When companies decide to invest in employee rewards, they look for a return on that investment pretty quickly. That return may come in the form of better employee satisfaction ratings, higher retention rates or as a building block of a better company culture.
According to a new study by the Incentive Research Foundation, there is now data to support that non-cash rewards outperform cash rewards. Here are a few specific applications for the IRF’s study that could affect the way you approach employee rewards.
Appreciation vs. Entitlement
Non-cash rewards elicit the reaction of appreciation from employee to employer. They make employees feel special. On the other hand, cash rewards often get bundled in with a paycheck and often go largely unnoticed in direct deposit, flowing into the general money pool, along with salary.
Cash isn’t as memorable and it doesn’t provide a unique experience as much as non-cash rewards, like gift cards, do. Extra money is great, but most people can find a practical use for it (a bill, a shopping trip, etc.) before the money even hits their bank account. If you are looking to create a feeling, a memory and an experience for employees, your better option is to go with non-cash rewards.
While it may not always seem like it, people actual value items they win or have been rewarded with a higher dollar amount than items they pay for. Forking over cash takes no effort, working really hard for something and then having it rewarded, especially in a public manner, means employees value the reward more.
For example, if you provide a gift card to a nice restaurant as a reward, this might allow an employee to take their partner or family out to a meal. The fact that they get to use a gift card to pay for that meal, makes them feel special, like they are getting something for nothing, when in reality, they are getting a special dinner for a job [exceptionally] well done.
We’ve talked about how non-cash rewards are memorable, but now let’s talk about the social effects of a reward. Whether you get something tangible or you get a company email shouting out your hard work from the CEO, there’s a social or “trophy” value to that interaction. It has been made public that you did a good job.
For an employee that raises their standing amongst their peers. It elevates their performance in a public way. This not only makes their reward memorable for the employee, but it makes it memorable for their peers.
According to the IRF study, companies with reward programs saw a 22% gain in performance compared to organizations with no reward program. Given that productivity boost it is most important to make sure the rewards are memorable. Cash fades with the monthly bill cycle, non-cash rewards have staying power, which in turn may give your company more staying power.