Survey Results: The Business of Incentive Programs

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Conrad Jennings
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1 Survey Results: The Business of Incentive Programs

2 TABLE OF CONTENTS Page 3 KEY FINDINGS RECOGNIZING EMPLOYEES A POSITIVE INFLUENCE ON BUSINESS CUSTOMER REWARDS OR INCENTIVES - A GREAT WAY TO RECOGNIZE LOYALTY AND INCREASE SALES BUSINESS DECISION MAKERS FOR REWARDS AND INCENTIVES 27 RESEARCH METHODOLOGY 2

3 3 KEY FINDINGS

4 KEY FINDINGS REWARDS FOR EMPLOYEES Employers recognize the importance of rewarding employees for various work occasions or life events. While virtually all agree that rewarding employees at the time of retirement is necessary, the importance of acknowledging other occasions varies by the size of the company. Employers at small firms are more likely to recognize employees for personal milestones such as birthdays, graduations or weddings; they are also more likely to give employees rewards for holidays. On the other hand, mid-to-large sized firms are predominantly focused on recognizing employees on work-related occasions such as work anniversaries or rewarding them for service. Across all company sizes, the monetary value of rewards/incentives is determined to be the most important contributing factor to improving employee morale and encouraging employees to do their best work. The majority of companies have budgets set aside for employee reward/incentive programs; however mid-sized firms are more likely to indicate an increase over last year s budget compared to other sized companies. Among the various reward options, gift cards lead as a great gift idea to give employees. Most small firms have budgets of less than $10,000 set aside for employee incentive programs, but larger firms set aside $15,000 or more. 4

5 KEY FINDINGS REWARDS FOR CUSTOMERS/CLIENTS Business decision makers strongly believe giving a gift card is a great way to keep their companies competitive and to increase sales faster. Most firms recognize their customers at the end of the year (over the holiday season) or for their loyalty. Mid-sized firms are most likely to recognize that initiating gift card programs for their customers/clients give them an advantage over the competition, and such programs lead to a faster increase in sales. The majority of companies have budgets set aside for reward/incentive programs for customers or clients; however, mid-sized firms are more likely to indicate an increase over last year s budget compared to small and large businesses. Most businesses with less than 100 employees have budgets of less than $10,000 set aside for customer/client rewards programs, but larger firms set aside $15,000 or more. 5

6 RECOGNIZING EMPLOYEES A POSITIVE INFLUENCE ON BUSINESS 6

7 BUSINESSES MOST OFTEN RECOGNIZE EMPLOYEES FOR WORK MILESTONES AND OFFICE RELATED EVENTS About two-thirds of employers overall initiate employee rewards for years of service (67%) and employee of the month, year, etc. (64%). MOST POPULAR OCCASIONS IN RECOGNIZING EMPLOYEES Work anniversaries (years of service awards) 67% Employee recognition award (monthly, quarterly, yearly, etc.) 64% End of year or New Year's holidays 60% Spontaneous awards recognizing individuals exhibit great teamwork or customer focus 59% 7 Q.S1 Which of these occasions does your company recognize employees? BASE: Total respondents Respondent choices were rotated

8 REWARDS AND INCENTIVES BOOST EMPLOYEES MORE AND ENCOURAGE THEIR BEST WORK Most companies (80%) report that giving employees rewards and incentives boost morale. POSITIVE IMPACTS COMPANY REWARDS/INCENTIVES HAVE ON BUSINESS Boosts morale Encourages employees to do their best work/ to exceed expectations 73% 80% Improves customer service 46% Keeps us competitive 39% Improves talent at our company 38% Drives revenue/sales 35% 8 Q.15. What positive impact does your company rewards or incentive program have on business? Respondent choices were rotated

9 LEADING OCCASIONS TO RECOGNIZE EMPLOYEES INCLUDE RETIREMENTS, WORK ANNIVERSARIES AND THE HOLIDAY SEASON Employers exceedingly agree that employees should be recognized for retirements (94%), work anniversaries (84%) and over the holiday season between November and January (84%). APPROPRIATE OCCASIONS TO RECOGNIZED EMPLOYEES (% AGREE) Retirements Work anniversaries Holiday Season - between November and January Employee Appreciation Day (First Friday in March) Birthdays Employee is expecting a baby/a new baby Veteran's Day (November 11) Employee is getting married Administrative Professional's Day (Last Wednesday in April) Boss's Day 45% 57% 54% 84% 72% 72% 68% 66% 84% 94% 9 Q.2a-j(1) Do you agree or disagree that your company should recognize employees on the following special work occasions or life events? Respondent choices were rotated

10 RECOGNITION OF EMPLOYEES FOR THEIR WORK PREVAILS AMONG MEDIUM TO LARGE FIRMS Mid-sized and large firms are significantly more likely than small firms to be recognizing employees both on a regular basis (e.g., Employee of the Month, Quarter, Year, etc.) and spontaneously for great work. COMPANIES SHOULD RECOGNIZE EMPLOYEES ON THE FIRST FRIDAY IN MARCH EMPLOYEE APPRECIATION DAY (% AGREE) OCCASIONS ON WHICH EMPLOYEES ARE CURRENTLY RECOGNIZED FOR THEIR WORK 64% Small (Less than 100 employees) Employee recognition award (e.g. Employee of the Month, Quarter, Year, etc.) 40% 71% 72% 74% 75% Mid-sized ( employees) Large (1,000 or more employees) Spontaneous awards recognizing individuals who exhibit great teamwork or customer focus 47% Small (Less than 100 employees) Mid-sized ( employees) Large (1,000 or more employees) 60% 65% 10 Q.2a-j(1) Do you agree or disagree that your company should recognize employees on the following special work occasions or life events? Respondent choices were rotated Q.S1 Which of these occasions does your company recognize employees? BASE: Total respondents

11 LARGE COMPANIES EXCEEDINGLY AGREE ON RECOGNIZING WORK ANNIVERSARIES; MONETARY AWARDS FOR THIS OCCASION ARE MORE ACCEPTABLE IN MID-SIZED FIRMS While firms of all size agree employees should receive rewards on work anniversaries, many more large organizations give work anniversary awards (77%) than their counterparts at mid-sized (69%) and small (50%) firms. Mid-sized firms are most likely to give a monetary gift for this occasion (54%). REWARDING EMPLOYEES FOR WORK ANNIVERSARIES SHOULD BE RECOGNIZED 71% 87% 91% CURRENTLY RECOGNIZE 50% 77% CURRENTLY GIVE MONETARY GIFT 36% Small (Less than 100 employees) 69% Mid-sized 54% ( employees) 45% Large (1,000 or more employees) 11 Q.2a-j(1) Do you agree or disagree that your company should recognize employees on the following special work occasions or life events? Q.S1 Which of these occasions does your company recognize employees? BASE: Total respondents Q.9 Which of the following are situations where your company gives employees a monetary reward, incentive or gift? Respondent choices were rotated

12 SMALL BUSINESSES ARE MOST LIKELY TO RECOGNIZE THEIR EMPLOYEES OVER THE HOLIDAY SEASON Nine-in-ten small business employers say firms should recognize employees over the holiday season, compared to eight-in-ten employers at mid-sized (84%) and large (80%) companies. COMPANIES SHOULD RECOGNIZE EMPLOYEES OVER THE HOLIDAY SEASON BETWEEN NOVEMBER AND JANUARY (% AGREE) 90% Small (Less than 100 employees) 84% 80% Mid-sized ( employees) Large (1,000 or more employees) 12 Q.2a-j(1) Do you agree or disagree that your company should recognize employees on the following special work occasions or life events? Respondent choices were rotated.

13 SMALL BUSINESSES ARE MORE LIKELY TO RECOGNIZE EMPLOYEES FOR PERSONAL MILESTONES Small businesses overwhelmingly agree the employees should be recognized for life events such as birthdays (78%), expecting a baby (74%) and getting married (66%). In practice, fewer small businesses actually do recognize employees for these milestones (52%), but they are more likely to do so than midsized or large firms. EMPLOYEES SHOULD BE RECOGNIZED FOR THESE LIFE EVENTS (% AGREE) CURRENTLY CELEBRATE MILESTONES LIKE GRADUATIONS, BIRTHS, WEDDINGS (% AGREE) Birthdays Employee is expecting a baby/a new baby Employee is getting married 78% 75% 62% 74% 69% 61% 66% 58% 49% Small (Less than 100 employees) Mid-sized ( employees) Large (1,000 or more employees) 52% 45% 44% Small (Less than 100 employees) Mid-sized ( employees) Large (1,000 or more employees) 13 Q.S1 Which of these occasions does your company recognize employees? BASE: Total respondents Q.2a-j(1) Do you agree or disagree that your company should recognize employees on the following special work occasions or life events? Respondent choices were rotated

14 MID-SIZED FIRMS MOST LIKELY TO INCREASE THEIR EMPLOYEE REWARDS BUDGETS OVER LAST YEAR Mid-sized firms are most likely to report having any rewards/incentive program budgets for their employees (83%), and more note an increase in budget over last year (42%). EMPLOYEE REWARDS/ INCENTIVE PROGRAMS Small (Less than 100 employees) Mid-sized ( employees) Large (1,000 or more employees) Any Budget (Net) 77% 83% 72% Less than $10,000 52% 24% 17% $10,000 but less than $15,000 11% 17% 9% $15,000 or more 14% 43% 45% No budget 13% 3% 8% Not sure 10% 14% 20% CURRENT EMPLOYEE REWARDS/ INCENTIVE PROGRAM BUDGET COMPARED TO LAST YEAR More than last year Same as last year Less than last year 25% 42% 28% 10% 9% 11% 65% 49% 61% Small (Less than 100 employees) Mid-sized ( employees) Large (1,000 or more employees) 14 Q.5 How much has your company budgeted, overall, towards employee rewards/incentive programs? Q.6 Is this budget more, less or the same as last year?

15 AMONG VARIOUS REWARD OPTIONS, GIFT CARDS LEAD AS GREAT GIFT IDEA TO GIVE EMPLOYEES Virtually all employers agree that giving a gift card encourages employees to do their best work. And, gift cards rank first among great gift ideas (82%) when considering various ways for employers to reward and recognize employees. BENEFIT TO GIVING EMPLOYEES A GIFT CARD (% AGREE) TOP FIVE GREAT GIFT IDEAS TO GIVE EMPLOYEES Giving a gift card is a great way to encourage employees to do their best work 98% 98% 1. Gift cards 82% 2. Entertainment (sports event, movie tickets, theater) 3. Electronics (MP3 players, ipods, mobile phones, tablets) 63% 53% Small (Less than 100 employees) Mid-sized ( employees) Large (1,000 or more employees) 94% 4. Experiential gifts (day at the spa, golf outing) 5. Health & fitness (wellness program membership) 53% 51% 15 Q.12. Do you agree or disagree with this statement Giving a gift card is a great way to encourage employees to do their best work? Q.3a. Which of the following types of items do you consider to be great gift ideas to give employees, considering the various opportunities to reward and recognize? Respondent choices were rotated

16 WORK ANNIVERSARIES AND HOLIDAYS ARE THE LEADING OCCASIONS FOR GIVING GIFT CARDS TO EMPLOYEES Employers consider various occasions to be appropriate for giving gift cards to employees work anniversaries and the holiday season are believed to be most appropriate (73% and 72%, respectively). OCCASIONS APPROPRIATE TO GIVE GIFT CARDS TO EMPLOYEES Work anniversaries Holiday Season - between November - January Retirements Birthdays Employee is expecting a baby/a new baby Employee Appreciation Day (First Friday in March) Employee is getting married 73% 72% 67% 64% 63% 60% 58% Administrative Professional's Day (Last Wednesday in April) 46% Veteran's Day (November 11) 27% 16 Q.4a On which of these occasions would a gift card be appropriate to give an employee? Respondent choices were rotated

17 MONETARY VALUE OF REWARDS/INCENTIVES IS THE LEADING FACTOR CONTRIBUTING TO IMPROVED EMPLOYEE MORALE Employers of all size firms ranked the monetary value of rewards/incentives as the most important factor contributing to improved employee morale, with the frequency of recognition ranking second. Large firms especially connect monetary value to improved employee morale (44%) when compared to small and midsized firms (38% and 31%, respectively). FACTORS IMPORTANT TO IMPROVED EMPLOYEE MORALE (% RANKED #1) Monetary value of the reward/incentive Frequency of recognition Employee wellness program Teambuilding activities Service awards Small (Less than 100 employees) Mid-sized ( employees) Large (1,000 or more employees) 38% 31% 44% 23% 26% 17% 18% 22% 17% 14% 11% 10% 6% 10% 12% 17 Q.1a-e(1) Below is a list of factors that may influence employee morale. Rank these five factors in the order of importance from 1 to 5, where "1" is the most important factor, and "5" is the least important factor to contribute to improved employee morale Respondent choices were rotated

18 REWARDS AND INCENTIVES FOR CUSTOMERS DRIVE LOYALTY AND SALES 18

19 HOLIDAYS AND CUSTOMER LOYALTY ARE MOST POPULAR REASONS FOR RECOGNIZING CUSTOMERS More than one-half of business decision makers recognize their customers/clients at the end of the year or for their loyalty (54% and 53%, respectively). LEADING OCCASIONS INITIATED FOR RECOGNIZING CUSTOMERS/CLIENTS End of year or holiday gift 54% Customer loyalty/incentive 53% Acknowledge a client or customer for contributing to a successful year 47% "Thank you" for partnering with us on a winning project 47% 19 Q.S2. Which of these occasions does your company recognize customers/clients BASE: Total respondents Respondent choices were rotated

20 AMONG VARIOUS REWARD OPTIONS, GIFT CARDS LEAD AS GREAT GIFT IDEA TO GIVE CUSTOMERS AND CLIENTS The majority of employers agree that giving a gift card to customers/clients is a great way to keep business competitive. And, gift cards rank first among great gift ideas (53%) when considering various ways for employers to reward and recognize customers/clients. BENEFITS OF GIVING A GIFT CARD (% AGREE) Giving a gift card is a great way to keep your business competitive Giving a gift card is a great way to increase sales faster 76% 89% 79% 72% 86% 74% TOP FIVE GREAT GIFT IDEAS TO GIVE CUSTOMERS/CLIENTS 1. Gift cards 53% 2. Entertainment (sports event, movie tickets, theater) 44% 3. Gourmet food 42% 4. Dealer incentive/store rebate 38% Small (Less than 100 employees) Mid-sized ( employees) Large (1,000 or more employees) 5. Experiential gifts (day at the spa, golf outing) 33% 20 Q.3b. Which of the following types of items do you consider to be great gift ideas to give customers or clients, considering the various opportunities to reward and recognize? Respondent choices were rotated 12. Do you agree or disagree with the following statements? Respondent choices were rotated

21 MORE MID-SIZED FIRMS HAVE CUSTOMER REWARDS OR INCENTIVE PROGRAM BUDGETS AT THEIR COMPANIES Most mid-sized firms (84%) indicate they have a customer/client rewards or incentive program budget 38% say their budget is $15,000 or more, and 37% say this is more than last years budget. CUSTOMER/CLIENT REWARDS/ INCENTIVE PROGRAMS Small (Less than 100 employees) Mid-sized ( employees) Large (1,000 or more employees) Any Budget (Net) 73% 84% 70% Less than $10,000 54% 27% 28% $10,000 but less than $15,000 10% 20% 10% $15,000 or more 10% 38% 32% No budget 16% 4% 18% Not sure 11% 12% 18% CURRENT CUSTOMER/CLIENT REWARDS/ INCENTIVE PROGRAM BUDGET COMPARED TO LAST YEAR More than last year Same as last year Less than last year 22% 37% 23% 12% 12% 13% 66% 52% 65% Small (Less than 100 employees) Mid-sized ( employees) Large (1,000 or more employees) 21 Q.7. Q.8. How much do you budget, overall, towards customer/client rewards/incentive programs? Is this budget more, less or the same as last year?

22 22 BUSINESS DECISION MAKERS FOR REWARDS AND INCENTIVES

23 DEPARTMENTS RESPONSIBLE FOR PURCHASING REWARDS AND INCENTIVES FOR EMPLOYEES Total Small Midsized Large FOR CUSTOMERS/ CLIENTS Total Small Midsized Large Human resources 54% 35% 60% 62% Executive management 40% 46% 40% 35% Operations 29% 22% 30% 32% Finance 27% 22% 30% 29% Group management 26% 17% 32% 26% Marketing 19% 13% 23% 18% Other 2% 2% 0% 4% Executive management 37% 42% 36% 35% Human resources 30% 26% 33% 29% Marketing 26% 16% 27% 31% Finance 21% 14% 21% 24% Operations 18% 18% 18% 18% Group management 14% 9% 18% 14% Other 3% 3% 0% 5% Small : Less than 100 employees Mid-sized : 100 to 999 employees Large : 1,000 or more employees 23 Q.17. Which departments are responsible for purchasing employee and customer/client rewards/incentives? Respondent choices were rotated

24 JOB LEVEL OF PERSON PRIMARILY RESPONSIBLE FOR PURCHASING REWARDS AND INCENTIVES FOR EMPLOYEES Total Small Midsized Large FOR CUSTOMERS/CLIENTS Total Small Midsized Large Management or supervising staff 44% 41% 42% 48% Management or supervising staff 42% 40% 43% 43% Secretary or support staff 29% 21% 30% 34% Executive 31% 33% 33% 27% Executive 25% 34% 28% 16% Secretary or support staff 24% 21% 23% 26% Other 2% 4% 0% 2% Other 3% 6% 0% 4% Small : Less than 100 employees Mid-sized : 100 to 999 employees Large : 1,000 or more employees 24 Q.18. Which job level is primarily responsible for purchasing rewards or incentives for employees and customers/clients? Respondent choices were rotated

25 COMPANY PROFILE Company Revenue Total Small Midsized Large Under $1 Million 16% 42% 8% 6% $1 to $9.9 Million 20% 36% 21% 6% $10 to $24.9 Million 15% 14% 19% 11% $25 to $74.9 Million 12% 3% 19% 9% $75 to $199.9 Million 12% 2% 17% 14% $200 to $999.9 Million 14% 2% 14% 24% Average # Of Employees Managed $1 Billion + 11% 1% 2% 29% Small : Less than 100 employees Mid-sized : 100 to 999 employees Large : 1,000 or more employees Primary Industry Total Small Midsized Large Business/Personal Services 25% 31% 26% 21% Manufacturing 15% 14% 19% 13% Government/public sector 11% 6% 6% 21% Finance, Insurance, or Real Estate Transportation, Communication, Utilities 11% 9% 13% 11% Retail Trade 8% 7% 9% 9% Healthcare 8% 5% 9% 10% 6% 4% 6% 7% Non-Profit 5% 8% 5% 4% Construction 5% 9% 5% 1% Wholesale Trade 2% 2% 1% 2% Agriculture, Forestry, Mining 1% 1% 1% 1% Other 2% 4% 1% 2% 25 Q.D1. Which of the following represents your primary industry? Q.D2. What is the approximate revenue of the company you work for? Q.D3. How many employees do you manage?

26 RESPONDENT ROLE AT COMPANY FOR EMPLOYEE DECISIONS Total Small Mid-sized Large Primary decision maker 55% 57% 60% 46% One of several key decision makers Influence on the final decision 28% 30% 28% 27% 17% 13% 12% 26% Small : Less than 100 employees Mid-sized : 100 to 999 employees Large : 1,000 or more employees 26 Q.A Which of the following best defines your role at your company in regard to employee decisions?

27 RESPONDENT JOB LEVEL AND FUNCTION AT COMPANY Total Small Midsized Large Total Small Midsized Large Job Level At Company Manager 38% 30% 35% 48% EVP 2% 2% 1% 2% SVP 4% 2% 5% 4% VP 4% 2% 7% 2% Director 23% 15% 29% 22% C-level 17% 35% 14% 8% Other 12% 13% 9% 14% Job Function at Company Operations 35% 29% 35% 39% Executive management 25% 38% 22% 19% Group management 13% 3% 18% 15% Human resources 9% 6% 12% 9% Procurement 2% 3% 0% 3% Marketing 3% 7% 3% 1% Finance 6% 5% 6% 5% Other 7% 8% 3% 9% Small : Less than 100 employees Mid-sized : 100 to 999 employees Large : 1,000 or more employees 27 Q.A Which of the following best defines your role at your company in regard to employee decisions? Q.S4. Which of the following MOST closely describes your primary job level & job function?

28 COMPANY HEADQUARTERS Total Small Mid-sized Large Northeast 23% 24% 25% 19% North Central 22% 23% 20% 24% South 35% 34% 35% 36% West 20% 18% 20% 20% Small : Less than 100 employees Mid-sized : 100 to 999 employees Large : 1,000 or more employees 28 S5. Please indicate the HQ state of your US-based organization.

29 29 RESEARCH METHODOLOGY

30 THE AMERICAN EXPRESS GIFT CARD PROGRAM METHODOLOGY The American Express Gift Card Programs for Business research was fielded by Ebiquity (formerly Echo Research). The findings are based on a random sample of 500 U.S. business decision makers with responsibilities for executive/group management, human resources, marketing, finance, or operations. Interviews were completed online between October 15 and 17, The results reported have an overall margin of error of +/- 4.38% at the 95 percent level of confidence. Ebiquity managed quotas by company size based on the number of employees as follows: Small Firm: Less than 100 employees Mid-sized Firm: 100 to 999 employees Large Firm: 1,000 or more employees ABOUT EBIQUITY Ebiquity are independent marketing performance specialists. Ebiquity enables brands across the world to make better informed decisions to improve their brand and business performance across integrated communications channels. Learn more at ebiquity.com 30

Judy Bromley Director, Market Intelligence judy.bromley@ebiquity.

31 Judy Bromley Director, Market Intelligence Tel 1 (646) EBIQUITY 110 William Street Suite 2401 New York, NY USA 31

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