Incentive - December 2008 - (Page 6) HEADLINES Short-Circuit PAGE 8 Circuit City’s bankruptcy has planners sounding notes of caution, but also optimism Party Predicament PAGE 10 In this economy, is a holiday party inappropriate, or a morale-boosting necessity? Cash Concerns A door closing on cash bonuses may open a window for non-cash incentives BY ALEX PALMER new study reflects the major challenges faced by companies relying on cash incentives to motivate employees in this economy. And, according to experts, these challenges are driving many employers to look at non-cash rewards, including merchandise, to boost employee performance during these tough times. As stock prices fall and earnings decrease for many U.S. companies, employers are reevaluating their traditional bonuses and cash incentive plans, according to Deloitte Consulting LLP. In its study, “Retention Strategies During Difficult Economic Conditions,” released in mid-October, of the 151 companies surveyed, 59 percent expect their annual bonus and incentive plans to pay out below target, with 11 percent New Award to Honor Incentive ‘Master’pieces BY ALEX PALMER A expecting no payout at all. “In this market, many companies are carefully evaluating ways to motivate and retain their valued employees, as financial results and compensation values are plummeting,” says Michael Kesner, Deloitte Consulting LLP principal and leader of Deloitte’s Executive Compensation service line. Over half of these companies (53 percent) are planning to adjust their plans next year, by modifying performance targets or changing performance measures in | incentivemag.com response to the economic conditions. These adjustments reflect how sensitive cash-based incentive plans are to economic circumstances. While the survey does not explicitly examine which alternatives to cash incentives are on the radar, it does indicate that a number of “other retention strategies” are also being explored, such as implementing or expanding flexible work programs, as 59 percent of companies are considering. Other Deloitte experts agree that non-cash rewards are attracting corporate interest. “In general what I’ve been hearing from clients in the industry is that yes, as companies are cutting their merit continued on page 12 Incentive has announced a new award that will honor top incentive and recognition programs of wide-ranging sizes and types. Incentive is now accepting applications for the Motivation Masters award from planners, buyers and suppliers for sales and non-sales, health and wellness, employee loyalty and other program types. “We’re looking for the best programs in a lot of different categories,” says Incentive Editor In Chief Vince Alonzo. “Our goal is to put a spotlight on what’s motivating people, what’s working and how our readers can learn from these blue-chip examples.” Applicants will submit their entries online and winners will be chosen by a panel of industry judges. The finalists will be announced in October and winners will be flown to Incentive’s Las Vegas Marketplace event, also in October, where a Grand Prize will be awarded, among other honors. More details are available at incentivemag.com/ motivationmasters. 6| Incentive | December 2008 http://www.incentivemag.com/motivationmasters http://www.incentivemag.com/motivationmasters http://www.incentivemag.com/motivationmasters http://www.incentivemag.com
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