All present and correct

As Christmas approaches, our thoughts turn to bonuses – but staff incentive schemes should be ongoing rather than restricted to being a seasonal affair. And any reward should be well considered, says Richard West

The time of year is approaching when meetings have a little extra buzz. You can sense a frisson in the air. From November our attentions start turning to matters of a more seasonal nature – goodwill to all people and the size of the Christmas bonus.

Christmas is traditionally a time of largesse and, however disappointing the previous months may have been, a decent bonus, gift or reward at this time of year can go a long way towards creating a more rose-tinted view of the company.

The recent research that found companies are more likely to reward staff at Christmas than they are at any other time of the year is probably one of the less controversial findings of modern times. However, in fairness, these days corporate incentive schemes are big business and operate throughout the year.

It is estimated that last year companies spent over &£680m on staff rewards and incentives – a figure that is growing year on year. So does this mean the traditional Christmas bonus, incentive or promotion has lost some of its former magic?

People who rail against the commercialisation of Christmas would probably like to think so. Yet only a cynic or killjoy would suggest that companies have hijacked the occasion in order to make employees work harder, or that gifts from suppliers might be called “bribes” at any other time of year. On the other hand, there is no denying some Christmas incentive and promotional ideas are beginning to look tired and, frankly, others can be way over the top.

Money no object

Christmas is a time of giving and receiving, and there is a clear distinction between the business-to-business gift market and the business incentive and reward market. But why go to the trouble and expense of organising an incentive scheme? After all, for many people extra money at this time of year is always useful and therefore a perfectly adequate incentive. While this is true up to a point, psychologists have argued that when it comes to rewarding people, money is a short-term motivator: it comes and goes, usually on bills.

If you want to make an impact, a carefully planned bonus or incentive scheme can do wonders when it comes to creating a warm glow in the hearts and minds of customers and staff. That’s because people remember the “trophy” value of rewards far more than extra money in their pay packets.

Popular wisdom assumes that the bigger and better the reward, the more likely it is to be remembered, and thus change behaviour. But that idea doesn’t necessarily hold water when you consider that gift vouchers and Christmas hampers remain two of the most popular reward and incentive items.

No hamper to progress

Thanks to some clever marketing, each product has undergone something of a renaissance in recent years. The voucher market in the UK, for example, is worth about &£1.2bn a year and is growing by an estimated ten per cent annually.

“The beauty of gift vouchers or Capital Bonds is that they are universally appealing and can be exchanged for almost anything,” explains Capital Incentives & Motivation managing director Graham Povey. “The fundamental principle is that choice motivates, and gift vouchers offer almost unlimited choice,” he adds.

The latest estimate is that there are now almost 200 different gift vouchers covering all parts of the retail, leisure and travel sectors. Whether you want to fly a MiG fighter, have a romantic dinner for two, or splash out on designer labels, it is almost certain that somebody, somewhere, will be offering vouchers that allow you to do it.

Paradoxically, the Voucher Association found that Christmas tends not to generate a surge in the voucher market – an observation supported by Tracy Aslem, head of incentive business at Kingfisher Gift Vouchers.

She says: “My view is that Christmas is no different to the rest of the year, though of course it is a time for giving. Staff motivation, however, is something that should be ongoing and a Christmas reward strategy should be an integral part of that process.

“That’s why employers are missing out on an opportunity. Not everyone wants a Christmas party nor does everyone want a hamper or a Christmas turkey. Gift vouchers, on the other hand, can be used any time and for almost anything.”

While a Christmas hamper may not be top of everybody’s wish list, the concept has developed tremendously in recent times. Forget the tinned fruit-cocktail and dates of yesteryear. The 21st-century hamper can be a thing of wonder, containing the finest foods and produce from all over the world. “I’d describe hampers as traditional rather than old-fashioned,” says Peter Austin, a partner at Oxfordshire-based Clearwater Hampers.

New rituals for victuals

Austin and his partner, Rachel, set up the company 25 years ago. During this time, the market has changed dramatically. He explains: “The biggest change has been in people’s expectations. Themed hampers for every occasion mean that we operate all year, although Christmas is by far the busiest period. In the ten days prior to Christmas we send out over 65,000 hampers – and of course these days customers want next-day or very fast delivery.

“It’s a competitive market that differentiates itself on service. Customers want their gifts to be as personal as possible, so that means we have to be very flexible and offer a complete range catering for all tastes.”

When it comes to giving gifts and rewards, if there is one thing that sets Christmas apart, it is that for many people it is a special time and a personal occasion. Anyone can appreciate the challenge of making the right choice; the same is true when it comes to corporate gifts. People remember. One survey found that two-thirds of people receiving a business gift could, three years later, recall who had given it to them and where. The risk of getting it wrong and upsetting an important client or major supplier could have serious consequences.

Mark Spicer, product manager for incentives, products and rewards with motivation and marketing consultancy The Grass Roots Group, believes that people can underestimate the hazards of giving an inappropriate gift. “It is really important to know about the recipient. You can’t assume anything. Imagine the damage you could do by sending alcohol to a teetotaller or including certain kinds of hamper foods to people of different religions or moral beliefs. And of course, many people in the UK don’t celebrate Christmas.

“If you have a good enough relationship with the client or the company, you should know this sort of information anyway. However, if you are using a third-party supplier, it is also important to make sure they are properly briefed. The opportunities for things to go wrong are always there – it is better to be cautious rather than over-ambitious and run the risk of things not turning out the way you’d planned,” he says.

But if you want to be remembered for giving something different or original, there are an astonishing number of companies that allow you to do this. There are also an equally impressive number of companies that will undertake the selection and delivery, if the task becomes too overwhelming.

The sheer choice and diversity highlights a trend that is emerging; when it comes to Christmas rewards and incentives, flashy and impersonal is out, thoughtful and personalised is in. Capital Incentives’ Povey believes that this is significant.”Whether it is a sales incentive programme or corporate gift, for it to work or achieve the desired result, the gesture must be sincere and heartfelt. If the recipient feels it is fake or insincere, the action can be destructive and demotivating,” he says.

Well-received

In the drive to be different and original, the danger is that companies might overlook some of the fundamental aspects of reward and motivation. Christmas may be the time to award bonuses or give and receive gifts, but if part of the intent is to motivate, then genuine thanks and recognition in front of their peers is even more important.

Povey illustrates the point, saying: “Within our company, we pay a bonus at Christmas. But because it is paid every year, people treat it as part of their salary. Last year, however, as a ‘thank you’ to the staff who put in extra work leading up to Christmas, we gave them &£50 in vouchers. The gesture had a bigger impact than the financial bonus, because people felt thanked and recognised for their work. Personal recognition and sincerity are often the major things that are overlooked by companies when they reward their staff.”

The ISP Diploma in Promotional Marketing 2005

Whether it’s advertising, direct marketing, field marketing or on-pack communication, if you are using one of the six major sales promotion techniques then you need to know how to do it right. That’s where the ISP Diploma in Promotional Marketing comes in.

Designed specially for agency and client marketers who devise, design and run sales promotion activity, this well-established and respected distance-learning programme has options for project managers, creatives and promoters.

Over four-and-a-half months candidates will study, in their own way and at their own speed, all the essentials including how to administer each technique, codes of practice and legal issues and how to run sales promotions that work safely and effectively. The key focus of the course is a set brief that candidates work on to answer a real world need.

The ISP Diploma Class of 2005 is open for enrolments from November 1 and is sponsored by Marketing Week. Visit www.isp.org.uk for more details.

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