Insight: Is the Incentive Industry Ready to Help CEOs Drive Stakeholder Engagement?

In developments that would have inspired incentive industry leadership in another era, the concepts of human capital management, metrics, reporting, ESG (Environmental, Social, and Governance) practices and of Stakeholder Capitalism are now almost daily topics in leading business publications around the world. Looking at the web sites of incentive and recognition companies and associations, one would think the industry has changed little since the 20th century. 

 

By Bruce Bolger 

 

If you work for an incentive or recognition company, ask yourself if your clients’ CEOs know about your company. Every CEO knows the name of the company’s ad agency: how many know the name of the incentive or recognition company they use? At a time when the issues of human capital management, measurement, reporting, or stakeholder engagement have never received more coverage in the leading business media or more discussion in executive management circles, one would never know it by reviewing the web sites of the leading incentive and recognition companies or their associations. 

 

The CEO of Bank of America, Brian Moynihan, tells every executive who will listen that the time has come to engage all stakeholders in an organization’s mission and to have a strategic focus on people. The Business Roundtable and World Economic Forum, two of the world’s leading business organizations, have issued manifestos for Stakeholder Capitalism, which creates returns for shareholders by creating value for customers, employees, channel partners, and communities. The US Securities & Exchange Commission now requires public companies for the first time to disclose how they manage their human capital resources to shareholders. The world’s most prestigious standards organization, ISO, the International Organization for Standardization, has issued the first ISO 30414 standards for human capital management and ISO 10018 for people engagement. ESG is by far the fastest-growing investment category, with organizations such as Morningstar urging investors to push for ESG management practices. 

 

In another time, this news would have elated the incentive industry’s leaders, who for years had invested in outreach and research to promote a strategic and systematic approach to engaging people to elevate the industry’s brand within business and government. These efforts culminated in the 1990s with enactment of favorable tax treatment for safety and quality incentives that were eliminated in the tax reform plan under the Trump administration. The success was in part due to the activities of the Incentive Federation. 

 

What is the response from the industry to these latest positive developments?  Collective silence. 

In a recent assignment for a client, I had a chance to review the web sites of the leading US incentive and recognition companies and their associations. Anyone who has been involved with the industry as long as I will quickly see, in reviewing the web sites below, that as far as this industry is concerned, little has changed since the 1990s. While leading business media and executives are focusing heavily on the issues of human capital management, reporting, ESG management principles, and stakeholder engagement, there is no sign that anyone in the incentive industry understands or believes there is a connection between this almost revolutionary new emphasis on people and their businesses. 

 

Without singling out any of the companies below, a check of their web sites speaks for itself. Some refer to performance improvement, a few make vague references to analytics, but almost all focus on merchandise, travel, gift cards, experiences, and technology, as if that is just what the CEO, CMOs, CHROs, and CFOs are worrying about right now. Industry leaders, such as Maritz and BI Worldwide, which for a while led the market with a focus on science and measurement at a time when customers did not care, have now returned to the familiar focus on rewards. 

 

There is almost no talk on most of the sites on human capital management, measurement, return-on-investment analysis, or fulfillment of organizational purpose. Almost every web site is similar—filled with vague assertions about how incentives or recognition will improve performance, with little substantiation and rarely a mention of the issues that have become top of mind for so many executives related to human capital management or external and internal reporting. For all the money invested in the research of the Incentive Research Foundation research, there is little sign from any of the web sites that any of the research is being seriously applied. 

 

I know I am not the only one who sees the articles in Barron’s, the Wall Street Journal, Fast Company, the Economist, the New York Times, Fortune, the Financial Times, etc., all of which are now regularly covering these topics. Am I the only one in the industry who believes that these developments are the most profound opportunity for this little-known field to finally achieve serious attention? (One of the few people involved with the industry for about as long as I, Rodger Stotz, formerly of the IRF and before that Maritz, does appear to share my views on the potential opportunities, based on a recent article in RRN.) 

 

The people active in this industry when I first entered it as a young editor at Incentive magazine would have reveled at these developments. The three trade magazines at the time would have actively competed to cover these developments, which would have provided topics for the industry’s two major shows at the time. Now, when the industry probably has greater potential than ever, there are only two media platforms left in the field, Incentive, which focuses primarily on incentive travel, and RRN. (An industry stalwart, the magazine Premium Incentive Practice, recently ceased publication upon the retirement of its founder, Paul Hennessy.) Before the pandemic, the only industry trade shows left existed under the banner of the promotional products industry—which would have made former industry leaders cringe with embarrassment—or tiny, boutique hosted-buyer shows that must pay people to induce them to attend. So, RRN is almost alone in doing what a trade publication is supposed to do: advocate for its field. 

 

Ask incentive company presidents why their companies continue to focus on a story mostly unchanged since the 1990s, and they’ll almost always say something like: “Our clients aren’t asking about human capital management or measurement or stakeholder engagement. When they do, we’ll reconsider.” There never would have been an iPad or iPhone if Steve Jobs thought that way. Times and needs change; just because someone didn’t buy something last year, doesn’t mean they won’t buy it this year. 

 

If you’re a CEO or in sales and marketing at an incentive or recognition company, or on the board of the associations, I highly recommend you review the web sites of the companies and organizations below and ask yourself: what distinguishes any of these companies from one another? To what extent do any of them address the pressing needs of CEOs to find new, more measurable strategies to manage and report on human capital internally or externally or to address the needs of and to engage all stakeholders? To what extent do any of these web sites refer to trends being talked and written about in the highest level of business or of the serious application of research findings from the IRF? 

 

I have not seen any articles in any of the business media about the importance of incentives, motivational events, gift cards, or merchandise. Great marketers address the topics on the minds of customers, not just on what they wish to sell. 

 

Will this change? There are signs that it will. Recently, a lesser-known incentive and loyalty company known as Brandmovers acquired AnimateGP, founded by Chris Galloway and Jerry Stein, the only agency I know of that has had the courage to focus on effective program design and return-on-investment measurement. Founded in 2017, AnimateGP was ahead of its time then and still is, but that is about to change. Brandmovers will not be the first to adopt a professional services approach. Stay tuned.

 

Those of you in the incentive and recognition business, look at the new RFPs (Requests for Proposals) coming into your inbox. They may not be talking about Stakeholder Capitalism, Human Capital Management, or Enterprise Engagement, but you’ll see more requests for information on analytics, program design, return-on-investment measurement, and behavioral analytics. It takes time for change to trickle down from the C-suite to the mid-level managers who run these incentive and recognition programs, but, accelerated by the pandemic, the trend is inevitable. 

 

Why? Because top management is increasingly paying attention. What else would explain why two leading CFO training organizations--CFO.University and McDevitt & Kline LLC--have asked the Enterprise Engagement Alliance (RRN’s parent company) to provide ongoing education on human capital management, measurement, and return-on-investment of engagement?  Or why, for instance, the Manchester, NH Chamber of Commerce recently reached out to the EEA to provide a special education program for its member CEOs? They didn’t ask us to speak about rewards and recognition, but we’ll include that topic anyway, because they are a part of the solution. 

 

If you are with an incentive, recognition, or other type of solution provider and believe your company can flip a switch to become a strategic solution provider of human capital management, reporting, and ROI of engagement, think again. The solution is not adding another page or a few new slogans to your web site. It requires getting serious about educating your own marketing, sales, and planning team on the new story so that you can not only help educate your clients but deliver results.  

 

Go through the web sites below and ask yourself how many of them stand out as unique (other than visually) or concretely address the pressing needs of today’s CEOs, CFOs, CMOs, CHROs, or other business management.