Incentive or Entitlement? Julie Shustrom University of St. Thomas December 16, 2004

The Problem Incentives can be expensive. The wrong incentive will not motivate. Over time, employees can come to feel entitled to awards. Entitlement makes programs ineffective.

Background Incentive program is 10 years old. Point-based No cash Program participants are front line employees. Product and service sales are now a job expectation.

Negative Feedback Employee discontent with the incentive program has increased over the past several years. Incentive amounts participants receive are “not enough.” Rules and goals are not fair or appropriately aligned with day-to-day job responsibilities.

The Question “Do employees perceive the awards they receive through the company’s incentive program as an entitlement?

How to Measure Entitlement Measure employee perceptions of Clarity of program rules Fairness and attainability of goals How awards are given Results vs. activities Better performers earn more Threshold requirement Attractiveness of award options Importance of public recognition

Methodology Paper survey to 100 customer service employees 14 questions 9 questions measuring factors that can indicate entitlement mentality 5 employee background questions

Results 41.3% response rate

Do Not Indicate Entitlement Agreed or Strongly Agreed Top sellers should receive more awards than lesser performers (71%) Rewards are appealing (74%)

Indicate Entitlement Disagreed or Strongly Disagreed Goals are attainable. (66%) Minimum threshold should be required. (63%) Rewards are appropriate to Effort (74%) Contributions-$ (79%)

Contradiction Achievement levels 73% achieve “minimum” or “breakthrough” levels. Goal attainability Only 32% said goals are attainable.

Split Responses Program rules are clear. Agree: 58%Disagree: 42% Program motivates sales efforts. Agree: 53%Disagree: 47% Recognition event is important. Agree: 53%Disagree: 40%

An Answer? “Do employees perceive the awards they receive through the company’s incentive program as an entitlement? A cautious NO

Recommendations Continue to study. Focus groups may clarify conflicting information found from survey. Increase communication. Improve understanding of program structure and rules. Provide information aligning employee contributions with the goals and needs of the business.

? Questions Questions