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Performance Improvement Programs are Potent

Performance Improvement Programs are Potent

When properly designed, PI programs are self-funding solutions that provide a positive return on investment. No longer do sales and marketing executives have to guess about the effectiveness or apply intuitive "guesstimates" about a program’s impact on an organization. Time-tested techniques and technology exist to accurately measure performance against objectives—how much did sales and profits increase; how successful was a new product introduction; how effective was the training initiative; were employee retention levels increased; did consumer churn rates improve?

Answers to these and other important questions ultimately heighten accountability and performance within an organization and provide further evidence that PI programs work. Historical and recent independent research indicates that, on average, a properly designed PI program generates a performance/sales increase of more than 20 percent. That is, for every dollar spent, the sponsoring company realized at least $1.20. Any executive in America would wholeheartedly endorse an investment that yielded an average return of 20 percent. This impressive statistic is supported in a landmark study by the International Society for Performance Improvement (ISPI) funded by the SITE Foundation. Released earlier this year, Incentives, Motivation and Workplace Performance: Research and Best Practices is the most comprehensive study ever done on the effectiveness of the incentive industry and its usefulness to employers in determining the relationship between incentives, motivation and performance in the workplace.

The following are some of the top quantifiable findings from the study:

  • Incentives increase performance an average of 22 percent. This increase is consistent with previous studies and actual results from major PI companies.

  • Ninety-two percent of participants surveyed indicated that their goal achievement was influenced by the incentive. This debunks the myth that incentives pay for results that would have been realized regardless of an incentive program.

  • Program objectives were met or surpassed by 57 percent of the participants.

  • The most effective program rules structures are goal/quota and per-unit (piece rate) based programs.

  • The longer a program’s length, the greater the increase in performance. Programs six months or longer provide ample time for behavior change and sustained results.

To cut through the conflict and confusion—based on fact and documented research—these are clear and accurate conclusions that PI programs can generate a positive return on investment.

It is incumbent upon program strategists and planners to build a rigorous set of measurement benchmarks into the development and operational phases of every PI program. An along the way continually monitor results and modify programs as necessary. Then we will know precisely how far we have moved the needle and add further evidence to the credibility of PI programs as a results-oriented strategy for today’s business leaders.

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John Farrell is the senior director of channel marketing for Carlson Marketing Group in Minneapolis.