The Brave New World of Incentives in 2019
A strong economy with a high consumer confidence means a positive forecast for incentives
A couple of weeks ago, we finished up our last post in our “New Year, New Challenges” series, where we delved into some of the industries our clients deal in and talked about what we saw in the year ahead for them. Some of the major trends we found across multiple industries: the continued rise of the digital world and the proliferation of e-commerce, labor shortages as baby boomers retire and new complex jobs open up, and a high level of confidence despite year-end market volatility.
But there’s no place like home, and the incentive industry is the world we know best. So, today, let’s turn back to our home turf and take a look at what’s going on in incentives as we head into the brave new world of 2019.
Industry Optimism, Generally
That’s where the good news comes in: A strong economy with a high consumer confidence means a positive forecast for incentives. At Northstar Meetings Group’s annual industry roundtable back in November, that sentiment was reflected pretty much all around, with industry leaders noting that a strong economy focuses companies’ attention on growth investments, which is just what incentive companies like HMI provide.
November’s Incentive Travel Industry Index survey on incentive travel backs that up with numbers: more than half of surveyed buyers of incentive services reported increasing their budgets in 2018 from the previous year. They also stated that they plan to increase the number of people who are eligible for travel rewards. And 58 percent of the survey’s respondents reported a more positive perception of incentive travel compared to 10 years ago.
Incentive programs are everywhere, especially in the B2C world, from Amazon Prime to frequent flyer miles to Domino’s Pizza Rewards (as if you needed another reason to eat pizza. But more on that next week). Their increasing presence is catalyzed by the rise of the digital world, which is why nobody, including myself, can stop talking about digital. Similarly, as digital continues to overtake the B2B world, incentives follow suit. Overall, 84 percent of businesses now use some form of non-cash rewards.
Industry Concerns, Specifically
It’s also important to note that the lows of the economy affect incentives as much as the highs.
A study conducted by the Incentive Research Foundation (IRF) in January revealed that that brief period of stock market volatility near the end of the year jangled more than a few nerves, especially in the incentive travel sphere. The rest of the incentive industry — the side that offers rewards in the form of merchandise or gift cards — was more positive, with net optimism at an extremely solid 43 percent.
Yet, it seems these concerns over volatility are balanced out by other, more positive factors: for instance, the fact that 2018 closed out its fourth straight quarter of GDP growth. Short-term ups and downs might keep us all on our toes, but they don’t, by any means, predict the future.
The Rise of Workplace Culture, Generally
Besides the digital wave and the strong economy, there’s another reason why 2019 and the years beyond offer a positive outlook for incentives: the notion of a brand or company culture. There’s a burgeoning new era of workplace culture that sees a job not merely as a means to a paycheck. Rather, it’s a means to creating new and memorable life experiences, to forming connections with others, and to contributing something important to the world.
Industry leaders have noted the rising importance of “human capital” in the eyes of the C-suite: those intangible but valuable contributions of individuals, like creativity or knowledge, that ultimately help generate revenue for a business (like, I don’t know, writing really awesome blog posts). Incentives help out with this in a big way by motivating employees to work harder, not just because it’s their job, but because they know they’re valued by their company. (What I’m trying to say is, someone please give me a free trip to Cancun.)
The era of Glengarry Glen Ross is nearing its end. In the words of the IRF, “When organizations connect work to a larger purpose and mission, emphasizing intrinsic motivation over pay, they outperform their competitors.”
This is partly why, as we’ve said before, non-cash rewards are particularly successful as incentives: They create memories.
The Invasion of Millennials, Specifically
Stop rolling your eyes at me, Mom. My generation isn’t lazy, we’re just motivated by different things. You don’t understand us.
At the vanguard of the new culture-oriented workplace are millennials, most of whom are now somewhere between starting their first full-time jobs and working their way up the management ladder. Deloitte’s annual survey of the millennial workforce shows year after year that millennials prefer to work at and buy from companies with a brand culture whose values and ethics align with theirs.
They want and expect their good work to be recognized, but they also value interpersonal relationships and a team-oriented work environment. Whether as employees or customers, they want mutually beneficial partnerships out of the companies they associate with.
Finally, the world’s biggest generation is instilled with a greater sense of wanderlust than previous ones. In a 2016 survey by Hipmunk, 60 percent of millennial respondents said they planned to check of a “bucket list” destination that year versus only 35 percent for Generation X respondents. They’re also more likely to use their credit cards to earn hotel or flight points.
If you haven’t picked up on it by now, incentive programs are the perfect solutions for motivating millennials, both those on your payroll and in your customer base. A channel enablement program can foster the kinds of connections millennials want from their own channels. A travel or experiential rewards program motivates them with rewards that really matter to them. And bonus points if your program includes CSR or other features that help build a positive brand culture.
Even without factoring millennials into the equation, the world of the workplace is evolving, and we’re pretty sure incentives are going to have a big part to play in it. More and more, members of the C-suite are understanding the importance of a positive workplace culture, and we’ve got a feeling the New Year is going to show that.
To 2019 and beyond. For more information, visit www.hmiaward.com.
This article was originally posted by HMI Performance Incentives.