IRF: Companies Using Rewards Post Higher Revenue Growth
By Alex Palmer
April 12, 2012
Companies using non-cash rewards boast annual revenue growth more than three times those without non-cash rewards, according to a paper from the Incentive Research Foundation and Aberdeen Research, released on March 30. While organizations offering non-cash rewards enjoyed a 9.6 percent revenue increase, those that did not only had an increase of 3 percent.
The report, titled “Rewards and Recognition as a Vital Compensation Component,”
drilled into data from the IRF and Aberdeen’s extensive survey of 291 companies released at the end of last year. The survey categorized the companies into “best in class,” “average,” and “laggard,” looking at company performance and sales results, with 83 percent of best in class companies achieving annual quotas for the year compared with just 51 percent for average and 22 percent for laggard companies.
Best in class companies were also more than twice as likely to provide non-cash incentives as all other companies.
“In this study, we have two views,” says Melissa Van Dyke, president of IRF. “One looks into where organizations are doing things correctly on a number of fronts and another is how prevalent rewards and recognition are to that mix—the answer came back ‘very prevalent.’”
The research found that organizations that provide non-cash rewards enjoyed a 2.1-percent increase in revenue from one year to the next, while all others saw an 0.7 percent decrease. The companies using rewards had a 1.6 percent year-over-year increase in team attainment of quota versus a 2.2 percent year-over-year decrease in all other non-reward companies.
Additionally, organizations that provide non-cash rewards enjoyed 34 percent shorter sales rep time-to-productivity and 10 percent shorter sales rep time-to-hire than those that do not use rewards.
“It’s a pretty strong statement about how important non-cash rewards and recognition are within the mix of HR tools and processes available,” says Van Dyke. “It is a core part of what successful organizations do.”
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