Applauz Blog

Why Are Employees Motivated by Non Cash Incentives and Rewards

Published: October 29, 2019

Last Updated: May 12, 2024

  3 min read

what type of rewards motivate employees

Common knowledge suggests that employees prefer cash rewards. But studies show non cash incentives can be just as powerful in raising employee motivation.

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 receiving countless gifts we didn’t like or had absolutely no use for from people who were supposed to know us better.

Asset 34Case in point: The ugly Christmas sweater or the fancy chocolate fondue set you were gifted by a family member when all you 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 mean that those same gifts were useful, needed, or even desired by you.

But when it comes to job motivation and employee engagement, non-monetary incentives are the way to go. Why? Because cash simply doesn’t work as well.

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Non-Cash Incentives & Rewards Motivate Better, Science Says

Companies have long struggled with employee engagement and continue to do so. As a result, most companies have some type of incentive compensation program in place. In a study by WorldatWork, it was determined that 88% of organizations have a recognition or rewards program in place.

Monetary incentive programs are not the solution, though. 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.

Asset 30What does this mean exactly? It means that when given the choice, people initially believe they’d rather be rewarded with cash than tangible rewards.

Bottom line: working adults who engage in a challenging mental task perform significantly better when the incentive is a tangible reward.

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!

Modernize your years of service program to boost engagement Download PDF Now

5 Reasons Employees Prefer Non-Cash Incentives

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.

  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. 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. Emotional 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 the same way, with one important difference: they celebrate our achievements, not just another date in the calendar.

  5. Justifiable perception: Frequently, what 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 are many things we don’t consider justifiable expenses. Massages, expensive jewelry, or maybe that nifty new 3D printer you’ve been eyeing lately—things we know we don’t need but would enjoy as gifts.

How Applauz can Support Your Years of Service Initiatives Download PDF Now

Final Thoughts

A great employee service awards program includes a gift catalog filled with unique and high-quality items, like in the Applauz Rewards Marketplace.remoteWorkWindow-Applauz-1

That said, if there’s one thing to remember here, it’s that employees tend to value real and tangible rewards much more than the cash equivalent.

Making room for recognition at work is important to business success 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; and so will your business.


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