by Leo Jakobson | September 01, 2012
The Incentive Federation Goes to Washington

Incentives must have a strong, positive lobby in our nation’s capitalin order to ensure the industry’s future.

Incentive: Do we still need to defend incentives?

Delta: The Incentive Federation is trying to raise a war chest this year so we can be present and fighting in Washington next year. There are two things that have become very clear to me since we started our lobbying effort. If we are reacting to potentially harmful legislation rather than educating members of Congress and the executive branch in advance — trying to undo something is much more expensive and difficult process than trying to prevent it from happening in the first place. 

Secondly, it is important that we have a voice. If there’s tax reform next year, every single special expenditure item such as Section 274(j) — the provision that gives us tax advantage treatment for safety awards and elective service awards — is going to be on the table to be either eliminated or reduced. 

Peer: We’re trying to pull together various groups so that we can be more effective in Washington, so we can be proactive rather than reactive. That was reflected in our response to the General Services Administration [GSA] scandal where, the wasteful expenditure of government money by amateurs really had a negative impact. We were able to get out there and respond quickly. There’s an ongoing effort, and we’re not done. 

McLain: The incentive industry, specifically and independently, needs to talk more about its contribution to the economy. In Palm Beach County we have five million visitors that create an economic impact of $5 billion and generate nearly 45,000 jobs in the county, and $836 million in taxes. 
The Rise of Corporate Social Responsibility and Wellness Programs

Incentive: Is corporate social responsibility still an important part of incentive programs?

Hoddeson: I think some people confuse environmental or “green” programs with corporate social responsibility programs. We definitely are seeing more requests for ways in which companies can engage the participants in a corporate social responsibility program when they’re in the principality of Monaco. This is coming up more and more — not just making a donation, people want to be hands-on.  

There was one program that took place in Monaco where participants built and put together kits for making solar cars, and contributed these kits to a school to teach students about alternative energy. More and more we're being asked to come up with ideas for programming that relates to corporate social responsibility. 

Fenhaus: It’s that Millennial factor: They want to make the world a better place, so we are seeing an uptick in the use of the charity option [when loyalty program participants redeem points]. In addition, for programs that we design for clients, we will add specific charities for their particular program if there is a company cause or foundation. We did a hospital that had six charities that [employees were] actively involved in across their various regions, so we added those as [award] options.  

I was amazed at the generosity of some of the people. [They’d get] a $100 reward or a $500 reward, and say, “I don’t really need it, so I’m going to give 50 percent or 100 percent to this charity.” It’s a very popular option and continues to do extremely well as part of our programs. Today, I think you need it as part of the corporate awareness, and I think as an incentive company, you need to offer that option to employers. 

Incentive: How are wellness programs changing?

McArthur: We see slow and steady progress on wellness programs, and they come from two directions. One is human resources organizations that are taking a long-term view of ways to impact and maybe drop the slope on health care cost increases. We’re also seeing them as add-ons to existing recognition programs. I think that there's a long-term economic case to be made, and I think we’re coming out of a period where clients were not as interested in long-term economic cases. 

Fenhaus: We’re seeing great, tremendous growth in the health and wellness space. Corporations are saying, “We’ve really got to figure out how to energize and engage our team members.” It’s helping individual companies with the communication plan and then making sure it’s an enriching experience. They can have the best program, the best design tools, but if no one’s using them or knows that they’re available.

People respond to incentives. And if you can design a program that has some fun facets to it, give rewards and make them meaningful, you get a higher participation rate. As an American society, we need healthier employees, and organizations have to do that without it coming off as the stick method or intrusive in employees’ personal health, but as making people aware. 

Beauchine: Many [companies] are doing it online, and many are doing it with a mix of game mechanics and rewards for certain behaviors. In general people are pretty happy with these programs. but I would say there is still a lot of experimentation with this —there are many forms and flavors and varieties of wellness. 

Ten years ago, the quit-smoking sessions and the Weight Watchers group meetings and forum were [held in the workplace]. Lots of it has moved online. It’s easier now because the individual can see their own charts of progress online and can realize their achievements, and can benchmark against the whole group. 

Ernsting: What I've been hearing from [Mandarin Oriental] hotels is that they are seeing more active programs — activities incorporated into the incentive [such as] morning yoga.

Fenhaus: What we've actually seen and where we've had the greatest success [with wellness programs] is in those organizations that have some form of other employee recognition or engagement programs. It's a natural extension to include that wellness component, because the team member feels, “you're thinking about me as a holistic employee, and you're trying to take care of me. You're trying to take care of my family.” 

And now that we have you involved, now that we have you energized, now that we have your family participating, we'll up the ante by asking you to do a couple things, and generally if it's done well, the participation rates stay high. Five years ago, it was just getting employees to take the health risk assessment. Now, corporations are much more knowledgeable, much more sophisticated. If [an employee is in] a high-risk category, they're saying, “We really want you talking to a health coach. We want you actively participating in the smoking cessation program, making sure you're taking your diabetes medication, participating in the walking program over the lunch hour.” It's much more than simply take the health risk assessment and get a reward. It is, “We really want you to do maybe four things to earn an incentive.” In some cases, they're increasing the incentive because they know that they're asking more from the team members, but it really helps that momentum and that whole journey of health. 

A lot of the research is says some of us are past the point of no return, so let's focus on keeping the healthy people healthy. Organizations are putting much more emphasis on keeping the healthy people healthy — not having that constant degradation in the health care curve. 

Stotz: There is an evolution that we’re seeing in the whole wellness arena. It starts with the HRA – the health risk assessment – and getting people to participate. We’ve found that the data shows that the use of awards and recognition-type promotional items are very effective in getting people to at least start with that confidential health risk assessment, and then there’s a follow-up with a health coach or a health professional, to analyze the assessment. That’s step two – to create the individual program, the lifestyle program that the individual would then commit to. 

That’s where you get into the self-reporting, whether it’s walking so many steps a day, being on your medication for diabetes or high blood pressure, whatever.

We’ve actually seen and heard of some organizations that are going to outcomes. You go through this process over the next 18 to 24 to 36 months, they ask for confirmation from your physician or your health provider, and the insurance company is getting involved with it. If you’re actually maintaining the new lifestyle, or some of the new behaviors, you are getting rewarded.

And this is where you get into the introduction or actual application of financial incentives — a reduction in premiums, or a reduction in co-pays and deductibles. The critical issue that is that we’ve seen is, there is a tendency by the organization to then stop or significantly reduce the non-cash awards. What our studies showed is that you really need to do both. The programs that are most effective are a combination. 

Hart: I agree 100 percent. Any health or wellness program [that] moves over to recognizing outcomes and rewarding outcomes is doomed to failure. It’s like a performance program.  You want to be recognized so the behaviors and the activities are going to lead to those achievements. If you only recognize the achievement, it’s not living up to its full potential.