Incentive - April 2008 - (Page 50) THE INCENTIVE MERCHANDISE BUYER’S HANDBOOK CHAPTER 2 Plan the Strategy; Set the Budget CASE STUDY International Motivation When Cisco decided to launch an incentive program for its 900 call center employees in 46 countries around the world, their executives knew they would have to find merchandise that would truly inspire a diverse audience. The international technology corporation turned to Maritz for help, becoming one of the first companies to use the “Exclusively Yours” global platform soon after it was introduced in June 2006. The program has been so effective that Cisco is still using it. With Cisco’s point-based incentive program, call center employees used their points to shop in Maritz’s Exclusively Yours international online catalog, which features items targeted at the interests of 130 different countries. The selections are delivered to Cisco employees through Maritz’s alliance network. “We take a very decentralized approach to fulfillment,” explains Kurt Hosna, director of global rewards for St. Louis-based Maritz. “And because we ship locally or regionally, we are able to be in line with the local customs, styles, and trends.” The types of awards chosen by Cisco incentive winners varied according to the country. The top picks in the United Kingdom were the iPod, iPod Sound Dock, and the Nintendo game console, while in Japan participants used their points for sweets and monetary donations to a guard dog association. Household and apparel items redeemed big in India, while digital cameras and computers topped the list in Brazil, and the Sony GPS system was the number one choice in Germany. Cisco achieved higher than expected results, and feedback from participants indicates that the merchandise has been a real motivator. In a survey, an employee in India said, “I like that the rewards are region specific,” and someone in Hong Kong noted, “I can get stuff I want.” Top Dog Incentive survey respondents tell us what person at the sponsoring company spearheads merchandise programs. C-suite (CEO, COO, CMO, etc.) . . . . . . . . . .17.7% Sales VP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7% Sales manager . . . . . . . . . . . . . . . . . . . . . . .5.4% Marketing VP . . . . . . . . . . . . . . . . . . . . . . . .8.1% Marketing manager . . . . . . . . . . . . . . . . . .26.9% HR VP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.2% HR manager . . . . . . . . . . . . . . . . . . . . . . . . .8.1% Office manager . . . . . . . . . . . . . . . . . . . . . .2.2% Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22.6% Source: 2008 Incentive Merchandise IQ Survey safety achievement award if it has been awarded during the year to more than 10 percent of the employees. Consult with your organization’s tax specialist to ensure compliance with current tax codes since rules are subject to change. BREAKING DOWN THE BUDGET A well-planned incentive program will pay for itself from the profits or cost savings generated. Like rules structures, budgets also fall into the closed-ended and open-ended categories. Administrative costs tend to be higher in open-ended programs, because there’s no limit to the number of points or dollars that can be earned by the participants. Closed-ended programs lend themselves to more fixed budgets because of the cap on winners and awards. Regardless of being open or closed, it’s likely that exact numbers won’t be firmed up until the program concludes and the invoices are paid. Earmark funds from the beginning for integral program components: • Administration—5 to 15 percent of the total program cost. Spending will vary depending on how big the program is, hours required to administer it, analysis needed, specialized database, or incentive software. • Promotion—20 percent. Don’t skimp here. The incentive campaign must be publicized in order to be effective. • Awards—70 to 75 percent. For merchandise awards, factor in all purchasing costs, including shipping rates, sales taxes, and any customization services. Try to get a total price from the supplier. In a short program, the prize should be of higher value relative to the quick results you are seeking. The higher a participant’s income is and the more familiar she is with incentive programs, the more valuable the award should be. You may want to budget for smaller, less expensive items that can be used for promotion, kickoff, or special activity spurts, such as books, CDs/DVDs, games. • Training and Education—5 percent. In order to do their jobs better and achieve the objective, employees may require training or coaching, so a portion of the budgeted funds will need to go to setting up special classes, producing training materials, etc. I SPECIAL SECTION 50 | April 2008
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