Study: Government Regulations Lead to Incentive Program Changes

New IRF research reveals nearly 40 percent of firms have eliminated at least one program to comply with government or tax rules.

Thirty-nine percent of firms have cut at least one incentive program to comply with government regulations and tax requirements, according to the Incentive Research Foundation's 2019 U.S. Federal Regulations and Non-Cash Awards. The survey queried 398 decision-makers for non-cash rewards programs; four four business sectors -- automotive/manufacturing, pharmaceutical/health care, technology/telecommunications and financial services -- were represented. 

Among other effects that government rules and oversight had on programs, according to the findings, were the following:

  • 46% of firms reworked the underlying business purpose fo their programs.
  • 43% of firms changed the entire design of a program.
  • 41% of firms changed what rewards participants were eligible to win.

Participants also were surveyed about their overall knowledge of regulatory and tax requirements:

  • 77% of those polled were very confident in their ability to identify regulatory and tax requirements.
  • 62% were "aware" of regulatory and tax codes.
  • 38% were "extremely knowledgeable"  about the regulatory and tax requirements that businesses must comply with for their non-cash rewards programs, while 34% rated themselves "very knowledgeable."
  • Knowledge of regulatory and tax requirements was highest for program owners at financial services firms (46% rated themselves as "extremely knowledgeable") and lowest at automotive and manufacturing firms (just 29% reported as such).

The study also queried program owners on their compliance with regulations. Additional insights into how firms are implementing compliance procedures:

  • Firms reported high levels of confidence in ensuring compliance with regulatory and tax requirements pertaining to non-cash rewards programs, with 69% indicating they are "very confident" they have adequate compliance measures in place.
  • As firms become larger, more groups are involved in approving changes to non-cash reward programs prior to their implementation.
  • Senior executive and finance departments are more likely to be involved in the review and approval of changes to non-cash rewards and programs.
  • Compliance practices are more fully developed at technology/telecommunications and financial-services firms, while pharmaceutical/health care firms do not yet have fully developed and implemented compliance practices.
  • Financial-services firms were most likely (66%), followed by technology & telecommunications (61%), to have a fully developed and implemented policy to guide the design, approval and execution of non-cash rewards programs.