Incentive Programs Offer Budget Possibilities during Recessions

by: Nichole Gunn December 14, 2010

During economic slumps all industries feel the effects. But, traditionally speaking, the incentive industry has usually remained strong, holding its head above water.

With the effects of a tightening-of-the-belt economy, advertising and aspects of marketing are the first sectors to take the hit since these sectors’ realization of return on investment (ROI) are less apparent. This causes employers to begin their budget cuts in these programs first.

On the flip side, incentive programs’ ROI are realizable. A basis for this is that incentive programs tend to be cost-effective, and they hold fixed rates. As the norm, “the fixed rates comprise about one quarter of the program’s cost, while the rest is usually not incurred until after its effects have been implemented and registered.”

Incentive Performance Center offers its views on the subject, "For those companies with a low tolerance for risk, incentive plans can be close-ended, designed to fit a set budget." Adding to this it writes, “While not as motivating as open-ended programs, these programs can deliver improved performance during times of extreme budget stress."

During economic downturns, businesses struggling with finances and seeking to lessen the burden with budget cuts are advised to take a look at the possibilities of incentive programs. Weighing the options and thinking budget strategies through is essential.