Employee Achievement Programs Make a Difference

The demand for and use of employee achievement and recognition programs continues to grow. In these leaner economic times companies are looking inward at the best resource they have to address growing demands to reduce costs, increase productivity, reduce accidents and improve customer service…their own employees.

Employee-based achievement programs are hardly new but the number of companies willing to recognize and reward non-sales personnel for achieving corporate goals continues to rise. The reason—who is in a better position to recommend ways to make a job more efficient, safer, more productive, easier or less costly, than the employees, those who live their jobs day in and day out. But beyond the more measurable benefits directly linked to achieving corporate goals, there are important intangible benefits including improved employee morale and improved relationship between employees and management.

By recognizing and rewarding employees for their knowledge, commitment to corporate goals and participation in the efforts to achieve those goals, your client is setting the foundation for long term success—a win-win proposition for you and your clients.

How Do You Put Together a Company-Wide All Employee Program?

• The following are general guidelines for what must be put in place to effectively initiate, develop, launch and implement an effective all-employee program.

• A corporate-wide all employee achievement programs must be derived from specific goals which can be clearly measured and effectively communicated.

• The program must be "packaged" or positioned in a clear, concise and memorable format.

• Senior management support is essential, however "buy-in," commitment and support must come from all levels of management.

• Specific program initiatives must produce measurable results that directly impact the bottom line and deliver substantial ROI.

• All elements of an employee achievement program must be linked to the achievement of specific and clearly defined goals.

• Participating employees must be presented with timely awards at a value commensurate with their efforts and contributions. A base award earning opportunity should form the foundation of the program and be linked to achievement of corporate goals. In addition, instant award and discretionary award opportunities should be present to generate ongoing enthusiasm and reinforce the overall importance of the program.

The program must be clearly, effectively and frequently promoted in order to build awareness and maintain enthusiasm and excitement.

Employee Achievement Programs & Taxes

There is much confusion and many misperceptions about taxes and employee achievement programs. The following are answers to some of the most frequently asked questions about employee achievement incentive rewards and taxes.

1. Are Gift Certificates And Debit Card Rewards Taxable?

There is a common belief that Gift Certificates Debit Card Rewards don't have to be taxed since they are not cash. This is not correct. They are in fact taxable. Here is a summary of what the IRS tax code section says... An incentive award cannot be in the form of cash or a gift certificate (other than a non-negotiable certificate conferring only the right to receive tangible personal property). Any certificate that may be converted to cash is not "tangible personal property" and cannot qualify for preferential tax treatment.

2. Are Employee Achievement Awards Non-Taxable?

The Tax Reform Act of 1986 dictates that an employer may deduct the cost of achievement awards given to the same employee up to $400 in any year. If the incentive awards are awarded as part of one or more established written plans or programs of the employer, the $400 deduction limitation is increased to $1,600 per employee. This means that if your client establishes a formal safety or years of service program, they can award up to $1,600 for an individual employee but no more than an average of $400 per employee for all employees.

An "employee achievement award" is defined in the Internal Revenue Code (IRC) as an item of "tangible personal property" transferred by an employer to an employee for safety, achievement or for length of service. Moreover, the award must be given as part of a meaningful presentation and cannot be disguised as compensation to the employee.

Accordingly, to be tax exempt, an incentive award cannot be in the form of cash, charge or credit card or a gift certificate. Also, other items that are not tangible personal property and hence not tax exempt include travel, vacations, meals, lodging, tickets to theater or sporting events and stocks.

3. Are Years of Service Awards Taxable?

A length of service award can be excluded from an employee's income only if it is "tangible personal property" and is received after his first five years of service.

4. Are Gifts With Company Logos Taxable?

Logo'd gifts UNDER $4.00 US in value are tax-free. Anything OVER that is taxable—regardless of whether or not it has a logo.

5. Are Other Employee Achievement Awards Such As Recognition or Productivity Programs Tax Exempt?
   

   The old regulations in effect before the enactment of the 1986 Act defined an achievement award as an item of "tangible personal property" given to an employee for length of service, productivity or safety achievement. The 1986 Act, however, specifically does not include awards for productivity in the definition of employee achievement awards. The 1986 Act exclusively states that an incentive award can be given to employees for safety achievement or length of service only.

   Note: The information published here is not intended to serve as tax advice, consultation guidance. Companies sponsoring incentive programs or employee achievement programs should consult their tax attorneys to verify the taxable status of their incentive rewards.

About The Incentive Federation

The Incentive Federation was formed to protect the rights of organizations to motivate customers and employees through the intelligent and ethical use of incentive programs. Comprised of the leading associations, trade shows, and some of the top suppliers in the incentive field, the Federation monitors Federal regulations that could affect the proper use of incentive programs and lobbies against proposals that could hinder the ability of businesses to properly use incentive programs. As part of its industry services, the Federation also conducts the only regular research on use of incentives by U.S. organizations, and manages the Incentive Performance Center,

the industry-wide effort to promote professional use of incentives.

For information, call 908-233-4009 or e-mail: IncentiveFed@aol.com.

Need Help With Incentives?
Check Out www.incentivecentral.org

Incentivecentral.org is a portal to the incentive business created with funding from The Motivation Show and the industry's leading trade associations. Incentivecentral.org was created to provide business management with objective and thorough information on all |aspects of incentive programs and to list all available resources without favoring one commercial entity over another. At this site you will find case studies, industry articles, benchmarking tools, incentive rationale and more. It’s a tremendous resource and a tremendous tool to help you sell incentive programs.

Sales And Prospecting By The Numbers

Selling is about developing relationships, identifying problems and presenting solutions. Selling is also a numbers game. Although there is no sure formula, here is one guideline that many successful incentive sales managers have been known to live by:

• 1 sale needs 6 qualified presentations or white papers

• 6 pitches need 24 prospects

• 24 prospects need 100 suspects

• 100 – 24 – 6 – 1

Another way to look at it: A goal of $1.5 million might need a prospect pool of $9.0 million.
OR…A better conversion or close ratio, say 1 of 2 instead of 1 of 6.

Additional Thoughts on Selling

Time Management is Critical

• Do everything you have to do to win… but only those things you must do!

• Know the difference between a "prospect: and a "Suspect." You spend time with a prospect and waste time with a suspect.

Be Efficient

• Embrace technology, don’t bury it. Sales people who use automated systems are 43% more productive than those who don’t!

• Put your best prospects on speed dial

CATALOG REMINDER

• Catalog Expiration
  As you meet with clients and begin planning 2003 incentive programs, keep in mind that the Deluxe-Lite Catalog will be new for 2003 as will the Deluxe Catalog. The Plateau Catalog series, Reflections Gift Collection and The Canadian Catalog are all good through 2003 with redemption through March of 2004.
   

• Online Catalogs
  Don’t forget that the Deluxe, Deluxe-Lite, Plateau Collection, Reflections Gift Collection and the Canadian award vehicles are all available online.