Globalizing Incentive Programs
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This presentation was presented at the Synygy conference with Maritz and Language Solutions Running global incentive programs? There's quite a bit involved with the design and implementation of global non-cash Incentive programs. Multinational companies that have workforce outside of the United States show a higher rate of engagement and ROI. There is a huge opportunity here. Globalization has the biggest impact with communications and rewards. You need to plan global to achieve local. For language, we will define adapting and translating the product to local market. Different rules structures/program design are required based on local workforce and markets. Understand how these differences will affect achieving the global goals. Build a business case for your reason to translate. Use data and facts to support that decision and then decide to do translation, regionalization or localization. Use cultural dimensions data and research to make this decision
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Globalizing Incentive Programs
- 1. Globalization of Non-Cash Incentive Programs Speakers: Toni Ashby Product Manager – Global Rewards Maritz Jeroen Tetteroo Localization Manager Language Solutions
- 2. • Where do I start? • Is it complicated? • What do I need to consider? • Let’s start with what we know about planning any incentive program and discuss what should be tailored across the globe. Running a Non-Cash Global Program
- 3. Program Considerations • Program Design • Pay Out Structure • Technology Platform • Communication • Rewards
- 4. Program Design • What is the program goal? • How will you structure it? – Individual or team-based? – Top performer vs. everyone earns – Annual program vs. shorter duration • Equitable program for all • Understand the cultural impact for choices
- 5. Pay Out Structure • How much are you willing to award for desired performance? – Will that be motivating to the participant? • How often will points be deposited? • Do you need to consider purchasing power parity?
- 6. Technology Platform • Communication • Administration • Data/Information needs • Business logic • Localize Rewards Offers
- 8. Build a business case • Use data and facts to support your decision to translate • Get support for your budget • Understand the relationship between budget and achieving your business objective
- 9. Meaning of Work Meaning of Work NeedsNeeds MotivationMotivation Individual / Group Behavior Individual / Group Behavior Culture Values / Attitudes / Norms Appropriate Motivators (Intrinsic / Extrinsic) Appropriate Motivators (Intrinsic / Extrinsic) International Management, Managing Across Borders and Cultures, Helen Deresky, 2006
- 10. Geert Hofstede’s Cultural Dimensions “Culture is more often a source of conflict than of synergy. Cultural differences are a nuisance at best and often a disaster.” - Hofstede •5 dimensions: – Power Distance – Uncertainty Avoidance – Masculinity – Individualism – Long-Term Orientation
- 11. Cultural Distance per country
- 13. Hofstede’s Cultural Dimensions Rule Structure Payout Structure Rule Structure Business Objective Internal Communication
- 14. Country Workforce Population % of global workforce Primary Language % of Pop. Secondary Language % of Pop. Strategy Translate Regionalize Translate Translate Regionalize Regionalize Localize English 86% Spanish 14% Malay Chinese/ English Hebrew English/ Arabic French Chinese English Hindi English Japanese Decision making framework Country Workforce Population % of global workforce Primary Language % of Pop. Secondary Language % of Pop. Strategy USA 8640 54% Malaysia 950 6% Israel 1250 8% France 300 2% Singapore 350 2% India 400 2.5% Japan 704 4.5%
- 16. Rewards • Must cater to Cultural & Economic Diversity – Local Customs, styles, and trends – Employee demographics – Mix of Awards – Local language – Logistics
- 17. Keys to Success • Local Ownership • Every country has laws which may or may not permit sales incentive programs • Taxes, i.e.., FBT in Australia • Localization of languages and other program components
- 18. Case History – Global Technology Company • Goals – Gain Market Share and expand incentive efforts • Solutions – Technology allows for centralization, with local customization – Offer rewards that are relevant and local • Results – Increased gross profit 13 % per unit sold – Increased ROI of 11 to 1 – Increase participation & Data collection for additional marketing
- 20. Global Technology Company Pre-Sale Call Centers • Goals – Solve international fulfillment issues – Increase reward appeal • Solutions – Centralized information and point site – Local fulfillment of meaningful rewards • Results – Inside sales growth of 50% YOY – 4% over stretch target in 1st quarter – Greater participant understanding
- 21. What we’ve learned Global programs: • Higher engagement rates • Redemption rates as high as 75% within 90 days • Receive more feedback/inquires from non- domestic audiences • Higher achievement rate outside US
- 22. Global Programs Work • Engage your global workforce • Grow your business in global markets • Gain valuable market insights • Challenges but can be overcome and well worth the effort • Cater to similarities of global workforce while balancing local uniqueness
- 23. Contacts: Jeroen Tetteroo Senior Localization Manager Language Solutions 314-725-3711 jeroen@langsolinc.com Toni Ashby Product Manager – Global Rewards Maritz, Inc. 636-827-3957 toni.ashby@maritz.com
Editor's Notes
- Our companies are partners in the design and implementation of Global non-cash Incentive programs. The slide presentation that was running when you came in did a pretty good job of setting the stage for “WHY”---why you should consider globalizing your programs. We’re going to jump in to the “NOW” of running global programs.
- Multinational companies have 2/3 of their workforce Outside US (in some cases ½) Show a higher rate of engagement and ROI HUGE OPPORTUNITY HERE How many shy away because you don’t know or may be struggling with global cash compensation. What opportunities are you missing? We will show RESULTS and SUCCESS
- These are the things you need to think about in planning any program and they’re all important. We’re going to give you a few things to consider in each area, but we’re going to dig deeper on the last 2: communications and rewards…….. Because that is where globalization has the biggest impact. Communication in particular, language and Rewards, the need for local/regional delivery. You need to PLAN GLOBAL – ACHIEVE LOCAL We will focus 2: Languages and REWARDS Define Localization = Adapting/translating product to the local market
- Every program includes this. Cultures outside US can effect program design: Teams or Individuals Different rules structures/program design are required based on local workforce and markets Understand how these differences will affect achieving the global goals We typically want to get to the INDIVIDUAL, however, in Japan, they are more team-based Equitable doesn’t mean Equal leads into Purchasing Power Parity (PPP) NEXT SLIDE Adapt to change/feedback quickly – FLEXIBILITY Anticipant adoption, participation, goal achievement
- PPP index is used to adjust point earnings base on local differences in cost of living/spending power Need to understand demographics of participants to better understand how their earning level(s)/standard of living is affected by PPP PPP index is based on food, housing, etc.; catalog rewards costs are not usually affected by PPP (i.e. iPod price is fixed globally) Soft logistics Sales employees usually higher paid than most Is it a cultural fit – every client is different Have that cultural discussion within company
- Are you going to operate programs from a technology platform? It can make any program much easier to administer and operate. It’s ESSENTIAL if running a global program. Automating the cultural customizations makes globalization economically feasible. Communication – Automatically translates into approval languages Administration – streamline process across oceans and continents Data/Info needs – capture and report all data numbers Business logic – handles pay out structures Localize Rewards offers – Questions to ask: Challenges: Do they have the bandwidth? Streaming Video for sales training deployment in China - It is available to all? Ie: Web Ex not available in France How to handle communication – may differ: In LATAM – rules structures for building a channel – NEEDS more FACE to FACE, rather than going to a website Transition……. These 3 considerations structure, payout, platform Are pretty straight forward, but there are cultural consideration in each. I’m going to turn over to Jerroen who will share an approach for gaining the cultural understanding needed to inform the design process and then he’s going to discuss in more depth the communication and language considerations.
- Company example: Asked to meet with an organization who was planning on taking their products overseas.
- Company example: Asked to meet with an organization who was planning on taking their products overseas. Budget is an issue for most organizations Research has shown that 80% of all organizations do not have a regional or local strategy for their global communications. We developed a Client Mentor Program where we help organizations take informed decisions. We defined 20 objectives that we would like to see organizations achieve as they mature on the global market space. The most important one is build a business case That will enable you to make informed decisions, get the budget support you need. Also, it help you understand the relationship between budget and achieving your business objective
- When selecting or developing a rewards system, you are looking towards what strategy would work best for your US sales force and how that affects behavior This is an example of a model that companies like Maritz look at when they develop incentive rewards programs. Maritz is in this model can be found down at Appropriate motivators. This is where you design your incentives rewards with the different rules and types of rewards. What we know is that when you take your incentive rewards program to the international markets, you will have to consider culture as a factor that will influence each of these variables. It’s not just a technology factor or language factor. You might already have a lot of cultural information in your head. Maritz is certainly already looking at this, but I would like to go into this in more depth……Because how are you going to use that information and make an informed decision?
- Examples from 5 dimensions PD and UA seem to be very much related in Hofstede’s research. According to Hofstede, America is ranked slightly below average on PD and UA. Power Distance – the extent to which a society accepts unequal distribution of power. Uncertainty Avoidance Index – extend to which a society feels threatened by ambiguous situations. Cultures like America tend to be motivated by an incentive rewards system that is based on objective performance evaluation and variable compensation tend to be most successful. In Japan, they will most likely feel threatened when they are presented with this ambiguous system. They prefer to be rewarded based on seniority / subjectivity rather than objectivity. Also, managers may expect to be rewarded regardless of performance. Masculinity – Hofstede ranks America to be relative masculine, higher than average. MAS cultures are very assertive, strive for achievement and are relatively materialistic. So for America, an incentive reward system that is financial based and geared towards performance will most likely work. Feminine cultures desire more intrinsic benefits that relate directly to job satisfaction. Individualism – versus collectivism. Being expected to look after one's self and immediate family versus being integrated into strong groups and the extended family. US: More merit-based reward system encourages healthy competition Japan: Rewarding an individual is frowned on because it encourages competition rather than cooperation and goes against traditional value system. Long-Term Orientation – Americans are seen by Asians are short term thinkers.
- There are many situations in which you can use this data. Basically what you want to do is you want to relate this data in order to determine what would be the best strategy for each location? One situation is where you want to ask, what cultures do I really need to focus on? If you look at this example for Germany, how does Germany relate to the US versus the other locations that I want to go into? How significant is this data?
- Cultural dimensions give a general prediction of how a country's culture compares to your culture and how effective your strategy will work in that particular country. There are many ways to plot value dimensions, but this is one way to show the differences in culture and what countries you should really focus on. It shows how different each country is culturally different from the US. When you have this framework, brainstorm about what aspects to hit on with your product that relate to these cultural dimensions. Consider further investigation to localize for those countries who rank lowest on cultural relevance with home country Consider internationalization for those countries who rank lower than X% on cultural relevance with home country Consider translation for those countries who rank lower than X% on cultural relevance with home country
- If you want to dig deeper into this, you can look at he individual value dimensions and prioritize what you need to focus on for each particular market or a group of markets. When you look at MAS, that has an effect on your pay out structure. It seems to be relatively the same, but probably more research per region/country is needed to see how significant this is. Use this to your advantage when you sell your program.
- So you have this cultural data. This might be information that your client gives you. You have countries, the number of employees in each market and the percentage of their global workforce. What other information do you need to know to put into this framework? If you are lucky you even get the information on what languages are required. Keep in mind that the language has to represent the language of their workforce. This may not be the same as the official language of the country. Also keep in mind if there are any secondary languages. Malaysia example: For instance this company has 900 employees in Malaysia. There are 3 languages in Malaysia. Are we going to translate into all of these languages or some, how do you make that decision? More investigation is needed. You may need to talk to the local managers. Now let’s look at the strategy element within the decision framework. Are you going to translate, are you going to go deeper and localize? Are you going to regionalize or internationalize? Or are you going to leave it in English. So how do you make this strategic determination? A lot of times we feel and it’s validated in our industry that corporations make these decisions quite randomly. They do not build a business case for their decision to translate for a particular market. So how do you prioritize?
- So we take the data that they give us. The countries represent their locations and the size of the bubbles represents the size of the workforce population in that location. Now we have to apply the decision matrix to determine translation priority. And we are going to use the cultural dimension to prioritize and help make that decision. In this case, the domestic market of the corporation is the US. This shows the locations and how far they are culturally removed from the US. Remember that that cultural distance is influenced by those 5 cultural dimensions. You also have to consider language. In this case, the corporation may decide that since China is culturally and linguistically the furthest removed from the US, the corporation may decide to prioritize that market. This is the market in where there are the most variables – determined by that cultural distance – for success in that market. They may decide to localize for that market. However, they might decide that a location like Germany – which is closer to the US culturally – may have more chances for success for implementing a program. It depends on the overall strategic business goals of the organization. If sales force or employee engagement is a key success requirement of the organization, they may decide to prioritize one that is furthest removed from them. You can do it, we can help.
- We’ve talked about LOCALIZATION, where to put your attention and budget….but REWARDS must ALWAYS be localized Should not be compromised Fulfill within country or within region (where possible) China – clocks represent death India – leather goods
- Is this the global program a corp. dictate where all do the same Or choose to participate?? In some countries, it could effect: their tax bracket government insurance mortgage rates or payments social benefits FBT must be claimed by the company i.e.: if a reseller company this could be a barrier.
- Global Technology Company Situation Looking to gain market share and solidify position as a market leader Wanted to expand its incentive efforts to reach all levels in its distribution channel, including partner resellers and sales representatives Solution Centralized technology platform that allowed each business unit have its own personalized site. Multiple programs linked through a single gateway Data collected relating to the sale and end user reported with claim Participants gain ability to accumulate all their points into a single account Meaningful collection of rewards, country-specific, culturally relevant & fulfilled locally. Results ROI of 11 to 1 Program yielded an increase in average gross profit per unit sold of 13% Data collected relating to the sale and end user have become a crucial market planning tool Participation from international partners continues to increase significantly
- Custom issues in fulfilling Appeal of time piece in all cultures Same for everyone may not work in global programs. Situation To support their direct sales force, the client was using third party call-centers to conduct pre-sell activities Call centers were operated by multiple vendors located in 46 countries Call center reps had the opportunity to earn a luxury-brand watch if they hit certain sales targets Single award did not appeal to everyone Difficulties fulfilling watches across borders Solution Centralized site where participants could easily find program information Participants earned points that were deposited into an Awards Bank System Offer a full collection of meaningful, culturally relevant rewards Local or regional fulfillment of rewards Results Inside sales growth of 50% year over year First quarter result = 4% over stretch target in US/Canada theater Quarter-over-quarter bookings over target in each region throughout the year 80% of participant say they now understand their program
- We’ve been running global programs for 6 years in 85 countries. We’ve learned that they can be very successful. This is new to many cultures and can be a powerful tool in helping you achieve global results. So don’t shy away from it because it seems complicated. Can measure success of program by PARTICIPATION Need regional focus Small 1 to 1 manager training There’s OPPORTUNITY!! Do It Now!
- Think of lost opportunities within your company and the power of a global workforce. (sales, engagement, enrollment) You have an audience you can effect. You want the world…but do you need the world??? Put you energy and $$ in the right place.