IRF Releases New Master Measurement Model to Measure Incentive Program ROI

St. Louis, MO – October 27, 2010 – “Mastering Measurement: The Critical Performance Elements of Incentive Design,” a new study available from the Incentive Research Foundation (IRF), addresses how to measure the short- and long-term impact and return on investment of incentive and recognition plans. The study, available at http://www.TheIRF.org, is designed for professionals who design incentive and reward programs, whether as organizational staff or external consultants.

 

The new IRF study updates the 1992 “Master Measurement Model of Employee Performance” to address the current dialog and studies related to the best application of measurement and incentives. It is based on an analysis of the latest research on measurement and incentives as well as on input from a Delphi panel consisting of more than 70 experts and practitioners in various aspects of performance measurement who contributed their viewpoints in a series of collaborative virtual meetings.

 

“This study provides new insights that build on the original Master Measurement Model and is especially relevant in today’s economic environment,” said Rodger Stotz, Chief Research Officer of the Incentive Research Foundation. “This study addresses the current need for a more robust way for organizations to measure performance.”

 

Illustrated by case studies from leading companies, the updated study provides a step-by-step process for developing effective measures, incorporating several essential elements not addressed in the original study:

 

·        Causality—the need to address better ways to identify the actual causes behind the behavior change or performance improvement;

·        Cross-functional issues—the need to look at how the incentive program might affect or be affected by performance in another area of the business;

·        The factor for unintended consequences—the need to identify and account for potential side-effects of an incentive program that could negatively affect performance, such as driving one behavior at the expense of another;

·        The return on investment—the importance of using conservative estimates when determining projected value of performance improvement.

 

 

Here are the updated steps to successful measurement as outlined in the study:

 

Step 1: Understand the corporate strategic plan.

Step 2: Gather and analyze performance data (with the help of an employee involvement process).

Step 3: Align measurements to the overall organizational goals and objectives.

Step 4: Conduct a risk analysis for unintended consequences.

Step 5: Analyze the data against business-driven needs.

Step 6: Build a business case based on “predictive analysis” to address causality

Step 7: Convert to dollars.

Step 8: Continue to track metrics, adjust, and continuously improve.

 

 

 

The Incentive Research Foundation (www.TheIRF.org) funds and promotes research to advance the science and enhance the awareness and appropriate application of motivation and incentives in business and industry globally. The goal is to increase the understanding, effective use, and resultant benefits of incentives to businesses that currently use incentives and others interested in improved performance.