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How Do You Impact Behavior?

How Do You Impact Behavior?. Impacting Behavior. A Five Step Formula 1. Hire Competent People 2. Tell Them What to Do 3. Tell Them How to Do It 4. Get Them to Want to Do It 5. Reinforce Them When They’ve Done It. Impacting Behavior. Tools Available Compensation Communications

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How Do You Impact Behavior?

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  1. How Do You Impact Behavior?

  2. Impacting Behavior A Five Step Formula 1. Hire Competent People 2. Tell Them What to Do 3. Tell Them How to Do It 4. Get Them to Want to Do It 5. Reinforce Them When They’ve Done It

  3. Impacting Behavior Tools Available • Compensation • Communications • Incentives • Recognition

  4. Impacting Behavior Step 1: Hire Competent People Tool: Compensation • Principal method to recruit • Aligns company and individual’s long-term objectives • The individual’s measurement for long-term progress

  5. Impacting Behavior Step 2: Tell Them What to Do! First Tool:Communication • Clarifies tasks • Provides methodology (training) • Can build team spirit • Usually a short-term focus (frequency)

  6. Impacting Behavior Step 2: Tell Them What to Do!(Cont.) Second Tool:Incentives • Anything used to change behavior • Carrot = positive reinforcement • Stick = negative reinforcement (short term effect) • Will accomplish specific, short-term (usually 1 year or under) objectives • Can add fun & variety to the work-place

  7. Impacting Behavior Step 3: Tell Them How to Do It! Tools: • Communication (Includes Training) • Incentives

  8. Impacting Behavior Step 4: Get Them to Want to Do It! Tools: • Incentives • Communication • Compensation

  9. Impacting Behavior Step 5: Reinforce Them When They’ve Done It! Tools: • Communication • IncentivesAnd . . .

  10. Impacting Behavior Recognition • Establishes Levels of Long-term Performance • Gains a Performance Commitment • Provides Peer Acceptance & Respect • Satisfies Individual’s Status Needs

  11. Tool Compensation CommunicationIncentive Recognition Duration Long-Term Short-Term Short-Term Long-Term however..... Impacting Behavior Best Use of Tools

  12. Impacting Behavior Most of the Time You Want Behavior Changed NOW!

  13. Impacting Behavior Your Best Tool for “NOW” is: INCENTIVES (Behavior Change through Positive Reinforcement)

  14. Incentives:(Performance Improvement Programs) • A Marketing Promotion Strategy for Increasing Sales and/or Profits by Influencing Participant Behavior • “You Give Me Extra Effort ... I’ll Give You Extra Reward!”

  15. Incentives are reinforcers. When a behavior is followed by a positive reinforcer….the behavior increases in frequency, strength or duration.

  16. The Majority of Companies use Non-Cash Incentives...All of the Fortune 1000, Because: • They Work! • You Only Pay on Performance! • Adds Fun & Variety to the Work Place! • Structured Properly, they will Provide a Sound, Measurable ROI!

  17. Traditional Incentive Uses: • Increase Sales • Improve Product Mix • Increase Market Share • Improve Customer Service • Improve Quality and/or Productivity • Safety Awareness

  18. Additional Incentive Uses : • New Product Launches • Cost Containment / Suggestions • Improve Seasonality • New Account Attainment • Revive Dormant Accounts • Training / Recruiting

  19. Incentives The Target Audience for Incentives should be the Mid-Range Performers. This is the biggest audience and can have the most impact on overall objectives Usually a company has: • 7-10% Top Performers • 80-90% Mid-Range Performers • 8-11-% Poor Performers (short-term)

  20. Incentives Performance with Incentive (Move the Bar) # of participants Performance over time • Performance will increase at most levels • Variable to market conditions (5-30%+)

  21. Incentive Fact If the Activity can be Measured . . . The Activity can be Improved!

  22. Incentives Seven Steps to Incentive Program Success

  23. Incentive Success 1. Establish Measurable, Achievable Objectives 2. Assign an Appropriate Budget (ROI)3. Develop a Sound Program Structure including all who can Impact the Goals 4. Develop a Good Measurement System 5. Offer Motivational Awards6. Provide Frequent Promotion and Communications 7. Measure Results Against Objectives And Always . . . KISS (Keep it Simple)

  24. Incentive Success Offer MotivationalAwards

  25. Incentive Awards • Award selection is crucial to the success of the program. After all, if you don’t have awards that motivate, the program will fail. • Considerations: • Demo & psycho-graphics of your group • Income levels • What will it take to “Turn Them On” • Their experience level in incentive programs • Budget needed for behavior change

  26. Incentive Awards Four Major Award Options: • Group Travel • Cash • Cash Substitutes (Gift Cards) • Merchandise & Individual Travel

  27. Incentive Awards Group Travel

  28. Incentive Awards / Group Travel • Highly Desirable & Promotable • Can Create a Team - Family - Loyal Atmosphere • Great PR - Top Performers & Upper Management “Rubbing Elbows”

  29. Incentive Awards / Group Travel • Once Attained, Top Performers don’t want to miss “Next Year” • Expensive (Few winners, many losers. Can be a “turn-off to 90% of your audience) • The best use of group travel is to have a select number of top travel awards combined with other awards that are achievable by your entire audience

  30. Incentive Awards Cash

  31. Cash When asked, most people say they would prefer cash over non-cash awards (merchandise & travel). Yet, there is hard evidence that motivating with cash is not as effective as motivating with non-cash awards.

  32. Cash Cash as a Motivator • We all like cash, we want cash. • We all want more cash. • Cash is very desirable. There is little, if any, complaints when cash is given as an award. Cash is what people think they want (for awards) so you are satisfying a perception. • Cash is easy to understand & administer

  33. Cash Cash Can be A Strong Motivator If: • It is a significant amount • It is given separately (not part of a paycheck or normal compensation) • It is given out in front of a group But cash can have it’s drawbacks..........

  34. Cash Personal Comfort Levels • Once reached, cash diminishes as a motivator • Can have a negative impact (comfort levels reached sooner!)

  35. Cash No Memory Value • Unless a significant amount (often 10-15% of salary), cash incentives are often not even noticed (especially if part of a normal pay check). • Cash incentives are usually used to pay bills, fill the gas tank, etc. Participants can’t remember what they did with the cash. • Once cash is spent, it is gone, as is the memory of the reward and how they got it!

  36. Cash Limited Ego Satisfaction/Trophy Value • While cash incentives can sometimes have ego satisfaction, it has little, if any, trophy value • Cash is usually used to pay bills (no permanent symbols of success).

  37. Cash Confused with Compensation • Cash is lost in the mainstream of daily bill paying. It’s identity is lost. • Cash can be viewed as an entitlement and can be very difficult to take away (if used for any length of time.)

  38. Cash Guilt • As stated, most often cash is used to pay bills because if not, the participant is likely to feel guilty. • Non-cash awards relieves this “guilt syndrome”

  39. Cash Limited Promotability • Cash is just “more of the same” • It is very difficult to promote or glamorize cash unless it is a substantial amount.

  40. Cash No Family Involvement • Cash rarely makes it home as it is generally used to pay bills. • It is quickly spent on routine things and then forgotten • There is no family involvement in award selection or goal setting. (Family involvement is a powerful motivator)

  41. Cash No Goal Setting • Cash has little, if any, goal setting power because... • Any Amount is OK.

  42. Cash Results • Cash is just “more of the same”. It is an ever-present media of compensation. • Where cash is not already providing sufficient motivation, merely increasing the amount is not enough to provide additional stimulation.

  43. Cash • If cash is such a great motivator, why aren’t they selling more? • Cash vs Non-Cash Case Studies Follow………..

  44. Cash - Gulf Oil Case Study PROGRAM PERFORMANCE Sales No Incentive Sales Traditional Non-Cash Program Region 1 (Control Group No-Incentive) Region 2 (Traditional Non-Cash [merchandise] Program) Region 3 (Non-Cash [merchandise] Awards-Double Value Region 2) Region 4 (Cash Awards-Equivalent to Region 2) Region 5 (Cash Awards-Less than in Region 2) Region 6a (Cash Awards-Twice value of Region 2) Region 6b (Cash Awards-Four Times value of Region 2) Region 6b (Cash Awards-Six Times value of Region 2)

  45. Cash - Gulf Oil Case Study Gulf Oil-Three Principal Findings • Any incentives are likely to produce some results • Doubling the value of merchandise awards does not automatically double incremental performance • Cash does work...but it can take up to six times as much to do the job of non-cash incentives

  46. Cash - Federated Insurance • Although non-seasonal products, sales dropped drastically every May. May had never reached 5% of their annual volume. A non-cash incentive program was run for the month of May. It was concepted well, promoted effectively and produced 16.4% of that years volume! Sales people responded to $200,000 in merchandise awards while earning $1,000,000 in additional commissionthat was there all the time!

  47. Cash - Goodyear Case Study • 900 dealers participated in the program • Those dealers who received cash bonuses boosted their sales a successful 22% over the previous six months • Those dealers who received non-cash awards boosted their sales 32% - (46% greater than cash!) • For every dollar invested in the program, Goodyear got back 80 cents from the cash group and $1.31 from the non-cash group

  48. 15 21 1 16 1 10 Cash Districts Non-Cash Dist. Cash - Mazda Case StudyThree month test on truck sales (two test groups) - 32 districts offered cash and 32 districts offered non-cash Over Objective Even with Objective Under Objective • Non-cash districts @ 115.7% of goal (cash districts @ 102.1%) • 21 of 32 non-cash districts exceeded goal (cash districts 15 of 32) • All sizes of dealerships in non-cash groups outperformed cash groups

  49. Cash The American Compensation Association surveyed 1,600 companies for a White House conference on productivity. Some of their findings were: • Non-cash awards offered a 3:1 return on investment when compared to cash • Each dollar of increased performance costs about 4 cents in non-cash awards and 12 cents in cash awards • Successful non-cash programs cost 3 to 5% of an employees annual compensation while successful cash programs must equal 5 to 15% to be effective

  50. Incentive Awards Cash Substitutes

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