5 Reasons Why Employees Prefer Non-Cash Incentives and Rewards
Do people prefer cash or non-cash incentives? When discussing employee incentive and rewards programs, that truly is the million-dollar question. Try replacing “incentives” with the word “gifts”; suddenly it becomes too obvious. Cash is always better, right?
The decision for cash was hard-wired into our brains long ago. It stems from the pain we felt from receiving countless gifts we didn’t like or had absolutely no use for, from people who were supposed to know us better.
The ugly Christmas sweater or the fancy chocolate fondue set you were gifted by family members when all you were really wanted was a regular, old, coffee machine; all these “gifts” contributed to the want of cash instead.
Even though the gifts you get from your family are well-meaning, it doesn’t actually mean that those same gifts were useful, needed, or even desired by you.
Here’s the hook though… Even what you think you want is likely not what you would really fight to get. You might not believe it, but if the ugly Christmas sweater were to be competed for, you might achieve a world record just to get it.
OK. Maybe not.
But when it comes to job motivation and employee engagement, non-monetary incentives really are the way to go. Why? Because cash simply doesn’t work.
Non-cash incentives and rewards motivate better says science
Companies have long struggled with employee engagement and continue to do so. As a result, incentive compensation programs are now part of many companies’ cultures. In a study by WorldatWork, it was determined that 88% of organizations have a recognition and/or rewards program in place.
However, monetary incentive programs are not the solution. Frankly, money is nice, but it’s simply not enough to motivate your workforce or boost employee morale. This has been accurately proven by an experiment conducted by the University of Chicago. The study showed that the power of non-cash incentives compared to the motivational power of its equivalent amount in cash simply pales in comparison.
What does this mean exactly? It means that when given the choice, people initially believe they’d rather be rewarded with cash than tangible rewards. Although In practice, working adults who engage in a challenging mental task perform significantly better when the incentive is a tangible reward, not cash but an item of desire. How significantly? According to the aforementioned U of C study, the same amount of non-cash reward led to nearly triple the performance uplift when empirically measured!
5 reasons why employees prefer tangible non-cash incentives and rewards
Incentive programs play an essential role in employee engagement, appreciation, job satisfaction, and retention. Here are 5 eye-opening reasons why employees prefer tangible goods as rewards.
1-Cash is already the main work incentive: Employees call it their salary. Whatever their work accomplishments, money is already the default currency of compensation. So, if you as their employer add additional cash rewards, it’s quickly forgotten and provides very little long-term value to your business. In fact, your employees are likely spending their reward money at a local gas station, or maybe the grocery store. How motivational can that possibly be?
In the end, employee engagement and motivation have little to do with money. A Gallup study conducted on employee engagement reported no significant difference in employee engagement by pay level if you needed more evidence.
2-Trophy value: Tangible gifts have the symbolic, lasting value of a trophy. You would never brag about a paycheck in front of your colleagues as much as you would with a tangible reward symbolizing the value of your work. Receiving a tangible reward makes you feel proud and important.
3-Aspirational value: Desire to attain higher socio-professional status drives employee engagement. Non-cash based incentives (a.k.a: Tangible objects) aligned with your organization’s overall mission and values make the reward feel unique and its recipient, special.
4-Affective value: Gifts are part of our lives and environments; they remind us of the occasion they were given to us. Most importantly, they’re inherently associated with the person who surprised us with them. That’s why we develop emotional connections with the things we receive as gifts; which significantly increases their perceived value. Tangible non-cash rewards function exactly the same way, with one important difference: they celebrate our achievements, not just another date in the calendar.
5-Justifiable perception: Oftentimes, what really makes us happy when receiving a gift is the fact that we would not have spent money to purchase it ourselves. We’d feel too guilty spending so frivolously on items of luxury. That’s because there’re many things we don’t consider justifiable expenses. Massages, expensive jewellery, or maybe that nifty new 3D printer you’ve been eyeing lately — things we know we don’t really need but would definitely enjoy as gifts.
One last thing…
If there’s one thing to remember here it’s that employees tend to value real and tangible rewards as part of your company recognition efforts much more than the cash equivalent. Making room for recognition and gratitude at work is super important to obtaining success as a business in today’s competitive work environment. So put away your wallet and start recognizing your employees with thoughtful non-cash incentives and rewards! Your employees will thank you for it; so will your business.