Do you hear that sucking around? That's the sound of the power vacuum being created at corporations all over the country. Heading out to pasture are teh gray-haired executives who are trading in their company security key cards for golf scorecards and keys to their fishing boats. Left behind are their youthful proteges, who after years of mentoring are ready to assume command. Too bad they're on the radars of every corporate headhunting agency worth their salt.

Yes, the boomers are retiring. And the ripple effect is creating new and greater challenges for incentive planners, as keeping top talent is perhaps more crucial today than ever.

Why? Because more than a third (35 percent) of U.S. corporate managment will retire in the next three to five years, according to the National Association for Employee Recognition (NAER) in Naperville, IL. "Companies are all going to be searching, because they've lost their brain trust," says Christi Gibson, NAER's executive director. "That's a huge group. They are going to be losing their best, so they are going to want to keep the best who have been mentored by these corporate management teams." Here's how they should do it, experts say.



Trend 1:

Making the Case for a Cause



Overall, a positive company image is essential to drawing those who have their pick of places to work. Companies that put their support behind a good cause can offer an additional draw to top talents by giving them an opportunity to have a positive impact on the greater good or a cause close to their hearts.

An incentive planner can't alter the company's strategy; however, he or she can pull cause-related marketing into the mix. Recently, a company allowed its employees to redeem points they earned in the firm's ongoing incentive program points for donations to Hurricane Katrina victims rather than for a new golf club or iPod. "We were pleased to make that happen," says Mark Peterman, vice president of client solutions for Maritz Inc. in St. Louis. Maritz helped organize the large-scale donation. "The whole idea of cause marketing will be a trend," he predicts.

Trend 2:

Branding From

the Inside Out





Many successful firms are embracing the fact that they can transform their army of employees, through training sessions, into brand ambassadors.

Stories of employees being the last to know their company's repositioning strategy or new splashy advertising message are all too common, and come from a lack of requisite meetings and training. "Internal branding ensures that there's a tight alignment between the actions and activities of the staff who deal directly with customers and overall brand promise," says Doug Press, president of The Incentive Group in White Plains, NY.

Companies fall into two categories, Press says: "Promise makers and promise keepers. There is a race to remove the gap between the two. [By increasing employee] communication, education, and motivation, firms are increasing the level of the customer experience."



Trend 3:

Centralization of Incentive

Operations

Creating the right motivational mix is quickly becoming a science all its own. Increasingly, planners are being called upon to become top-notch trend spotters for must-have merchandise and hot travel destinations, as well as financial masterminds capable of proving return on investment at the drop of a briefcase. What's more, many are now required to weave the company's marketing message into everything they do as "internal branding" comes of age.

So how are they going to do all of this? They are going to get organized. One idea proliferating in many corporations is the centralization of all incentive operations. This offers two key benefits: increased purchasing power and consistent corporate messaging. Whether its used for buying plaques or plasma TVs, a centralized system offers economies of scale, says John Farrell, a senior director at Carlson Marketing, in Minneapolis. "Plus, it eliminates the 'lone ranger' business unit or manager who spends money in an untrackable manner and rewards untrackable behaviors."

Pulling all of the company's motivational resources together under one umbrella also allows a company to create consistency in corporate messaging, and this makes it easier to align programs with key objectives. Currently, "There are too many fragmented programs," says Farrell. The strategy that is gaining momentum in the industry is to "plan centrally and operate locally. The salesforce, dealers, consumers—everyone who is buying and selling must be doing so in sync. In the past, each was motivated via different messages and measured in different ways, which created a very disjointed outcome. If everything is working together, you can determine return on investment more effectively and precisely."



Trend 4:

Emergence of the Point

Person

Many companies are creating new executive-level positions to further centralize the process. Titles like "chief person officer," "vice president of people," or "head of employee engagement" are coming into vogue. This is necessary because the department in charge of incentives varies from company to company. At some, the responsibility falls upon the human resources department; at others, marketing or corporate communications takes charge. And in some companies, incentive-related duties are divided between planners in several departments, like finance and purchasing. "There isn't any central place where [overseeing performance] is located, so as a result nothing gets done," says Don E. Shulz, professor emeritus-in-service at Northwestern University's Kellogg School of Management in Evanston, IL.

Having a point person with power is paramount, as managers can be sensitive about others interfering with their staffs. The head of the call center, for example, "might say, 'I'm not sure I want you coming in here with all of these nifty programs, because that's supposedly my responsibility,' " says Shulz. Offering such a nucleus for messaging also allows firms to better brand their companies internally.

In line with this trend, the pool of qualified executives with the focus and educational background to take on such a specialized role will be expanding. An existing partnership between Northwestern's Medill School of Journalism and the Forum for People Performance Management and Measurement is bearing fruit with the development of the first graduate-level courses and degree program in the field. The Forum is seeking to spread the program to other universities.



Trend 5:

Motivating

the Middle



One seemingly counterintuitive measure that continues to gain popularity is not just to reward the best of the best, but also designing programs that motivate the middle.

While the top 10 percent of employees are the stars, programs need to recognize the average performers who comprise up to 80 percent of the salesforce. If a company finds ways to stimulate the middle, it can create significant gains for the company at large, says Maritz's Peterman.

Part of the reason:Typical "top performer" programs can prove to be discouraging to the majority of a staff. More than half (52 percent) of employees polled by Maritz said "that they have only somewhat or no chance of winning an award." Additionally, 53 percent agreed that "award opportunities at my company are reserved for only the top performers."



Trend 6:

The

Customized Reward



Of course, as the audience expands, so does the prize pool. Overall, there are some significant shifts that are dictating which travel and merchandise awards companies are using to motivate their employees.

One overarching trend is the need for customization. After all, nothing makes an incentive participant feel like just a number more than receiving a gas card if he doesn't own a car, or a crate of Omaha Steaks if she doesn't eat meat. This also is true when companies are trying to reward customers. From the popularity of companies like Build-a-Bear to a Nike program that allows customers to create their own athletic shoe for an additional fee, the trend is evident. "If I can customize something to make it more personal and more differentiated, then I'm a little ahead of the competition," says Robert Passikoff, president of New York City-based Brand Keys, a brand consultancy specializing in customer loyalty.

Companies like Maritz are working to make employee incentive programs easier to customize. Last year it debuted its "Travel Insight" product. This allows planners to poll their employee base about their preferred program attributes and trip activities as well as their demographic profile. The data are then used to create more specific, and potentially more effective, trips. "One size does not fit all as an incentive reward," notes Peterman.

Offering a choice of five smaller travel programs versus one large one is a common trend that is likely to continue. Maritz found that 76 percent of respondents say they prefer "smaller trips that offer a choice in dates, destinations, and activities." As a matter of fact, some of the top reasons employees fail to attend trips are date conflicts (65 percent) and unappealing destination options (16 percent). Breaking up a large incentive trip into several more intimate venues ensures that a greater percentage of the workforce will be motivated to take part in the program overall.



Trend 7:

Keeping Trips Short and Sweet



Both the length of the trip and the amount of planning that goes into it are becoming shorter. Incentive programs are increasingly seeing a "day shaved off because people feel like they can't be out of the circuit that long," says Jim Schultenover, Washington DC-based president of Krisam Group, an association of affiliated independent hotels. "The trend applies to destination travel as well as cruises."

Planners are probably pleased by this trend, considering that they are under more pressure than ever to turn these programs around quickly. Whereas in the past, programs were often planned well in advance, companies today have shortened the window because "they don't want to be liable or forced to look too far out. Contracts are stiff in both directions," says Schultenover. "There's pressure on time, prices, and value. If we thought time was in short supply before, now it's nonexistent."



Trend 8:

International Again

Travel incentives are growing in popularity, thanks in part to the resurgence of international travel. Since late 2001, many companies have played it safe by taking their groups only domestically or to the Caribbean. However, they are beginning to explore the exotic overtures of overseas travel.

"International travel is back," says Chris White, CEO of Global Events Partners (GEP) in Washington, D.C., a worldwide partnership of destination management companies (DMCs). "The economy in general is getting better globally, and people are more comfortable now going overseas than ever, post-9/11. It would have happened faster if the currency rates overseas were more palatable."

GEP surveyed the principals of its 60-plus DMC partners worldwide to get a feel for the new landscape. More than 90 percent expected to see more money spent by meeting planners on corporate events. "There is pent-up demand,' " says White. "They say, 'We haven't gone in a while, so let's go all the way.' " He notes that some foreign hotels are more negotiable on rates lately. "They'll wheel and deal overseas, unlike here where the demand is still so great," White adds.

Carlson Marketing also has noticed that its clients are now more open to considering foreign travel, according to Ed Kinne, director of industry relations for the incentive house. "There's more interest in Asia-Pan Pacific and Eastern Europe. The menu of possible options they're willing to think about and look at has opened up." Travelers have become accustomed to the lengthy bag checks and other security procedures that are now the norm, Kinne says, so this trend won't be hampered by such considerations.

Meanwhile, domestic travel continues to boom. Florida, Arizona, and Las Vegas "have been a constant," says Kinne, who adds that all eyes will also remain on New Orleans as it rebuilds.

Trend 9:

Merchandise Choices:

Protect,

Entertain, and Serve

Merchandise preferences are being driven by security concerns about terrorism and natural disasters. Items like generators, air purifiers, First Alert clock radios, security systems, flashlights, and other disaster-relief items have become part of the product mix, says Carol Ivcich, head merchandiser for Maritz. "There's a trend in personal safety. My generation thought fallout centers and canned goods were nutty. Now they're reality." Even the threat of West Nile virus has entered into award selections; this spring, screened-in gazebos are expected to be popular.

Not all of this year's popular merchandise is for the safety conscious. The Promotional Products Association International (PPAI) in Irving, TX, says the strongest areas continue to be apparel, followed by electronic items related to cell phones and computers.

Ivcich echoes that electronics continue to dominate employee wish lists. Since 2004, when electronics first surpassed home improvement for redemption popularity in Maritz's annual Loyalty Marketing's Almanac, the category has only increased its prominence in the industry. The frenzy will be fueled going forward by continued price reductions for LCD technology and increasingly frequent product upgrades that will quickly render obsolete this year's cutting-edge models. High-definition televisions, digital cameras, and "anything iPod"—all winners in 2005—are strong bets for the coming year.

Gourmet barbecue items are also in vogue. Designer rubs and seasonings, as well as cookbooks, are in demand, as are stainless-steel grills and high-end utensils. "Real men make quiche now," Ivcich says. "There's a hipness associated with all things metrosexual these days."

She notes outdoor furniture has become top drawer as well, as incentive winners are discarding their plastic patio furniture in favor of natural woods that "better integrate with the natural environment."



Trend 10:

Gift Cards Regroup



A study conducted by First Data Prepaid Services reports that after three years of steady advances in 2005 the percentage of American consumers who purchased or received a gift card slipped to 59 percent from a 2004 high of 64 percent. Those who did buy gift cards bought fewer than in the previous year, and the average value of cards dropped $15. Many in the industry anticipate this slide to continue throughout 2006 as companies grapple with their worry that the pervasiveness of gift cards renders them no more effective at motivating than cash rewards.

In response, gift-card companies are developing methods of customizing their products so that they will produce a more lasting impression. In contrast to the oft-cited selling point of cards—their flexible, universal use—one technique

has been to develop prepaid cards that can only be redeemed at merchants within a particular industry, such as electronics, home improvement, or apparel. American Express Incentive Services (AEIS) and Ecount are two card companies that offer cards with specialized redemption options.

Card design also shows room for innovation in the coming year. Increasingly, companies are asking that the gift cards they buy integrate corporate colors, motifs, messages, logos, and even complete images, and the technology to do so affordably is more widely available than ever. Incentive buyers also are looking for ways to build a more visible presentation around a card award, hoping that peer recognition will increase the impact of the gift on the recipient.

Larger economic trends also can impact the gift card industry. Should gas prices soar again, expect gas cards to be popular, following the spike in demand during the fall of 2005, when filling up the tank cost about as much as a steak dinner.


SIDEBAR

The New Hot Job: Chief Executive Officer (CXO)

According to Jason Friedman, CEO of Fairfield, NJ–based Creative Realities, an "experience economy" is starting to replace the "service economy" of the previous two decades. "In the experience economy, people want things that are tailored to how they want to feel and they want to experience things versus just receiving a service," says Friedman.

Consider the theme restaurant. From the Hard Rock Cafe to Planet Hollywood to the ESPN Zone, somewhere along the way, good food became secondary to the "dining experience." Product releases have become major see-and-be-seen events (think Victoria's Secret Fashion Show). Bookstores and electronics retailers can no longer simply sell products; they have to let people read and play with the merchandise. To that end, they serve coffee and set up Xbox and PlayStation 2 tournaments for customers' use.

To address this trend in experiential marketing, companies are hiring a new breed of executive, the "chief experience officer," or CXO. The title can vary from company to company. For instance, at Coca-Cola and Purina, the title is "director of experiential marketing."

These new executives will be tasked to design sales programs that give customers rewarding experiences from start to finish. On a small scale a program could include valet parking to make a customer feel pampered, or, in upscale groceries, in-store cooking demonstrations and taste tests. On a larger scale, programs can go so far as to hire rock bands to play at product release parties, rent limos or Humvees to transport guests to and from events, or offer customers the opportunity to meet celebrities or athletes. "People will pay for experiences. [At Disney] there's a reason why they sell those ears. It's not just the ears; it's all the memories that go along with the experience," says Friedman. This page is protected by Copyright laws. Do Not Copy