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Staff reward schemes play an important role in building loyalty



Expert | Leadership | Workplace

By Glenn Fitzgerald

Retaining experienced and key staff is a core focus of many small businesses. An increasingly mobile workforce means taking a “job for life” is rare. The national average tenure in a job nowadays is three years and four months according to the Commonwealth figures, while a 2019 Deloitte survey out of the US suggests 49% of millennials will quit their job within the next two years.

Losing staff is costly for businesses. Staff turnover interrupts operations, involves additional recruitment costs and results in the loss of valuable employee knowhow. Small businesses are therefore wise to invest in their workforce in a way that builds loyalty, offers professional development opportunities and makes staff feel valued and appreciated.

Incentive programs play a key role in motivating employees, engendering loyalty and creating a strong corporate culture with high morale. The Incentive Research Foundation, a US organisation dedicated to research in this field, found that 84% of organisations were using non-cash rewards, and that there was strong support from senior executives for non-cash staff recognition programs to enhance both business culture and productivity. This high-level support makes sense – studies have shown that feeling appreciated is a key driver of employee engagement in the workplace.

But things are changing in the incentives industry, as businesses explore new ways to gain a competitive edge. Traditionally, incentives purely involved gifts or leisure activities aimed at personal enjoyment and reward, and tended to look backwards from a company perspective – that is, they were a recognition of outstanding past performance or an opportunity to acknowledge particular employee contributions.

More recently, however, companies have adopted a forward-looking focus, seeking to blend reward for past performance with building capability to meet future business needs. One way they are doing this is by incorporating professional development opportunities within reward programs.

Strategic reward programs of such nature are particularly attractive to companies operating in industries facing some form of disruption. These include:

  • the hospitality and tourism industry (disrupted by the likes of AirBnB)
  • the automobile industry (affected by a variety of changes including automated cars, electric cars, and a growing sharing economy driven by operators like Uber)
  • media and communications businesses (with the increasing shift towards online platforms and consumer-generated content)
  • health-related businesses (with dramatic changes to funding models and legislation); financial services (through deregulation, aggregators and online services)
  • the retail world (challenged by cheap imports and online competitors)

All of these industries are adapting to changing operating environments, and staff need to adapt (and often build new capabilities) also. Businesses are having to look much more to the future and imagine how their operations might adapt and evolve, and what skills and capabilities their workforce will need to achieve this.

A challenge, of course, is to ensure that the staff development element of an incentive program does not detract from the reward, but instead is seamlessly part of an experience that will be valued and enjoyed by the employee. Encouraged by customer demand, Destination has put significant thought and research into developing such programs over the past 5 years, including partnering with RMIT’s College of Business to identify capability gaps and how to meet them. The research is being carried out by Professor of Marketing Dr Francis Farrelly and has resulted in our Incentive and Business Insights Program (IBIP), an experiential learning program that immerses participants in engaging and interactive sessions in iconic global locations and leading markets such as Tokyo, New York, Barcelona and London.

These programs have included everything from the artistry and craftsmanship of iconic brands like RM Williams and Louise Vuitton, to developing performance culture at the Barcelona Football Club, to understanding retail space and consumer behaviour at the biggest Starbucks Roastery in the world – each experience underpinned by our custom learning content focussed on customer experience, innovation, design thinking and brand.

Immersing participants in an alternative learning environment stimulates innovative thinking, enhances knowledge and builds marketing and leadership capability. During these sessions, participants interact with renowned brands, business thought leaders and agencies with a focus on innovation and capturing opportunity.

Experiential learning works well for retail businesses, which are increasingly looking to innovate and include “experience” in their offering as online shopping means competing on price is no longer feasible. Such programs also work particularly well for company personnel involved in strategy and marketing roles across all sectors as these positions encourage an enquiring mindset and a willingness to challenge preconceived ideas.

The significant disruption we have seen or can expect across industries from tourism and retail to automotive and media means many small businesses will be looking to upskill staff just as much as they are looking to retain them. A more strategic approach to rewards programs is a valuable way to achieve this.


Glenn Fitzgerald is CEO of incentives company Destination, the largest privately-owned incentive service provider in Australia.