen goal.
Two specific measures were used to evaluate success: the percentage of a group achieving their goal and average performance relative to the goal. The inspiration (points) control group performed better than the cash compensation group on both measures.
|% Achieved Goal||Avg. Goal Performance|
|Inspiration (Points) Control Group||32%||94%|
In this incentive program, inspirational awards proved to be more effective than cash in motivating salesperson behavior—even when the cash rewards were slightly larger. This finding supports the view that increased motivational effectiveness should be added to the list of experiences and merchandise award advantages.