Assignment

Of
Human Resource Management
On
Incentives in Recession

Submitted to :
Submitted by:

Lovely Professional University

2008-10
Meaning of Incentive
An incentive is any factor (financial or non-financial) that
enables or motivates a particular course of action, or counts as
a reason for preferring one choice to the alternatives. Since
human beings are purposeful creatures, the study of incentive
structures is central to the study of all economic activity (both
in terms of individual decision-making and in terms of co-
operation and competition within a larger institutional
structure). Economic analysis, then, of the differences between
societies (and between different organizations within a society)
largely amounts to characterizing the differences in incentive
structures faced by individuals involved in these collective
efforts. Eventually, incentives' aim is providing value for money
and contributing to organizational success.

Incentives in Recession
Today, because of recession people are making changes to
their daily routines to save everything from the environment to
a few bucks. This thing is affecting every kind of business
today. There is downward trend in every course of business. So
companies today are trying to adopt incentive schemes in order
to retain the employees and people’s confidence in their
organisation.

To help consumers look beyond the price tag, companies have

to come up with creative ways to increase brand loyalty—and
nothing drives business like incentives. Incentives are critical
during economic down times. If nothing else, incentive
programs should be strengthened in times like this. Why?
Because consumers are paying an arm and a leg for necessities
like gas and food, making them more and more conscious of
what they're spending on other "luxuries. Offering incentives
can help guarantee consumers stay loyal to one brand over
another. But doing it right takes time, research, and know-how.
It's important to know the target audience, and to know what it
takes to motivate them. Take something as simple as a bottle
of soda. There are plenty of different brands to choose from
and they all cost about the same. What can one brand do to
create a loyal customer? Reward them. The leading beverage
companies are putting points under the bottle caps, which can
be banked and redeemed for merchandise rewards—the "if you
stick to one brand, you'll earn points faster" philosophy.

In order for this approach to be successful—and generate

continuing consumer participation via point increments—the
reward offerings must be aspirational and attainable. By
offering a range of merchandise rewards that includes
everything from golf clubs to designer handbags, trendy
earphones and exercise equipment, the same incentive
program is now appealing to an unlimited audience.

But with an unlimited audience comes some more curves to

take into consideration. Since your audience now really is
unlimited, it's important to remember that the average
American household belongs to a dozen loyalty programs. What
will make yours better then the rest?

To ensure success, your incentive program must encompass

three elements: communication, motivation and reward. It's
important to get the word out to your target audience clearly
and efficiently. A confusing program is just as detrimental as
one that isn't marketed well. Once the program is properly
communicated, the goal set for participants must be realistic
and achievable. Giving points in increments of two, then
offering rewards starting at 150,000 is de-motivating at best.
Finally, offer great rewards. People want rewards they can use.
Logo-ed pens and mugs have their place, but not when you're
trying to build brand loyalty during a recession. So if you want
to make consumers' short lists, keep these things in mind. Your
product or service may very well become one of those
"luxuries" they can't live without.
Employees can be given extra incentives in the form of
Christmas bonuses. For many small business owners, a little
extra in the paycheck each year is a way to tell employees that
they are appreciated and help staff members on a tight budget
ease their financial strain a bit. No one wants to cut back on
perks like this, but, in a recession, cutting every extra expense
is the only way many small companies can survive. However,
while it makes sense to cut things that are actually eating away
at the meager profits of a business, employees are struggling,
too. The solution is to find ways to give employees a helping
hand without spending money that the company can't afford to
lose.

Employees can also be asked to go on a holiday. This will

reduce the workforce for sometime and will also reduce the
expenses of the organisation. Inreturn employees can be
offered some incentive so as to compensate them for their
livelihood.

Also in Canada , the Organization for Economic Co-operation

and Development, said Canada is now in a recession. They
predicted, as a result there will be a net loss of jobs in 2009
and the unemployment rate will rise to 7 percent, the
highest since February 2005. The OECD sees the jobless rate
peaking at 7.5 percent in 2010.With those statistics in mind,
there will likely be many businesses to go under. Small
businesses typically have the biggest struggle during a
recession, but major businesses are effected as well.
According to REUTERS, consumers look for the “best
deal” when looking for a product or service. Not only are they
shopping around for the best prices, they are looking for that
“extra” incentive. Businesses will struggle to stand out
from the crowd. Offering something more will not only keep you
in business through the hard times, but actually increase
sales. Even in a recession, offering business incentives have
increased sales 30% and more. The results from offering
these incentives can surpass your sales even before there
was a recession.Acquiring new clients works the same way.
It’s not just used for tangible products. Incentives are the
perfect way to get new clients for your service.

The following are the examples of some companies that

are following Incentive scheme in times of recession.

MyTicketIn.com announces its new Employee Incentives

and Employee Retention Program as a flailing economy veers
toward recession. "Now is the best time to extend a warm hand
to employees and cement bonds with co-workers in the
workplace," says company president, Malcolm Robinson. By
doing so, the employee is more likely to stay, Robinson argues,
and more likely to remain loyal in bad times and persevere on
difficult tasks with a feeling of truly being a member of a team.
Many might ask how a ticket broker can play a role in this
employee-employer dynamic.

By working with corporate employee retention programs and

management in smaller companies in locating bulk and VIP
tickets and seating to sporting and cultural events,
MyTicketIn.com has taken on a role in providing the means to
create greater employee incentives and motivation as well as
greater retention of valuable expert talent. A company outing is
still a primary way to create emotionally positive events on the
timeline of employment with an employer. Sporting events are
typically chosen because often both men and women can enjoy
rooting for a local team, even if they are not originally fans of
the team. Opportunities are created to socialize and network,
creating more trust and greater sense of relaxation in the office
during work hours.

Robinson argues that such rocky economic times as these can

trigger the expectation of layoffs and even employment moves
to other regions or to companies with less risky staffing issues,
and are therefore often the best times to reinforce the feeling
of job security and a safe and friendly atmosphere in the office.
Providing Houston concert tickets, ballet or sports events
tickets could help the average Houston-based corporation to
retain valuable employees at minimum cost, according to
Robinson.. The difference is ultimately a matter of making the
employees really care about the company they work for. It's
about making them like their jobs, rather than half-heartedly
showing up every day for a paycheck every two to four weeks.
What employees develop in terms of offsite networking and
trust-reinforcing behaviors at the basketball game or the golf
tournament can gradually become the norm in on-site working
behaviors, as well. So a simple pair of Texans tickets for
corporate Houston employees, for example, can play a pivotal
role in office relations for your average Chevron or
Schlumberger. The employer's ultimate payoff, of course, is in
terms of enhanced productivity, more successfully completed
projects and goals, as well as greater retention of skilled,
seasoned talent.

Awards Network has been producing bottom line impact

results for America's finest organizations with employee
recognition, incentive programs, business rewards and
corporate gifts for more than 50 years.

Awards Network is now offering referral and wellness incentive

program solutions to clients seeking to reduce costs and
recession proof their business. Attracting and retaining quality
talent and loyal customers is a top priority for organizations
large and small."In this day and age organizations are looking
to compete in a difficult economy," Bob McDowell, Director of
Sales at Awards Network reports. "Referral and wellness
incentive programs are one way of recession proofing your
company by solidifying the relationships between employees,
customers and the business itself."This summer has been
especially difficult for businesses as the burdens of rising
energy costs, the housing crisis and inflation have started to
affect consumer spending. Recession proofing plans that
include employee and customer recognition and incentive
programs are becoming prevalent as companies are seeing
that sustainable growth is possible in a stagnant economy
when these plans are in place.

"Incentive award programs engage employees and increase

loyalty by employees and customers," McDowell states. "Our
referral and wellness incentive programs are in high demand
because companies are implementing them as tools to retain
and attract new and current employees/customers and also to
keep the workforce healthy, happy and on the top of their
game. This in turn leads to a happier, more productive
workforce that can handle the heavier workloads and longer
hours better than workforces in years past."Awards Network
customizes and quickly implements each incentive award
program and works one-on-one with clients to ensure that all
deadlines and expectations are met."By providing the best
service to our clients coupled with lifestyle, award
merchandise," McDowell explains, "our clients are able to have
the incentive award program function as part of an overall
recession proofing plan. By providing incentives and
recognition for employees and customers, many of our clients
are able to remain competitive in their respective industry
despite the current economy."Awards Network designs flexible,
online incentive programs and performs all of the
administrative and gift fulfillment functions of the program.
When coupled with an overall recession proofing plan, incentive
awards become an umbrella for companies seeking to weather
the rough economic climate.

Conclusion:-

Although there is increase in incentives in some companies,

with the recession showing no end in sight and the current
spotlight on executive pay, many U.S. companies are cutting
back on the annual bonuses and long-term incentives they pay
their executives, according to a survey by Watson Wyatt, a
leading global consulting firm. Watson Wyatt’s survey, “The
Effect of the Economy on Executive Compensation Programs,”
found that one in two companies (49 percent) plan to reduce
the size of their executive bonus pool compared with last year.
Of these companies, 30 percent expect a cut of up to 20
percent, 35 percent expect a cut of 20-to-50 percent, 23
percent expect a cut of 50 percent or more and 11 percent do
not plan to pay any annual bonuses at all. Watson Wyatt’s
survey, conducted in December 2008, includes responses from
264 companies across a variety of industries.“Companies are
going into 2009 expecting hard times,” said Ira Kay, global
director of executive compensation consulting at Watson
Wyatt. “Given the enormous pressure to respond to
shareholders, who have been hit hard by the economic crisis,
it’s no surprise that all aspects of executive pay programs are
being scrutinized.”

Included in that review are long-term incentives. Almost one in

four companies (23 percent) expect the dollar value of their
long-term incentive grants to decrease in the next year, most
likely as a consequence of the recent fall in the equities
market. In terms of other long-term compensation vehicles,
companies are putting less emphasis on stock options and
relying more on performance-based restricted stock in the
coming year.

Bibliography

• http://en.wikipedia.org/wiki/Incentive

• http://www.managesmarter.com/msg/content_display/ince
ntive/e3i373c967eb1bb9ca14007722d2a53cc2d
• http://freegasvouchers.wordpress.com/2008/11/27/canada
-now-in-a-recession-how-will-your-business-survive/

• http://www.citehr.com/10878-usefull-hr-websites.html