Do Incentives Work? Landmark Study Unveiled

Oct. 10, 2001
One of the most comprehensive studies of the $27 billion incentive industry reveals that in many cases, incentives do motivate employees.

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Do incentives work? That question has been argued back and forth among safety professionals for years.

A landmark study, released yesterday at the Motivation Show in Chicago might have the definitive answer. The results of the study, the most comprehensive one ever done on the effectiveness of the $27 billion incentive industry and its usefulness to employers in determining the relationship between incentives, motivation and performance in the workplace, was unveiled by the Society of Incentive & Travel Executives (SITE) Foundation. One of the key findings reveals that only eight percent of the workers surveyed would have achieved goals without an incentive program. Granted, the group has a vested interest in the effectiveness of incentives.

"The first research report of its kind in our industry cuts through the conflicts and controversies and shows that through research and practice, tangible incentives dramatically increase work performance by an average of 22 percent," claims Mike Hadlow, chairman of the research committee for the SITE Foundation. Hadlow is also president of USMotivation in Atlanta. "No CEO in the world can afford to ignore this compelling finding. Incentive programs are more powerful than we have even speculated."

Hadlow said the study contained a number of key findings that employers will find especially useful in these times of uncertainty. One of those findings is that team-based incentives are the most effective. Also, said Hadlow, "the role emotion plays in the workplace greatly influences commitment to a work task, and can be positively redirected."

Some interesting findings contained in the study include:

  • Incentive programs aimed at individual workers increase performance 27 percent.
  • Programs aimed at teams increase performance 45 percent.
  • Incentive programs have an equal, positive impact on both quality and quantity goals.
  • Incentive programs structured with employee input work best; however only 23 percent of incentive systems were selected with employee input.
  • Long-term incentives are more powerful than short term (44 percent gain vs. 20 percent gain).

The study indicates that interventions by employers can change negative attitudes that adversely affect the achievement of work and safety goals. When mood-enhancing interventions are combined with positive, energetic management and valued incentives, negative emotions decrease and performance increases.

The study also introduces a new, diagnostic and prescriptive model that can be used by employers in implementing an incentive system. The Performance Improvement by Incentives (PIBI) model provides guidance on the step-by-step procedures for implementation and allows decision-makers to trouble-shoot and correct incentive systems.

"The detail provided in this study will be a blueprint for all management charged with the responsibility of improving performance," says Patrick Delaney, president of the SITE Foundation. "It goes a long way in de-bunking some of the myths that have been promoted over the years."

The SITE Foundation was established in 1986 to fund global research into the use and application of incentive programs to achieve business objectives and improve performance.

The research team conducted the study using both primary and secondary research, including all current English language research literature on incentives published in peer-refereed journals. Researchers determined the trends in conflicting studies using "meta analysis," a new statistical procedure that allows researchers to summarize the results of different experiments conducted on a specific topic by different researchers. In addition, they surveyed a large sample of U.S. organizations using incentive systems. Out of 400 organizations contacted, 145 participated in the study for a 37 percent response rate.

The SITE Foundation also announced that it has developed a tool that enables corporations to measure the return on investment of an incentive marketing program and to leverage more value from current programs.

by Sandy Smith

About the Author

EHS Today Staff

EHS Today's editorial staff includes:

Dave Blanchard, Editor-in-Chief: During his career Dave has led the editorial management of many of Endeavor Business Media's best-known brands, including IndustryWeekEHS Today, Material Handling & LogisticsLogistics Today, Supply Chain Technology News, and Business Finance. In addition, he serves as senior content director of the annual Safety Leadership Conference. With over 30 years of B2B media experience, Dave literally wrote the book on supply chain management, Supply Chain Management Best Practices (John Wiley & Sons, 2021), which has been translated into several languages and is currently in its third edition. He is a frequent speaker and moderator at major trade shows and conferences, and has won numerous awards for writing and editing. He is a voting member of the jury of the Logistics Hall of Fame, and is a graduate of Northern Illinois University.

Adrienne Selko, Senior Editor: In addition to her roles with EHS Today and the Safety Leadership Conference, Adrienne is also a senior editor at IndustryWeek and has written about many topics, with her current focus on workforce development strategies. She is also a senior editor at Material Handling & Logistics. Previously she was in corporate communications at a medical manufacturing company as well as a large regional bank. She is the author of Do I Have to Wear Garlic Around My Neck?, which made the Cleveland Plain Dealer's best sellers list.

Nicole Stempak, Managing Editor:  Nicole Stempak is managing editor of EHS Today and conference content manager of the Safety Leadership Conference.

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