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Why Cash Rewards Don’t Motivate

Posted, by Deborah Merkin
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We talked before about the shift in reward and incentive programs. Employers must now take into account that each workplace is usually comprised of 3 different generations, Baby Boomers, Generation X, and Millennials. Each of these generations defines a “valuable reward” in different ways. This shift in rewarding now involves turning away from the idea of general cash rewards and taking a more personalized approach to the individuals you are trying to motivate or reward.

Whether the program is designed to motivate behavioral change, “above and beyond” performances, or engagement, the one tool that remains consistent throughout is the reward or incentive. It’s an important aspect of any program and should be regarded as such when designing your program. In the past (and many times still today) the preferred option of motivating was offering cash rewards. It’s a common notion that the more money an individual receives at work, the happier and more motivated they will be. Butnew research finds big cash incentives are more distracting than motivating, and the relationship between motivation and performance is more complex.  

Incentive Magazine article, 3 Reasons Why Cash Incentives Don’t Motivate, points to two separate studies supporting the idea that cash incentives don’t link to motivation and workplace happiness. One study from Tim Judge of the University of Florida concluded that even if companies let their employees set their own salaries, they still wouldn’t enjoy the job more. The second study, from Gallup, interviewed 1.4 million people at every pay level, across every industry, around the world and found that job satisfaction had little to do with money. The article points to three important reasons why cash incentives don’t motivate.

Reasons not to use cash rewards

  1. At the end of the day, it’s just considered income. We all have expenses and every dollar brought in typically goes to one of those expenses. So the lasting effect of the reward is fleeting. Which brings us to,
  2. Cash has no “trophy value.” When you’ve earned a reward it’s typical to be proud of it, maybe even show it off a bit. But it’s not usually in good taste to start passing around your paycheck to show off that reward. Getting that reward is something to celebrate and enjoy.
  3. Cash Programs Usually Lack Goals. Think of it this way. If you’re running in a race but have no clue where the finish line is, who’s to say you’ve actually won at the end…no matter how fast you run. Clear goals allow employees to understand where they’re going, how far they are and what they’ve accomplished once they got there.

The best thing an employer can do is to take a close look at how effective their program is. What is the overall goal of the program, are your employees clear on it, and what rewards have the greatest impact on your program participants? While money is important, yes, it isn’t everything.  

So you’re on the same page, but if not cash rewards then what tools should you be utilizing to effectively motivate and engage your workforce for long-term success? Check out our recent post,
Incentives and Rewards in 2016: The role they play in program success, to learn more about how and what rewards and incentives are being used. Stay up-to-date with the latest trends in reward and recognition and subscribe to the blog today!   Subscribe Now

Topics: Employee Recognition, Gift Card Incentives & Rewards, Employee Engagement, Gift Card Programs, Employee Incentives & Rewards

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