Recognition & Incentives: What You Need to Know for 2023
No doubt about it, 2022 was a tumultuous year for businesses everywhere. Many companies strategically increased investment in recognition and incentive programs to stabilize their workforces, and to re-connect after long months of COVID separation from colleagues and clients. It wasn’t always easy, though, as market forces and a re-starting economy created challenges never encountered before – Awards? Stuck on a cargo ship! Travel program? COVID rules different today than they were yesterday!
In 2023, the market is brisk, but we’re seeing signs that some challenges are easing up. To shine a light on where we may be headed this year, the Incentive Research Foundation (IRF) just released the 2023 Trends Report. Here’s our take on some of their findings:
Incentives and Recognition for a Decentralized Workforce
As of August 2022, Gallup research showed that “70+ million US workers can do their job working remotely. Only two in 10 remote-capable workers are currently working full on-site. When an employee’s location preference doesn’t match their current work location, burnout rises while engagement drops.”
IRF Says: While incentives have always been successfully used to drive the bottom line, the IRF confirms that incentives also have a significant, strategic role to play in developing a thriving company culture with decreased turnover and a far flung workforce.
What’s more, incentive and recognition providers are being called on to dovetail into client companies, with more services and complex reporting than ever before, in part because of reduced resources in client organizations.
NXL’s Take: Definitely! Here at NXL, we’re doing more for our clients – acting as an extension of them – and seeing a big uptick in programs intended to not only motivate, but also to connect with and engage employees. Programs of all kinds are growing.
Strategic Need Meets Budget Challenge
With soaring costs and limited personnel, it has been difficult to source travel options and merchandise during the past year. Plus some industries have really felt the strain of inflation or other economic pressures impacting their programs. Consistently, though, incentives and recognition are go-to solutions for economic and cultural challenges.
IRF Says: Research shows that scaling back is a “short term trend, with incentive travel buyers indicating that the number of people participating in incentive travel programs will increase by 48% in 2023 and 61% in 2024 compared to 2019.”
NXL’s Take: Across almost all of the industries we serve, we’re seeing our programs as core to the organizations’ strategies to align, retain, and motivate key personnel. While some clients are restructuring programs to address their own unique goals and challenges, it’s not a question of “if” they should do a program, but “how” to invest in their people in the right way to achieve results.
Incentive Travel is Resurging, but Points, Gift Cards, and Merchandise Are Here to Stay
In terms of travel, 2022 was one for the record books, with new programs, annual programs, and postponed programs all colliding in one blockbuster year. Demand continues into 2023 and beyond, with a brisk travel market, limited availability, and higher rates. Turnaround times are shorter, and expectations about experience are higher than ever.
But what’s also a really interesting turn of events is how companies are handling points programs now.
IRF Says: “As incentive travel programs rebound to meet pent-up demand, expectations are higher than ever. With the added emphasis on employee retention and recruitment, the quality and impact of programs ties clearly to corporate goals.”
IRF also cites the Industry Outlook for 2023: Merchandise, Gift Cards, and Event Gifting study and Academic Research in Action, noting that “non-cash rewards provide a flexible means of increasing an employee’s total rewards package without incurring or creating long-term expectations and ‘entitlement effects’.” In other words, employers can directly address the impact of inflation on employees without incurring additional salary costs that will last well beyond this economic moment.
NXL’s Take: We agree with the panelists on the IRF’s recent Industry Outlook 2023 webinar. With inflation having a real-life effect on every employee, there is increased value in a points program in which employees can find opportunities to treat themselves, or to bridge a gap. Aside from the emotional and cultural impact a successful points program always has, there may be very real need in some enterprise-wide programs, and points are particularly appreciated.
As the IRF notes, things are stabilizing, but the environment has changed. It’s important to revisit programs and take stock of their results, re-calibrate to reach a wide audience, and align programs to company culture and goals. Here’s to a successful 2023 for all!
To read more about our thoughts on what 2023 will hold for incentive travel, check out Corporate & Incentive Travel magazine’s article on the State of the Industry.