Blog: The 3 big lies in the reward and recognition space

by |
The reward industry has changed a lot in the past 10 or 20 years. And it’s changed very little. We still leverage the same psychology that drives individual needs for appreciation, progress, goal attainment, validation – just as we did 50 years ago (contrary to some gurus there is no “motivation 3.0.) But we’ve also found better, more efficient ways to deliver those psychic fist-bumps.

But for my money, the biggest change in the industry is the amount of untruthiness rampant today.

Now, I’m going to take a bit of a risk and pull back the covers on a few of the dirty secrets out there in the rewards and recognition space.

Lie #1 – “We are the ONLY cloud-based solution”
Truth – SaaS solutions aren’t that rare. Many (I’ll say a majority) of the technology solutions out there that run a company’s reward systems are cloud-based. Meaning – in the strictest sense – they only exist in your employees’ browser. You access the information and functionality via the web. No downloaded software – no “installation” process. A link and a click and you’re going.

Heck – just to be a bit daring – I’ll even say almost 100% of the major solutions on the market operate that way. Anyone who says they are the ONLY one – are stretching the truth if not outright torturing it into submission. Sure, there are subtle variations on what is “cloud-based” or SaaS – but from you, the buyer’s point of view, those are distinctions without differences. You won’t notice the operational differences and neither will your employees.

Lie #2 – We don’t make money on the awards – or – we are awards agnostic
This is so untruthful it is almost criminal. When I hear that I want to scream.

The implication in that comment is that awards aren’t important to them. The truth is this – almost 100% of reward providers make something on their rewards they ship to your employees. They make money one of three ways – and some companies – (not us) make money using ALL of the following – and still claim to not make money on awards.

With awards a recognition and reward company can make money by:
1.) Buying awards at $10 and selling them to you at $12. (We do this in some cases.)
2.) Or they can buy gift certificates (or awards) at $10 and sell it to you at $10 – and get a commission of some percent on the back end (ie: 20%.) (In some cases we do this.)
3.) Or they charge you a “service fee” on points issued. You issue $1.00 worth of points to your employees and your reward provider invoices you for $1.00 plus a 15% service fee ($0.15) (We’ve not done this.)
4.) Or… They do ALL of the above.
5.) They make money on breakage. Breakage is unredeemed points. In many employee programs companies charge for points issued – called “bill on issuance” – and hold that money in abeyance until the employee redeems for something. This is the preferred method for employee programs. There are a variety of reasons for doing this – the single most important one is that the IRS likes it when you pay for points issued to your employees and then they pay (and you pay) the associated income taxes and other charges associated with W2 income. (We do this too… but can do bill on redemption if needed – we can talk through the pros/cons of this for employee programs.)

Want to find out if a company truly doesn’t care about awards… tell them you will find  your own reward provider and see if their pricing changes. If their pricing doesn’t change then they probably aren’t driving any substantial margin from the awards portion of your program.

Lie #3 – We Are the Only Company That Does Social Recognition
Here’s the truth. All recognition is social. ALL.OF.IT.

Think about it – can you be recognized if no one knows about it? I’ve said tongue-in-cheek before that if a trophy hits you on the head in the forest and there is no one there to see it were you recognized? Recognition by definition is social. Or more accurately – GOOD recognition by definition is social. A good manager will ensure that the recognition is noticed by others and isn’t hidden beneath a basket.

I will say that there are some reward platforms that don’t have an easy way to socialize recognition events via a “Facebook” like interface. That is a true statement. But, based on my review of most of the software today – it is become less and less true. It would be hard to find a provider that doesn’t have some sort of portal interface where other departments/divisions/groups can advertise the recognition events occurring in their areas.

Recognition is now very, very social.

And the one truth in this post…

We make money on awards. We also make money on our expertise and knowledge capital (called consulting) and we make money on program management and our software infrastructure. And we’re not ashamed of it.
 
Paul Hebert is VP of solution design at Symbolist and blogs online at http://www.symbolist.com/blog/
 

HRM Online forum is the place for positive industry interaction and welcomes your professional and informed opinion.

Name (required)
Comment (required)
By submitting, I agree to the Terms & Conditions