Rewarding with Cash or Non-Cash Incentives - Which One is Best?
At one time or another, we’ve all asked our employees what they would like to receive as a reward for a job well done, and 9 times out of 10, they will say they want cash. However, recent studies are showing that the real truth is that although employees may say they want a cash incentive, many times they will actually work harder for a non-cash reward, such as a trip to the Cayman Islands or an Apple watch.
Psychological research points out that people as decision makers are really two halves of one whole. One side is the “should” person, and the other is the “want” person. On the one hand, you tell yourself you shouldn’t eat that piece of chocolate cake, but the fact is you really want to eat it. The non-cash reward is a justifiable “want” in people’s minds. It’s free and that fact actually increases the perceived value of the reward for the employee.
To find out what incentives will work best for your employees, you need to know what results you’d like to get out of your reward program. Is your goal to encourage employees to do the best job they can do and drive performance? Do you want incentives to help foster employee commitment to your organization?
Employees become happier when their good performance is seen by their peers. That’s why we celebrate high performers publicly. We want to share success and accomplishments! Cash is never the best reward in this situation because people don’t like to disclose or brag about the amount of money they received. However, it’s the exact opposite when it comes to receiving a trip or a high-end luxury item. The employee is excited to share the details and, in turn, is given an indirect way to talk about their achievements.
Non-cash rewards also leave something tangible in the minds of the employee. Research shows that people spend more time thinking about non-cash rewards versus cash ones, and that results in them wanting the reward more. Once they receive it, they remember that their hard work resulted in that trip, experience, or luxury item. That leaves them with a warm, happy feeling for many months afterward, which is passed on indirectly to the organization. It’s a win-win for both the employee and the company.
As we all know, helping employees feel valued and appreciated causes them to want to stay at a company and go above and beyond in the workplace. Studies show there is a high correlation with the employee’s relationship to their manager and how valued they feel by the organization. Non-cash rewards work better at establishing the relationship, as they are seen as gifts based on the manager’s discretion. They aren’t viewed as compensation like cash is. Therefore, the non-cash incentives are more likely to improve the relationship between manager and employee.
So, the decision to offer cash as an incentive or to offer other incentives—such as trips, experiences, concert tickets, or high-tech swag—should really be based on each situation and your company’s desired outcomes for your incentive program. The bottom line is you need to reward your employees for their hard work and dedication because that increases engagement, productivity, job satisfaction, and company loyalty. After all, it’s the people that work for you that are the heart of your company, and they can make or break your business. Showing your appreciation is crucial to future growth.