The Incentive Research Foundation (IRF) has released a new study that addresses how to best measure the short- and long-term impact and return on investment (ROI) of incentive and recognition plans.

“Mastering Measurement: The Critical Performance Elements of Incentive Design” is geared toward professionals who design incentive and reward programs, whether as organizational staff or external consultants.

The new study is an update to the “Master Measurement Model of Employee Performance” paper, released nearly 20 years ago in 1992. It addresses current issues and research related to the best application of measurement and incentives, as well as “provides new insights that build on the original Master Measurement Model and is especially relevant in today’s economic environment,” said Rodger Stotz, chief research officer of the IRF.

The new paper also includes input from a Delphi panel consisting of more than 70 experts and practitioners in various aspects of performance measurement, case studies from leading companies, and a step-by-step process for developing effective measures that incorporate essential elements not addressed in the original study, including causality, cross-functional issues, and factoring for unintended consequences.

The updated steps to successful ROI measurement are:

Step 1: Understand the corporate strategic plan.
Step 2: Gather and analyze performance data.
Step 3: Align measurements to the overall organizational goals and objectives.
Step 4: Conduct a risk analysis for unintended consequences.
Step 5: Analyze the data against business-driven needs.
Step 6: Build a business case based on “predictive analysis” to address causality.
Step 7: Convert to dollars.
Step 8: Continue to track metrics, adjust, and continuously improve.

A complete copy of the study is available for free at www.theirf.org. This page is protected by Copyright laws. Do Not Copy