The ZIZO Effect

Ep 7 Smart Spend, Big Impact: Budgeting for Meaningful Incentives

• ZIZO Technologies Inc. • Season 1 • Episode 7

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In this episode of The ZIZO Effect podcast, join Andrew Reimers and Jimmy Chebat as they dive into the crucial topic of budgeting for meaningful incentives. Learn about the balance needed to motivate your team while aligning with your business goals and maintaining your budget.

This episode covers strategic incentive budgeting, innovative reward distribution strategies, and how to create a balanced reward system that meets everyone's needs. From understanding the high costs associated with attrition to the effectiveness of micro-rewards, discover how carefully crafted incentives can transform workplace dynamics and enhance productivity.

For further insights, click here to access our whitepaper on 'Budgeting for Employee Engagement/Reward System: A Comprehensive Approach.' Whether you're a regular listener or new to the podcast, prepare for an insightful discussion on maximizing every dollar for peak team performance. Get ready—It's Game Time

Andrew Reimers:

Welcome back to The ZIZO Effect podcast. Today, we tackle a vital topic: strategic budgeting for incentives. It's all about finding the right balance - how to craft incentive programs that truly motivate our teams, align with our business goals, and fit within our budget. We're looking into the challenges of budgeting for incentives, exploring effective strategies for reward distribution and designing a balanced reward system that meets everyone's needs. Get Ready - It's Game Time. Hello and welcome back to The ZIZO Effect podcast. I am your host, Andrew J. Reimers and I was once on a local game show called Masterminds.

Jimmy Chebat:

Nice. I'd like to hear more about that. But first I am Jimmy Chebat, co-host of The ZIZO Effect podcast, and I am a jack-of-all-trades master of none. A nywhere from carpentry, plumbing, electricity, which I don't really enjoy doing that part. Yeah, I got zapped a few times, okay. But yeah, bringing things to life, creating, building, not just technology, but I like working with my hands as well.

Andrew Reimers:

That's awesome. That's great to know. I think that's an important tool.

Jimmy Chebat:

Yes, and one that I think is one we should teach our kids.

Andrew Reimers:

Yes.

Jimmy Chebat:

I think it's important to be able to handle a power drill. I think it's one of the necessities of being a man, but tell me about this Masterminds game show yes, so, my goodness, this is one of the most embarrassing moments of my life. Really, and you've had plenty right, yes.

Andrew Reimers:

We'll get into the time. I ended up naked in the Hotel Lafayette, locked out of my hotel room on my wedding night, but that's for another episode. No, I was in high school. I think I mentioned on a previous episode I was senior class president, and we had a team of educated people that took school seriously and they got nominated and were selected to be on a game show. I believe it was on the Empire Network. For those of you in Western New York, powered by Adelphia.

Andrew Reimers:

Yeah, Adelphia cable. Yeah, they had a game show called Masterminds and our team was selected and on the day of the shooting, two of the members got sick, and we had to scramble to find replacements. Nobody wanted to do it, except for my friend Steve, who I would say wasn't quite qualified to be on a Masterminds game show. But since he agreed to do it, I said you know what, I'll join you. We went, we lost 180 to 30.

Jimmy Chebat:

So what was the embarrassing part? The losing by that much or did you like answer like wrong?

Andrew Reimers:

Well, yes, we answered out of all of the questions we answered, you know, 90% of them incorrectly. Some of which we didn't even have wrong answers for because the question was so far over our heads. But anyway, it was an experience. You know, I would love to someday be on wheel of fortune or uh, family feud or something like that. Doubt I'll ever have the motivation to really pursue that, but I can say in my life I have been on a game show and it went poorly.

Jimmy Chebat:

Well, I mean, that's one off the bucket list, right. I've never been on a game show, but maybe that should be on my bucket list. We might have to start a game show here. You got a face for TV, my man, I like it.

Andrew Reimers:

Well, cool, let's jump into the episode. Let's do it. So, by now our audience knows we like to start every episode with a game, we are a gamification podcast, after all, and that game is called Name the Game. And our wonderful producers, Emma and Alex, backstage, they are going to play a song from a video game, and we have buzzers here and the first one to guess the song correctly wins.

Jimmy Chebat:

Yep, simple enough.

Andrew Reimers:

Simple enough. So right now my record is three, two and one. You are two, three and one. Two, three and one.

Jimmy Chebat:

Yeah, so it's a close race, it is. I need to. I need to win this one, you need to win this one to tie it back up.

Andrew Reimers:

Keep it close, yes, okay, so hands on the table. And one more thing we will give our audience a chance to participate at home later on in the episode. Got it, let's do it, let's do it. Not familiar with this one.

Jimmy Chebat:

You any thoughts? No, I'm pulling my hand off here. That's a difficult one, ladies. Wow, yeah.

Andrew Reimers:

They stumped us. They stumped us, but based on the look on their faces, we should have got it.

Jimmy Chebat:

Okay, you know what, let's leave this one to the audience, since none of us got it. Yes, since nobody got it, they can guess on this one. We can save the name the game for our audience, one for another episode. Okay, so we have some. Yeah, and why don't you tell them what they win?

Andrew Reimers:

Neither one of us were able to name the game, so that adds another mark to the tie. Yes, so I am three, two and two. You are two, three and two. We still haven't decided on the stipulation. What's going to happen to the loser of this competition? I suggest they have to shave their face for the entirety of season two.

Jimmy Chebat:

You tried to suggest shave their heads and that's insane, but yeah.

Andrew Reimers:

I don't know about the entirety. I don't want to shave my head because I'm worried it won't grow back. I think this tie is holding it all in.

Jimmy Chebat:

I would say shave your face for one episode, because it grows. I can't shave every single day. It's just a pain in the butt. That's one of the reasons why I grow it is. I don't want the maintenance, just trim it up.

Andrew Reimers:

Well, this is tremendous content.

Jimmy Chebat:

Very engaging and compelling.

Andrew Reimers:

I think it's important that we dive into business. Yes, and today, as we discussed at the top of the episode, we're going to be talking a lot of topics today, but where we're going to start is incentives and compensation. So you know, this has been touched upon, Jimmy, in previous episodes. But incentives and compensation, why don't you tell me what's the difference?

Jimmy Chebat:

Very simply, I don't have definitions here today. Usually we do the definitions, but compensation is you get paid to do a job and it has legal ramifications. Some people sign a contract and they agree to terms. You do this service for me and you pay me X amount, whereas incentives is almost like a pay for performance. You know not commissions. Commission is part of a compensation plan. Incentives is a luxury. Yes, it's not mandated, it's not mandatory. Not everybody needs to participate. You perform, you get paid, and it all depends on what sort of incentive programs people have and it's not taxed, it's Well wait a minute.

Jimmy Chebat:

If the IRS is watching here. They're going to have a different opinion, so you are by law required to tax. You don't have to, but you can't claim it as an expense.

Andrew Reimers:

So, uh, that's good to know for any business and operations and owners out there that are listening.

Jimmy Chebat:

Yeah, you take it almost as like a profit. Right Again, it's not tax, it's not, it's not right. You can't write it off, um, so you're not paying, so people aren't paying taxes, but you ultimately, as the business owner or the organization, pays the tax. So, somebody has to pay a tax on every dollar that's ever made in this here, United States of America.

Andrew Reimers:

Oh, I'll have to go back and get my paperwork from all my gigs over the years.

Jimmy Chebat:

Yeah, we will not broadcast this to the IRS. I know we won't tag them in this episode.

Andrew Reimers:

Yeah, no, we won't tag them. But that honestly brings me to a question, jimmy, that I almost feel silly asking. But I think it is important for the people at home to really understand. Why do people need to be incentivized?

Jimmy Chebat:

We talked about in our last episode motivation, intrinsic motivators, ways to keep people engaged, and we've mentioned that word many times engagement, especially among. Well, again, we talked about do we have that disclaimer? We should put that on. We're not beating up on Gen Z, but to engage all generations, yes, especially mundane tasks. Gamification is a great way, incentives is a great way to keep them engaged, keep them motivated. So that's one of the reasons why we need to incentivize.

Andrew Reimers:

Yeah, and you know we teased in the last episode about all the ways you can incentivize your employees. There's different companies that are designed specifically for that, that companies can get into contracts with and they can reward, they can give badges, whatever it might be. But what do we always hear when we talk to customers and what do we always hear when we talk to people is that they don't have a budget for an incentives program. Now, you said in the last episode that we had some creative and unique ideas for where that money could come from. You just need to know where to look. Can I ask you, what did you mean by that?

Jimmy Chebat:

Before I answer that question directly, I do want to clarify. When people say we don't have it in our budget, they usually mean one of two things One, we don't have the money for it. Or two, we have a budget and there's no line item allocated for this. So in either case I have the same answer, which is what do you have budgeted for attrition? And you know, when I ask that question people kind of give me this quizzical look like. What do you mean? You know we don't have a budget for attrition.

Jimmy Chebat:

And I say okay, well, how do you pay for attrition, meaning in attrition, when people quit, or you lose people or you fire people. They leave the job and you have to replace and there's a cost to that. And that cost varies from company to company, depending on your onboarding, depending on what you pay, your team, what you pay, how long your training program is it could be specialization.

Andrew Reimers:

I mean it could be months long training.

Jimmy Chebat:

Yeah, and if you're in a regulated space, there's a lot of compliance attached to that and that's that's additional cost to get people up to speed, because if they're violating any regulations, that's going to cost you way more money. There's quality control. You know, if you, if you're a frontline worker and you're talking to customers, that's your brand that you're putting at risk. So in any case there is a cost, the average cost in call centers. Again, we try to focus our research on call centers because that's who we primarily work with.

Jimmy Chebat:

Where it's a high level of attrition, it's mundane tasks and repeatable tasks and a job that is usually just a job. It's not a career. People don't make a career out of it. It's about $7,500 per new hire, but you factor in and I've heard anywhere from $3,000 where you've got companies that have offshore accounts, the labor is a little bit cheaper, but all the way up to $40,000. And when it's that high, people are also calculating loss of opportunity, brand risk.

Jimmy Chebat:

But simply, if you want to measure and calculate your attrition cost, take a look at how long or what it costs you to recruit. If you have headhunters, you're paying an extra 15, 20, now even 25% to the headhunters to try to find you people and then you've got to onboard. You got to hire them, interview them, then hire them, then onboard them. Yeah, and one of the scenarios that I always like to share and I get so much agreement with this is in those frontline worker jobs you have to interview 100 people to come up with, we'll call it, 50 candidates, for 20 people to accept a position, for 10 people to show up on day one, for five to make it through training and maybe one or two to last more than 90 days.

Andrew Reimers:

So you're talking. I mean the cost of attrition, I mean and that includes people who end up not even working for you- you have to budget that because you're spending resources on that process.

Jimmy Chebat:

You have an HR department you have to pay for. You have whether you're using Glassdoor, Workable, I don't know what other recruiting tools are out there. You pay for those services as well. Yeah, and you know the interview process. You know whether you some people include operations teams in the interview process not just HR.

Andrew Reimers:

So, Jimmy, I mean you're talking about, I mean there's a cost that goes into people who end up not even working for you.

Jimmy Chebat:

Yes, you know it, because there's so many different resources that you're using to hire people and whether you're paying headhunters well, usually headhunters, you only pay if they get hired. There's a lot of tools that are out there, but when you're onboarding people and you know when I talk about that number of people that you actually hire that don't actually show up you know you're setting up their emails, you're setting up their user accounts in all of the systems of record that you need, you put them on payroll and then they don't show up. You have to then reverse that process and there's a cost to paying for those licenses but also the time involved for somebody to do that, whether it's IT, hr or operations, and we've talked to companies who have had 100% attrition rates, where they're turning over their entire workforce year after year.

Jimmy Chebat:

Yeah, and that's a great formula I think we should probably share with the team how to measure your attrition. Yeah, it's if you go back 12 months and you take a look at your roster and you see the number of people full-time employees if you want to take the whole organization or just the department, take that number, look at your roster today and take that number, add them together and divide by two. So if you had 90 people and then you had 90 people a year ago or we'll call it 110 and then 90 people today, combine your 200, divide by two, it's 100. You calculate, you divide that by the number of people that have either left or that you've hired. Either one works. So if, over the course of the past 12 months, you've hired a hundred people, your attrition rate is a hundred percent. If you've hired 50 people, you divide that by a hundred, it's 50%.

Andrew Reimers:

So you do the math and then multiply it by your average cost per hire and that is your cost of attrition and that is the budget that I want you to pull from, and that's one and another example that I love that you taught me that makes so much sense and really puts into perspective a proper incentives budget is there. Yes, we talked in the past about what are people doing short-term to get employees through the door they're throwing

Jimmy Chebat:

money at them right.

Andrew Reimers:

Yes, extra dollar, two an hour. Well, there's a pretty cool formula that if you want to create an incentives budget for your employees rather than paying them, that extra dollar an hour to try to get them through the door.

Jimmy Chebat:

The money is in the comp right. So, rather than what I found is a lot of people, it's a very competitive marketplace for trying to hire people and it's almost like a carousel. People are just trading, they're going from one job to the other, to the other, and so to attract that talent, they're saying we'll pay you more, we'll pay a dollar an hour more, we'll pay $2 an hour more, so they're increasing their cost by offering a higher compensation. And so yes, for we say, rather than just universally giving everybody a raise, why don't you take one of those dollars and you put it into your incentive plan? And the calculation that we have in terms of per month, it's a $1 per hour, eight hours per day, and there's usually around 22 business days in a month, and so 22 times eight is 176. It's $176.

Jimmy Chebat:

Let's say you have 100 people in your department, you add two zeros to the 176 and you got $17,600 per month that you can put into your incentive budget. And again, we'll talk about how to distribute that here shortly and we've talked about it in the past and how to make sure that you get everybody involved and you're paying for performance. And then you can even take another dollar that if you're offering, trying to offer people $2 an hour and say when you get to this rank level, you automatically get a raise, you automatically get a raise. And that's another strategy that we use and we share with our customers and our clients to say that keeps them there because they see that carrot, they see that compensation raise within reach. And now you have a way to engage them, you have an incentive within reach to keep them there longer. And I'm not saying this solves your attrition problem.

Andrew Reimers:

It puts a pretty big dent in it, yeah absolutely, and I think the next question, logically then, is okay, we found the money. We know that there's no attrition budget, but there should be, and people need to start calculating that. We know that a dollar extra an hour, it would actually equate to $176 per month for an agent to be able to incentivize them and and, and you know, invest in them and they have the potential to earn even more. But so, jimmy, we found the money. Let me ask you this how do we distribute it.

Jimmy Chebat:

Well, that's the million dollar question, right there. Right, because you don't want to take all of that money and put it into a handful of contests. Right, because if, let's just say, you do five contests during the month, more than likely the maximum amount of people who are participating is five. Right, if it's five different people that win those contests and that's what you normally see is, your top performers are going to be the ones that win the majority of any contest that you put out there. If you're doing a free for all a battle royale is what we call it where everybody's competing for one prize so you've got to be able to distribute that and share that across your entire workforce and what we call micro rewards, and you've got to do it objectively.

Andrew Reimers:

Well, yeah, Objective is the key word there, because so often we've talked in the past about the problems with gamification and really one of the don'ts of gamification was having subjective rules and subjective leadership deciding who gets what prizes. So, yes, remaining objective, making everybody feel that they're being rewarded fairly, and that's not again just rewarding your top performers for always being the best. That's not going to motivate the people that are either new maybe they are tenured but just don't have the talent or haven't had the chance to learn. What about offering multiple rewards for different KPIs, key performance indicators that we're tracking? You don't want to just reward. Hey, whoever sells the most this month gets a prize. Well, there's other behavioral things that go in to that main KPI.

Jimmy Chebat:

Yeah, and what we do with our clients is we help them find those KPIs. So there's always a primary metric that most operations team focus on, and if you're a sales team, that's usually revenues, and tied to revenues is number of deals closed. And again, one person can close a deal worth $10,000 and the other person can close 10 deals worth $500 a piece. And who's better? Is it the number of deals or is it the dollars? And most people will prioritize dollars before number of deals, but they're both equally important, especially if there's usually an average deal size.

Jimmy Chebat:

But then you break that down further and you say well, you know what we call reverse engineering, the primary KPI. Well, how do you get those deals closed? You've got to make phone calls. It's a behavior, right, that leads to a result, and so you know it's not the most important metric, but it is important, especially early on, and so you can reward that. And then maybe those calls lead to appointments or meetings and then those meetings turn into demos and those demos turn into opportunities and those opportunities turn into proposals and then those proposals hopefully turn into deals that close and then bring in some revenue.

Jimmy Chebat:

So all of those are metrics, but you mentioned something it doesn't always have to be a performance metric. It could be behavior, which is a huge thing nowadays, like time and attendance. We hear that all the time. People are showing up late, they're not working their hours, they're not working their schedules, and in operations, people have certain time zones where it's peak busy times and they need more people online, especially if you have a remote staff. We hear a lot that people are providing you can work any schedule, but we'd like for you to submit your schedule and we'd love for you to work during these hours, because we have the most volume of work during these hours and so incentivizing you know hours.

Andrew Reimers:

Oh yeah, I mean you talk about peak hours. I mean there's ways to involve gamification where we know that the hours between 10 am and 2 pm is our busiest time.

Jimmy Chebat:

We're going to double rewards during that time. Yeah, there's so many different ways that you can spread that budget and maximize its effectiveness, as opposed to just putting them all in a handful of contests and you know. But there's a problem with that right. It takes a lot to administer all of these different things, and that's a big question that I think that people are going to ask.

Andrew Reimers:

Yeah, and it's really all about balance. It's about having a balanced reward system. We're not putting all of our eggs in one basket. We're not rewarding the same people over and over. So you know, it's about strategic budgeting and I just wanted to cover some of the benefits of a balanced reward system. So the first one I feel is obvious but is worth saying there's going to be increased employee satisfaction when you're building a balanced reward system. Everybody's going to be earning something, or at least have that chance, the reasonable chance, to earn a little bit extra.

Jimmy Chebat:

Yeah, inclusivity is a term that's been thrown around and usually you hear it in the DEI conversation, but within even that conversation, it's really important to provide equal opportunity for people. And I think when you create a diverse distribution plan strategy where everybody has a fair opportunity to win those incentives, because if you are just doing, hey, we're going to do the contest where the most sales wins, that's really not that fair because you've got people who have been there longer, who have higher skill sets, who have been trained, and they have a distinct advantage, and so you're going to alienate the rest of the workforce. So if you have fair, equitable, inclusive systems that allow you to distribute across, then, yes, you are going to have a much higher employee satisfaction rate.

Andrew Reimers:

For sure. And that brings me to the next point, and you mentioned the cost of attrition. Well, let's talk retention, because I can give you an example. One of our customers and I won't say who they are, they're a smaller company but they're at one year without any turnover. And listen, they use ZIZO, I'm not going to hide that fact. But they have a balance and strategic reward system built in that in a collections agency, people are happy working at this job because of the incentives and they're motivated to do better because they've seen the potential of gamification. So balance reward system it's going to help with that attrition rate.

Jimmy Chebat:

Yeah and look, I'll give you a compounded benefit of retention. You've been there for a year. You acquire skills during that year. The quality of the output is much higher. And so when we talk about ROI return on investment you look at attrition. There's a cost to attrition and the number of people that you save multiplied by your cost of new hire, that's right there, return on your investment. But something that's more difficult to measure the quantitative is what is the quality of output? The increase in performance? We're not. We're leaving out the performance increase due to the contest and the incentives. I'm talking about the increase in performance due to the increased skill sets. Yes, and experience.

Andrew Reimers:

Well, to that point, nobody's left in a year, nobody's been fired in a year. Everybody there plays their role. They're performing, they know exactly what their strengths are, their weaknesses are. Leadership makes sure that contests are designed, you know, so that lower performers teamed up with a higher performer and they work together. And yeah, it's really, I mean, it's really an incredible thing and I feel like a proud father with them.

Jimmy Chebat:

Yeah, as you should. I mean you've been a part of their success as customer success in your role. Funny how that works.

Andrew Reimers:

Yes, funny, how that works yeah.

Jimmy Chebat:

A big part and we'll get into this maybe in future episodes is the transparency. I think people, like you said, they know what's expected. Right, that is front and center and that helps build trust. And different episode, different conversation, but you know, finishing the conversation of the benefits, a more trusting workforce that comes from both the transparency, but also understanding and knowing that everybody has the same opportunity to earn. There's nothing unfair. They have a really good budget, by the way. And the bigger the budget that you have and we'll talk about budgeting here in a second the bigger the impact and the bigger the ROI. You're absolutely right and I can tell you

Andrew Reimers:

You know one last point on this. As far as the benefits, I know that I've worked in some places that were miserable and I've also worked places that included incentives, included forms of gamification even early forms of gamification and the difference between, let's say, the United States Postal Service and working for ZIZO, when it comes to a dynamic, motivated workplace. I mean, it's night and day. You know when you're working in that environment and when I go and I talk about this customer with a year without any attrition, and I go there and they're smiling, they're happy, they're helping each other. It is a dynamic, motivated workplace that you don't see in the collections world, everywhere. It is something very special, and that's just again another benefit that I think is important to bring up.

Jimmy Chebat:

Yeah, and you talk about fairness. Fairness is based on perception. What you think is fair I may not think is fair. The way you can change the perception is to take a program that may be subjectively managed and make it more objective. Yeah, and what I mean by that and that's that helps with the fairness is I'm not relying on a manager to decide how to build a contest, how much incentive dollars you're putting in that contest who gets which inventory and there's so many things involved.

Andrew Reimers:

The manager's drinking buddy is in some pretty easy competitions for some pretty high rewards. And everyone's looking around going. What the hell.

Jimmy Chebat:

Yeah, and one of the reasons why I originally created the e-whiteboard which led to ZIZO, and we'll get into some of that in future episodes here. When we talk about the origin story, that finger pointing, there's always an excuse, there's always a reason and again, people's perception is their reality. You can't really deny them that. If they say, look, this person is friends with this person who's winning all of the contest, and if you look at it and see that that is true, then how could you dispute that? If that's the case, there may be reasons that that person may be the most skilled and most talented, but if the other agent's perspective has factual evidence leading to their reality, then it's hard to dispute it. So you have to create ways to eliminate those excuses, which was the reason why I built it. I didn't want any excuses.

Andrew Reimers:

No, that's great. A lot of the feedback. So we're constantly in touch with our customers. And I should say when I first started with ZIZO and got to learn everything and saw how much fun it was and really what it did bring to the workplace, I started meeting with some of our customers, especially the ones that are local, in person, having lunch, talking about what they like, what they don't like, and over the years, the thing that I think surprised me the most was when I asked people what their favorite part.

Andrew Reimers:

You would just expect them to say, well, the rewards, obviously. But you know, what comes up just as often as the rewards is the transparency. People love knowing where they stand and they seem to really appreciate the ability to self-manage, to not have somebody looking over their shoulder or anything like that. So it does, you know, create a sense of transparency when everybody knows the rules. Everybody knows, like you said, it can. Nobody can claim unfairness, nobody can claim favoritism, it's. I just think that's really interesting because, again, yes, the rewards, but people really thrive when they get the insights.

Jimmy Chebat:

sell, Andrew? Trust. Yes, I say it all the time and that's not something that when I say it it's a very universal statement in the sense that we're selling trust. We want our customers to trust us. We want our customers to trust the data, we want our customers to trust the reward distribution matrix that distributes all of the rewards on their behalf. But we're also selling trust between their employees and the organization. And when you build and you help them establish that trust, again, people have a sense of belonging. You don't feel like you belong someplace if you don't trust them. Right, you have to have the established that trust. And when you have an objective and fair reward program, compensation program, people feel like they belong there. They do.

Andrew Reimers:

Yeah, I know, I see it all the time. Another thing about the fairness, and, to the point of fairness, you can motivate people, and we in ZIZO we have multiple rank levels. It's important to understand the differences between all of your workers, so this gives you an opportunity to motivate all performance levels. Now ours happened to be you know, somebody starts, they're a rookie, they make their way to pro, all-star, superstar. Well, we don't treat it's the same way we were gonna. We're gonna treat rookies, but you built out a system that has different expectations. So the rewards are there for the rookies to be able to obtain. Maybe they're not as much as what everyone is getting, because we don't have because I just want to make sure, oh, sorry because there's legend legend

Jimmy Chebat:

sorry hold, sorry, hold on. That's a hidden rank level that we have not released yet and because we have a rank level system, that also is part of that fair and objective mindset, and for us there's no way to create a fair reward distribution without having some sort of objective ranking system. An escalating increase in difficulty, yes, and a matching incremental increase in rewards, and so when people it's very difficult to dispute the reward system because they all have the same opportunities to move up the rank level system, but we also have the ability for them to move down. So there's both promotion as well as demotion, yeah, and they all have the same opportunities and the rewards are there. So if you're a superstar earning more rewards and I want to complain about you the manager has a very quick and easy rebuttal you have the same opportunity to get to superstar status.

Andrew Reimers:

You would never complain about me, Jimmy.

Jimmy Chebat:

No, no, you're on the trophy three times yeah.

Andrew Reimers:

No, that's that You're absolutely right and OK. So let's, we found the money right. Attrition dollar an hour went through all that math. We know rewards need to be distributed in a fair and objective way. Yeah, now how do we distribute that money in the modern workplace? I know that we've answered this question in every single episode of The ZIZO Effect podcast up to this point, but what would you say to that, sir?

Jimmy Chebat:

Again, it's not easy to do manually.

Andrew Reimers:

So let me write manually.

Jimmy Chebat:

But you have to take your incentive budget and you've got to spread it out, and we do it in multiple ways. Some of it is you versus you. You have nobody to blame but yourself, and that has to do with your expectations. That has to do with milestones. You know how far you're advancing in terms of what you've produced for the organization across your entire tenure. What are you doing day to day? What are you doing week to week? What are you doing month to month? And there's a reward system for you to compete against yourself against yourself and very similar to a video game. As you increase in your rank levels, the challenges get more difficult, as they should be, and so do the rewards.

Jimmy Chebat:

And then you've got to create different contests. It has to be many, many different types of contests. Variability is a is a real important part of keeping engagement constant, because things can get old pretty quickly. If you have the same reward, if you have the same contest, if you have the same people winning, it gets stale pretty quick yeah no, you're right.

Andrew Reimers:

You talked about we mentioned rewarding based on individual performance, based on what their rank level might be or their tenure, like you said, allocating funds to multiple competitions. We discussed rewarding based on multiple KPIs, so it's not just a focus on one specific KPI where everyone's just going to be like I need money, money, money, money, money. It's about the behaviors. Distributing funds at any time. That's something that I think is interesting because I know what it's like to sit in a contest and you have whether it was a prize, on the floor, whatever, you know, the company had purchased that was the big prize. You sat there and you had to wait till the end of the month to see if you even had a chance to win.

Andrew Reimers:

By that point, el Tal was already way ahead and we knew what was going to happen, depending on what business you're in. You know, we worked with a company that was in customer service and retail banking. So, whereas collections, december is a slow month. It was their busiest month and we would have race competitions and I would advise them on different ways to keep it interesting. We're like, during these hours, run a race competition the first person to pick up 20 calls wins. Anytime you can earn a reward. It isn't just a matter of the end of the month, the end of the week, the end of the day, and that's a really cool aspect, especially of what we do here at ZIZO.

Jimmy Chebat:

Yeah, and we call those micro rewards right, and that's how you stretch your budget to have the most effectiveness across your entire workforce, each and every day, each and every hour. Yeah, I picture a person I don't know if you yeah, maybe you have seen them, you know those coin things on their belt and they would click the button and coins would come out. It's like imagine having one of those going around the office and you know, here's 50 cents, here's a dollar, here's a dollar 50, and yeah, you know, and letting those rewards accumulate and then being able to redeem them. So, yeah, it's the ability to constantly be in a contest, constantly be in a competition, constantly being incentivized to do a job that normally is mundane and repetitive, and most people are disengaged and distracted through technology. This is one great way to constantly keep them engaged.

Andrew Reimers:

Yeah, and you said it earlier, that's a lot to do manually. Yes, you would need a full-time employee. You would need a full-time gamification expert in-house to be running this 40 hours a week, depending on how many employees you have monitoring all the competitions. What's an easier way?

Jimmy Chebat:

to go about that. I mean, it sounds like you need ZIZO, right? It would take probably four to five full-time employees to manage the contest, to manage the daily challenges, to manage the milestones, to keep people apprised of their current situations in real time or as close to real time as possible.

Andrew Reimers:

Yeah, downloading reports every 10 minutes to make sure we have the most up-to-date information, it's impossible. It's impossible.

Jimmy Chebat:

You need a system, and maybe it's not ZIZO. I mean, we're here to talk about gamification. I mean we're happy to help, absolutely, but it is, I think, from a system standpoint. You can't do it manually.

Andrew Reimers:

Yeah, well, moving on, we found the money. Yes, that money needs to be distributed fairly and objectively. We know how to distribute that money, but what are we giving away?

Jimmy Chebat:

You talked earlier about buying prizes and putting them out on the floor, right, and it's one size fits all and we used to do this and this is kind of where the idea of ZIZO kind of evolved. We would have back in the early 2000s flat screen TVs were the rage and it was early generations Plasma Plasma TVs, yeah, Then LCD or LED and it started to evolve and everybody wanted that flat screen TV and they were purging their old huge tubes, the I don't even know where the tabletop tvs.

Andrew Reimers:

I don't remember the last time I seen one of those console yeah, console tv that weighed hundreds of pounds and you know, even the early flat panels were pretty heavy, uh oh my gosh mean not to get off topic here, but all I wanted for Christmas this year was a TV-VCR combo so I could watch my old wrestling tapes. And my wife amazingly found one and gave it to me and I almost threw my back out picking it up to bring it out to the garage.

Jimmy Chebat:

Where in the world did she find a VCR-TV?

Andrew Reimers:

combo. You know what the best part is. It was down the street from our house.

Jimmy Chebat:

Oh wow, so craigslist, it's a it's a brock sonic.

Andrew Reimers:

Um no, she went on facebook marketplace and and looked it was it's a brock sonic. So, uh, shout out to brock sonic if you're still a company, but well done with your tv vcr combo, because it still works anyway.

Jimmy Chebat:

Anyway, I digress so yes, let's bring this back to what we're talking about.

Jimmy Chebat:

So designing a balanced reward system, you know, for us we found, rather than having a one-size-fits-all is if we designed a reward system that includes digital currency. Yeah, so people do points. It doesn't have to be a currency, it can be points. We have coins and we have Z-Bucks and you know, as I said, fortnite was one of my biggest inspirations for designing and how we designed ZIZO and they have V-Bucks, we have Z-Bucks and you know you allow those to accumulate over time. And then building a reward store where you have diversity in products and that allows people to pick what they want as opposed to what you believe everybody wants.

Andrew Reimers:

Exactly, and I love telling this story, especially when we're talking to customers and clients, because ZIZO has a huge reward store with over 200 products in it, and all of those products came specifically from our customers, from our players saying hey, I would love this waterproof Bluetooth speaker because I spend all my free time at the pool.

Andrew Reimers:

My daughter wants a Barbie dream house. I would can't afford to buy her one, but I have enough Z bucks. Would you be able to put that in the store? And we do it, Giving people the option, letting them choose what they want to work towards. So, whether they're the type that wants to cash out early and often, or whether they're the type that wants to save a litter robot, another huge one, that fantastic product I'm not spending $600 on it, but I can tell you that if I was in ZIZO and I had enough Z-Bucks, that would be something I would treat myself to, and I just love that our users have the input to be able to say this is what I want to work toward and that we're able to give them that.

Jimmy Chebat:

Yeah, those spending habits are important because it helps you build your reward store properly to accommodate everybody. So you know, we have those personas. We call them the instant gratifier, those people that they earn something and they want to go get something right away, whether it's a gift card or a small little electronics or a swag item. They need that instant gratification. And the second is the strategic saver. This is somebody who, like you said, is I'm not going to spend $600, but I will save up my coins, my tokens, my Z bucks to buy that bigger reward and I'll be patient with that. And you know, I'll say one more thing about these currencies point systems. That is unique in terms of how people spend, very different than compensation. If you provide people an incentive where it goes into their paychecks and gets direct deposited into their bank accounts, those funds go where, oh they go to bills, they go to food, they go to, you know.

Jimmy Chebat:

Your living expenses Exactly and there's nothing gratifying. I'm not saying that it doesn't have its place, I'm not saying that it doesn't have its place, but you don't get that gratification that you would on spending free money right, that's what it's perceived. It's like oh, I would like, you would feel guilty if you took money out of the family account that is reserved for living expenses and bought yourself a guitar case. But or you know, your daughter is looking for, you know, a new tutu for her ballet and you know you, you can't afford it from your living expenses. There's a lot of people who live check to check and here you've got you know this, these free currency and again and I put that in air quotes free because they're earning it. It's not free, but it's guiltless in terms of where they, when they spend it and they're earning it by doing something they would be doing anyway.

Andrew Reimers:

I mean, I love that, like we're, not. No one has to take extra time out of their day to earn these rewards. You're showing up to work and all we're asking, and all your company and your supervisors and leaders are going to be asking, is like, hey, do the best you can. And guess what, if you do, there's something in it for you.

Jimmy Chebat:

Yeah, and you're going to have. You know there's a. It's a bell curve, right, just like everything else. You're going to get your low performers that you know maybe this isn't the job for them, maybe they're not, you know, not motivated by anything yet, or they just don't like the job or don't have the skills for the job, and they'll find their way out. Most people are going to be in the top of that bell curve, earning an average amount of what your budget is, and then you've got your top performers, who are really getting two to three times what your budget is and they're really benefiting, which is what you want. You want the people who are performing to benefit from the reward system the most because they're committed to bringing that extra effort in order to earn those rewards.

Andrew Reimers:

Exactly, and you brought up the budget again, and I think that's a really important point to go back, because we talked about the instant gratifier, the strategic saver and the spending habits. Now the thing that we need to make sure that our audience is aware of is that the rewards need to be obtainable yes, attainable. So if you have a $10 per month budget per person and you're putting MacBooks in your reward store, that it's going to take them a year or more to try to earn, that's not motivating.

Jimmy Chebat:

No, you're right, you have to match what is in the reward store to what they're earning. But before we get into that, I think there's something to deciding what is the fair budget to put into this incentive budget. How much should I spend? Is $10 enough? Depends on where your operation is. If you're offshore and you're paying your people, maybe $3 an hour, $5 an hour. There's still countries that do offer those low paying labor rates. $10 an hour may be good, it may be enough.

Jimmy Chebat:

You definitely don't want the incentive budget to be more than their compensation. That's not right and we have a chart that we'll share here on the screen that provides a guide and it's part of our white paper that we'll also put a link to in this podcast so people can go read up on the proper way to build an incentive budget and how to use that incentive budget properly to distribute in a reward store. But based on our research, we found that your incentive budget should be anywhere from on a low end, 4% of compensation to about 10% on the high end. So if you're paying people $20 an hour, you take $2 an hour and you put that into your budget on the high end.

Andrew Reimers:

That's on the high end.

Jimmy Chebat:

It's a great and the more you put into your incentive budget, the more you're going to move that needle in terms of performance and it's very measurable.

Andrew Reimers:

If you're putting $350 a month into your employees incentives, they're going to be pretty motivated yeah.

Jimmy Chebat:

And and and, and.

Jimmy Chebat:

That's where you get into that next area. Whereas, what do you put into the reward store? Right? So make sure that it satisfies both the instant gratifier and the saver. That you know on the high end, and we have charts that we'll also put on the screen and I'll give you examples. For a $100 budget, you know you're going to assume that people are earning in the area Again, the bell curve. 80% of your people, or maybe 70% of your people, are going to be in that average range of what your budget is. So they're going to earn roughly $100 per month

Jimmy Chebat:

And if you want, as a minimum, uh, $10 to be in the area of your lowest value. So, whether it's a gift card, uh, if it's an electronic, something like a phone charger, uh, you can do perks as well, and perks do have tangible values depending on what they are. Some don't right dress down day, you know, maybe the corner office or vip parking where you're? You're parked in the front, uh, you know that first spot in the parking lot. If you have people in house or the ability to work from home, maybe you guys are in hybrid and, hey, you have to come in three days a week or full time, but you can buy the perk to work from home, right. But then you have others in those perks where you're giving away PTO. There is a direct correlation to cost there because you're still paying them their rate as well. But at the maximum you want things to be roughly about 10x your budget.

Jimmy Chebat:

So if it's a $100 budget, you want the maximum item to be in the $1,000 range, right? So people, it's within reach. If they're a top performer, they can get there in three months. Three to four months oh, easily. Yeah. Where some people are just so motivated and so they want something, so bad they will work extra hard to get that even sooner. And again you get those performance lifts. So things like a laptop you can even sell raises, and it's something that we've encouraged. People put it in your reward store. Make the cost of it equivalent to about six months worth of salary, right, so that way you're guaranteed that they're going to stay there for another six months, and anything beyond that it's gravy for the user, but again, you're making bank Thousands.

Jimmy Chebat:

Yeah, on not having to rehire that position. So there are so many different benefits and again, it's in the white paper. Definitely click on the link and download it, but we'll put it up on the screen here for people who are watching our podcast to view. But you've got to think very logically when building your reward system so it's not counterproductive. It doesn't work against you where you've got things that are unattainable. Yeah, no, you're absolutely right, and I think that's about all I have to say about the topic. So what I'm saying is we've only scratched the surface. There's a lot more that we can get into and we'd love to talk to you in person.

Andrew Reimers:

Awesome. Well, I can't wait. But, jimmy, that brings us to our final segment, and that is round two of Name the Game, where this is the chance for our audience to participate at home. Emma and Alex are going to cue up a song. We're going to listen. We're going to maybe have a little discussion about it, without giving any major spoilers, sure, but if they can name the game using our social media maybe our website, www. playzizo. com, or wherever you get your podcasts just drop a note, tell us what the name of the game is and you could have a chance to win some brand new socks. Get ready for the ultimate in foot fashion, introducing the fabulous ZIZO logo socks Made from 100% pure cotton. These aren't just socks, they're a cloud for your feet, emblazoned with the stylish ZIZO logo. They're perfect for every occasion and they promise to keep you comfortable and chic. Let's give it up for the prize that steps up your sock game ZIZO Logo Socks. So who's ready to win?

Jimmy Chebat:

Emma, Alex, let's hear the song. They really like to start these theme songs. They're dark, slow and dark. Yes, yeah, they're making it very difficult.

Andrew Reimers:

Yeah.

Jimmy Chebat:

I have the name of the song in front of me here, but I am not familiar with this game, are you?

Andrew Reimers:

You know, my only insights into this game have come from my nine-year-old son's friends. Okay, so not even your son, not even my son, he doesn't even play it.

Jimmy Chebat:

All right. Well, this is maybe a different generation that is playing this game, which is great to hear that. We're diverse, we're all-inclusive, we are all-inclusive. Yeah, I'm more about those retro, vintage type 1990, early 2000s games. That's kind of when I started to fall off yeah, I hate to say it, but became an adult.

Andrew Reimers:

Yeah, I mean not, that Happens to everybody.

Jimmy Chebat:

You can't be. You can still be a gamer and still be an adult. I think it's just. I just became an entrepreneur and I had no time.

Andrew Reimers:

That's fair. Yeah, well, that is it for episode seven of The ZIZO Effect podcast. Jimmy, it's been a blast. I've learned a ton. Thank you so much for being here. Thank you, we'll see you next time. And there you have it the end of our look into the intricacies of crafting incentives that hit the mark. We've journeyed through the maze of budgeting challenges, discovered the power of rewards that resonate with everyone and unlocked the secrets to fostering a culture where every team member feels valued and motivated. In our quest to redefine the workspace with gamification, one name has repeatedly shown through ZIZO. So what's the story behind this game-changing tool? Next week, we pull back the curtain on ZIZO, sharing our story of innovation and determination to transform workplaces into hubs of engagement and productivity. We'll dive into the origins of ZIZO and reveal why we're so captivated by the potential of gamification to create a better work life for all. Get ready, it's game time.

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Andrew Reimers

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Jimmy Chebat

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