Incentive's 17th Annual Industry Roundtable: The State of the Industry

The growing corporate focus on engagement and retention will earn the incentive, recognition and reward industry a seat at the table.

Every year, Incentive brings together a group of industry thought leaders from all segments of the incentive, engagement, motivation and recognition business to talk about the state of the industry. This year, 11 participants gathered at the Lotte New York Palace on Madison Avenue and 50th Street in Manhattan to discuss topics that ranged from the C-suite's growing focus on retaining and engaging top people to the difficulty of retaining Millennials to the importance of ROI, as well as what's happening in the merchandise, gift card and travel award categories. What follows is an extended version of the transcript of that conversation.

To view video interviews of each Roundtable participant, head here.

The State of the Incentive Industry

BOB MILLER: I think the business is really well positioned. When you look at the economic conditions both in the U.S. and globally, you've got a pretty strong economic forecast. I think that sets the expectations for companies focused on growth, and our types of services tend to be growth investments. I think that in an environment where people are trying to grow, you inevitably have to invest your talent, so I think this idea of how do you attract, retain and engage quality individuals is at a higher strategic level within large organizations than it has been in the past. So, the combination of a strong economy and us having solutions that address real issues for large corporations puts the industry in this situation where it's well positioned.

MIKE RYAN: Being head of client strategy, my observation of the industry is really through the buyers' eyes, and I think there's good news and troubling news for the industry. The good news is that businesses' talent management concerns have never been greater. It's hard to find a great employee. It's hard to keep them. It's hard to appeal to different generations. It's difficult to manage remote workforces. So, executives are open to the conversation of, "how do you do that?"

The challenge for our industry is we're competing with a lot of other talent-management issues. We're competing with consultancies that go in and talk about engagement as a score, not as an activity. We're competing with learning development firms that go in and talk about how training and learning is really the genesis of engagement. I think it's imperative for our industry to begin to talk to executives on that level. We've talked about changing the conversation before, and I think our industry could be and should be talking in the context of business issues. Engagement is no longer simply just an HR concern. It has material benefits at the marketing level, at the operations level. It is a global issue, independent of whether or not you're a global company. It's a brand issue because of what companies can say both to customers and also to each other on social media. So, the organizations in our industry that are prepared to have that conversation are going to do very well.

incentive roundtable 1
Paul Gordon, Josh Lesnick, and Linda Nuss

RICHARD L. LOW: Where's the industry right now? We're stagnant. In my opinion, we need to change the conversation, change our focus and encourage more companies, show them what a good program looks like, show them what rewards and recognition can do, and how that helps them retain their employees.

ALLAN SCHWEYER: I think really this is a pivotal time for the industry and if reward and recognition professionals can step up now, they might fill a gap. As chief academic advisor for the Incentive Research Foundation, I both conduct research and produce research, but also work very closely with academics — the university professionals around the world who are more and more attracted to this area. I see a lot more journal-quality and published material written about incentive rewards and recognition. It's a really burgeoning field of study.

And a lot of the research we're doing, and a lot of the academic research, is really showing that to drive these citizenship behaviors and build these powerful cultures that most successful companies in the 21st century exhibit, non-cash rewards really line up to these motivators better than anything because they attack people's emotions. They really make memories and create that reciprocity effect where people want to work harder and stay with organizations, where their customers are more loyal and spend more.

Incentive solutions providers need to come to the table better prepared to have larger conversations about helping the leaders in companies look at recognition, at engagement, as part of the culture that they're trying to build to attract and retain talent.
Cindy Mielke

PAUL GORDON: We need to have a greater voice of what the incentive reward-recognition piece is. I find that it's almost stigmatized in terms of what we do. We drive innovation. We drive productivity. We drive imagination. We drive the family unit in terms of feeling good about what dad or mom does at work because they won this item. It is vitally important, whether you're a Millennial, whether you're a Boomer, whatever manufacturing segment you're in, to drive those types of behaviors. So, I think that's a task that we have, collectively.

CINDY MIELKE: I think that this is an exciting time for our industry. Incentive-solutions providers need to come to the table better prepared to have larger conversations about helping the leaders in companies look at recognition, at engagement, as part of the culture that they're trying to build to attract and retain talent.

JENNIFER SCAVINA: I feel like right now it's becoming real, it's becoming tangible. Now we're being called in to the C-suite, and they want us to talk to HR. They want us to talk to the sales head. They want us to be involved in a long-term communication, and it's music to my ears. Ten years ago, EGR International made a very proactive, very specific turn and said, "what are we going to be?" Because it seemed as though the incentive piece was just not enough. It's an incredibly powerful arrow in the quiver, but we need to be talking about the whole package. So, we said we're an engagement agency — have us be involved because you will actually get more bang for your buck. There'll be more return on investment. They weren't ready. To me, this is a great time for our industry, and I think they're elevating the conversation, but also recognizing that we know what we're talking about. We've been talking about return on investment and they're seeing it.

Even pointing out this big concept of retention. That is where we want to live. I'm having calls from HR, where HR never called us. I find it kind of encouraging, and they're saying, okay, how do we blend the different things that you're doing? So, it feels like an elevated conversation.

It's All About Retention

GORDON: I think human capital has always been taken for granted. I've had meetings where I'm sitting there with a senior person and I'm telling them what this program is and they say, "Well, they're lucky to have a job," and I'm thinking, no, you're lucky you have a job because these are the people that are driving your business and you need to recognize them. They're not just somebody that you're filling a slot with. Given the time and what it costs to actually on-board somebody, you don't want that turnover. You want to pick the right people and keep them.

SCHWEYER: What's hopeful is, if you look at the McKinsey Quarterly or Harvard Business Review and magazines of that sort, you'll see that almost the majority of the articles are about human capital management. It's changed in the last few years. Almost the majority now are talking about engagement, retention, compensation, and so on. So, it's getting there.

RYAN: The term "human capital" makes people leave the room. The term "intellectual capital" makes people like CFOs get to the edge of their chair, because that's something you can identify with. That's not just about the cost of replacing people, which it is, but it's the cost of having relationship with clients. It's the cost of having know-how, how to get things done in an organization. It's all the things that come with making a company work, and again, it's just a repositioning what we do in a manner that speaks to not our language, but in the language of people who write checks.

incentive roundtable 2
Jennifer Scavina and Cindy Mielke

SCHWEYER: I so disagree with what you said, Mike. Human capital gets you in the C-suite now. That's why [leading consulting firms like] Accenture, McKinsey, Deloitte, are all focusing on that now. They know that financial strategy is not going to differentiate you anymore. When you talk about how you can differentiate on talent, engage people, inspire employees and attract them, that is what's getting you at the table right now.

RYAN: I don't disagree with that, but it's not keeping them at the table.

SCHWEYER: I think it is. Just this year, you know, Ram Charan, the guru of gurus to CEOs, Dominic Barton, [managing partner emeritus] of McKinsey and Dennis Carey, [vice chair of senior executive recruiting firm Korn Ferry] wrote a book called Talent Wins: The New Playbook of Putting People First. It just came out saying this is what we need to focus on, and I think that's such an opportunity. Reward and recognition professionals can get into that space. I think that's going to carry them to a seat at the highest strategy tables out there.

Elevating the Conversation

SCAVINA: We want to elevate the conversation, but there's a lot of common sense and there's a lot of humanity that comes into it. I like what you said, Mike, about changing the conversation to intellectual capital because sometimes just that language shift makes people say, "let me look at this differently." I often say to my people and clients in conversations that you can make a tangible difference to people's lives. It's not rocket science. Take the finance and put it into something that means something. We have a client that came to us and said, "it's a channel, so they can sell 10 different products: ours and nine competitors." They're saying to us, "what do we do?" I said, "well, college tuition, private school tuition, Montessori school tuition — allow them to self-direct." It's great for the brand because when we write a check to a Montessori school, this organization's brand is on it. You're not going to want to walk away from that relationship.

We say, "never do away with the incentive trip because that's the bonding, that's your face time, and that's what everybody wants: face time with the leadership." It doesn't matter how old you are, if it touches your life, you remember that. I think it's almost common sense — that human factor — but it works, and you build a relationship they don't want to walk away from. They don't want to jump ship.

MILLER: One thing that's encouraging is that a lot of the support organizations are coming a long way, like the IRF and SITE, the Human Capital Institute, and all those. I think we need a tighter connection to academia and I think this ability to range up and down in the conversation as appropriate is what's important. If you are in the C-suite, you want to talk about human capital, it's important. I think far too often as an industry, we've tried to do that with the idea being that somehow that's going to [turn into] more margin, and we tried to sound strategic and I think that's a little bit dangerous. It has to be authentic. You can't say, "I'm here to speak to you today about human capital management the same way that McKinsey would, and that's why we think you should go to the Four Seasons Scottsdale." You can't quickly jump from strategy to tactics. I think as an industry we've tried to do too much of that in trying to get to the sale, because our revenues were on the back end. If you really going to be in a consulting role, you have to be careful. If you're going to tell IBM that, or Toyota or General Motors, you better be really good at it. I think it has to be authentic, you have to be able to scale the conversation based on the audience.

We say, never do away with the incentive trip because that's the bonding, that's your face time, and that's what everybody wants, face time with the leadership. It doesn't matter how old you are, if it touches your life, you remember that.
Jennifer Scavina

RYAN: Human capital management is obviously important to companies, but in terms of making a buyer understand why they need this, it's important for them to understand that it's not just a nice thing to do. It's a business necessity. And I think that's the migration that our industry needs to make. We need to be more proactive. We need to ramp up our level of credibility and we need to go beyond where our traditional buyers are and start thinking more about the ancillary areas of the business that are also dependent upon people. That's a scenario of coverage that I don't think our industry gives enough credence to. There are many senior-level people that have business issues that are related to people, that just don't understand the benefit that we can bring to their issues.

NUSS: I think it's an education factor. A lot of times it's still the old mindset of, "well, they're lucky to have a job," and I think that's also a cultural issue. If somebody is saying, this company's had a lot of turnover, that's going keep me from going to work for them. So, I think it's an education, everybody having to shift the mindset of it's an emotional experience and that it's no longer just nice to have, but a must.

SCHWEYER: That emotional connection is so important. It's not as cool to work for IBM as it used to be, but they have this corporate executive services program where if you are a really top performer, you get to go to a village in Africa or Central America, and you and give away IBM equipment and know-how and stay there for a month, just like the Peace Corps. It's by far their most subscribed program. People want to get in that program. People who leave it have said things like, I would never quit IBM after that experience.

Continue to part two of the Roundtable, "Navigating Uncertainty and Measuring ROI"