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.
Case in point: 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.
Companies have long struggled with employee engagement and continue to do so. As a result, most companies have some type of incentive compensation programs in place. In a study by WorldatWork, it was determined that 88% of organizations have a recognition and/or rewards program in place.
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. In short, not cash, but rather 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!
Incentive programs play an essential role in employee engagement, appreciation, job satisfaction, and retention. Here are five eye-opening reasons why employees prefer tangible goods as rewards.
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 important to obtaining success as a business in today’s competitive work environment. So put away your wallet! And instead, start recognizing your employees with thoughtful non-cash incentives and rewards. Your employees will thank you for it; so will your business.