The ROI of R&R
May 05, 2008
How do you measure the value of a travel incentive if the goal is reduced turnover?
By Virginia Randall
Profile Industry: Architecture
Objective: Encourage collaboration and strengthen retention as the firm's size quadruples over a span of 10 years.
Solution: Spend 4 percent of budget on incentive programs like quarterly employee luncheons; an Employee of the Quarter recognition program with gift card award; and an innovative points-based program that enables top performers to attend the company trip to resort destinations.
Results: Low turnover and high morale in a period of rapid growth; WESKetch has won two "Best Firm to Work For" awards.
In the foyer at WESKetch Architecture, an award-winning architectural design firm based in Millington, N.J., the two "Best Firm to Work For" plaques take pride of place among other awards on display. "A firm does not grow fourfold in ten years and have a national body of work without having a stellar staff," says William Kaufman, WESKetch founder and principal. "We hire the best, they perform the best and they deserve to be treated as the best."
Since the firm was founded in 1996, it has grown to 30 employees and four studios. The challenge, according to spokesperson Kristian Dyer, was to "maintain the feeling and appeal of a smaller place of business while continuing to expand."
More is at stake than mere atmosphere. The overall goal was to improve collaboration during the design process so that different disciplines in different studios work together seamlessly. Architects could then work with interior designers more easily; construction administration would better understand how to work with other studios, and employees could feel comfortable enough with the firm's principals and directors to foster a two-way flow of ideas and inspiration.
To get to that point, WESKetch offers a rich package of employee benefits, combined with an incentive program that rivals those of much larger firms. In the past five years, according to Anastasia Harrison, associate and Director of Marketing and Business Development, the firm increased the entire benefits package to include health, dental and life insurance, employee profit sharing and a 3 percent Safe Harbor 401k plan.
In addition to great benefits, in the past two years, the firm's investment in its incentive program has soared. WESKetch offers an annual company picnic and a holiday banquet; and employee birthdays and anniversaries are celebrated quarterly at company luncheons, bringing economies of scale and time, while adding to a team sense of celebration. The recently instituted "Employee of the Quarter" award combines firm wide recognition with an American Express gift card for the employee who shone during the previous three months; an annual award recognizes the top performers for the year.
 And then there are the company's trips that combine training and development (T&D) with R&R, using structured programs at resorts to reward performance, build team spirit, develop project ownership and recognize emerging leaders and patterns for growth.
The company makes it a special point to reward performance. In fact, it has built its travel incentive program around points awarded to employees who exceed project benchmarks, marketing efforts on behalf of the firm, business development and recruitment efforts, as well as more traditional benchmarks such as project profitability, meeting or exceeding project deadlines and project referrals.
All employees are invited to work for points toward the company trip (this year, Jamaica), meeting with supervisors to discuss their game plan. Points are accumulated over time, and can be carried over from year to year to meet the qualifying amounts. Unlike other incentive programs, employees can earn additional points to bring a significant other on company trips to resorts in exotic locales such as Mexico and the Dominican Republic.
The company trips use themes that combine training and development with recreation. In 2007, 18 employees and their guests participated in an excursion, billed as 'WESKarribean' by the firm. A trip to Cancun included a tour to local Mayan ruins—an area of particular interest to an architectural and design firm. The group also picked up practical knowledge at a seminar on the building process; architects could also take an exam to obtain learning credits for their license.
In a more recent trip to the Casa de Campo resort in the Dominican Republic, the theme was Core Values. Besides the teambuilding fun of beach soccer, volleyball, skeet shooting, and group dinners, attendees gained more insight into the firm's dedication to "green design." A movie night event featured a documentary on environmentally sensitive building practices, followed by a group discussion to brainstorm ideas and insights on hot-button design issues. A morning session continued the green theme using a LEED (Leadership in Energy and Environmental Design) Green Building Rating System seminar to broaden understanding for the design process. Other in-depth explorations of the firm's Core Values took place outdoors, on a veranda. The last evening, the firm enjoyed a buffet at a breathtaking scenic overlook at Dye Fore Terrace.
Assessing the Return
The total incentive expenditure for firmwide rewards currently represents 4 percent of the fiscal budget, having grown by 12.5 percent over the past year. With a low turnover rate, the average tenure for a current employee at the firm is four years. Making this number more impressive is the fact that the firm has grown by 45 percent over the past two years.
Spending money on incentives to keep turnover rates low makes good business sense. According to a report by the Saratoga Institute, a division of PricewaterhouseCoopers, turnover-related costs represent more than 12 percent of pretax income for the average company. Other studies estimate that it costs some $50,000 to replace an employee.
"Because the employees feel appreciated, the turnover rate for the firm is far below the national average," says Dyer. "The return-on-investment is seen in the fact that people look forward to coming in to work every day. You're working with friends and you're working for friends. It could be easy to be lost in the shuffle, to be just a number on the payroll, but that's not the case here. I feel appreciated, and I feel like WESKetch wants me here."
But for Anastasia Harrison it's more about people than ROI numbers, "I don't know if you can really put the firm's programs into terms of dollars and cents. Can you really project numbers for a happy workplace or employees who don't want to leave?"
Send comments to incentivemagazine@nielsen.com.
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