The “Neighborhood Effect” in Global Recognition

Larry Rohter of the New York Times recently wrote about how “Shipping Costs Start to Crimp Globalization,” discussing how expensive oil, global warming concerns, rich countries’ concerns over job loss, food safety issues, and the Geneva world trade talks collapse are contributing to a reversal of the old globalization model of manufacture wherever labor is cheap and then ship long distances to market.

“Globe-spanning supply chains – Brazilian iron ore turned into Chinese steel used to make washing machines shipped to Long Beach, CA, and then trucked to appliance stores in Chicago – make less sense today than they did a few years ago.”

This structure makes even less sense in global employee recognition programs. Old-school incentives companies that rely on merchandise catalogs and warehoused inventory of incentive items are fighting this same uphill battle of ever-increasing costs. It makes no fiduciary sense to buy, for example, reward items such as electronics built in China, ship them to the U.S. to warehouse, only to reship them to India as a reward for a participant in a company’s employee recognition program. However, this is still the model many of the large merchandise incentives companies still follow today, saddling their clients with exorbitant and unpredictable international shipping, handling and customs fees in the process.

As Rohter explains, ‘the recent surge in shipping costs is on average the equivalent of a 9% tariff on trade.” This is inspiring a “neighborhood effect” – an economist buzzword meaning “putting factories closer to components suppliers and to consumers, to reduce transportation costs.”

Globoforce pioneered the “neighborhood effect” in global STRATEGIC employee recognition programs. By offering direct access to thousands of merchants, restaurants, travel options and adventure outlets around the world, recognition program participants simply select the reward the want, then walk into their local neighborhood outlet or jump online. Inappropriate or potentially incomplete awards aren’t shipped around the world, saving our clients many thousands on their recognition programs while giving them a budget they can count on.

Are you ready to bring the “neighborhood effect” to your employee recognition program and save a bundle on shipping costs alone?