Dirty Money: Why great reward and recognition schemes need more than cash

It’s well known in pay and reward circles that wages are a hygiene factor for employees. Provided we pay our people fairly relative to the market, their peers and the contribution they make, tinkering with pay levels rarely drives better performance.

When it comes to hitting targets or a stretching performance, the received wisdom is that money talks: the most common tool in the box is a bonus or some sort of financial recognition scheme.

While there is no getting around the important role cash plays in the driving motivation, in the workplace of today where creativity, problem solving, team work and collaboration matter as much as targets, it should never be the only way you look to reward and recognise your people. Here are ten reasons why I think every organisation should rethink the emphasis we place on cash reward:

Cash Becomes Compensation

Cash for targets may make sense to your employees and be easy for the business to deliver but as a motivator it doesn’t work. What goes in the pay packet gets considered as wages rather than reward so your cash incentive gets lost in the mix and does nothing more than pay the bills. Having money to pay the bills may be important but there’s nothing special about it so there’s no lasting effect relative to the awards that you’re putting into those incentive schemes.

Tough to Take Away

While you gain little in motivation from cash reward, you also stand to lose a lot. Give people cash on their wage slip and it is hard to take away as people consider it their money. So once you commit to a cash reward scheme you’ll find it hard to change and when you do, the impact will be negative.

Buyer’s Remorse

The third issue around cash is the guilt associated with spending the reward if money is tight. This isn’t only when it comes to spending but post-splurge when a gas bill lands on the doorstep and the money is gone. Non-cash rewards act as just that – a reward – the decision is taken away and so is any negativity or guilt.

No Trophy Value

There’s a reason why people call it dirty cash – that’s because people don’t like to talk about money. If you give cash, winners avoid discussing their prize. Giving cash therefore loses the trophy and motivational value as a form of reward. Replace the cash with gift vouchers or a holiday and the winners will openly share their experience so prolonging the benefits of the incentive.

Not Promotable

Focusing on cash also misses a critical point around effective reward: you need to celebrate reward among employees while making it part of a programme which you promote. Non-cash reward allows you to put together creative awards and programmes which can underpin engagement while providing an added purpose and incentive to teams and individuals.

Cash Satisfies Needs, Not Wants

Cash is easy for companies to give away, and everybody needs it. But for true motivation, you need to give people something they want or desire, not something they need. Good non-cash reward like a holiday or a prepaid gift card will create memories which live a lot longer and motivate much more than money in the bank.

Nothing Personal

Everyone could use more money—but what’s special about that? The best rewards cater to a particular group’s interests, and having that personal edge makes a big difference in how effective your program will be.

One Size Doesn’t Fit All

One argument for cash is that a recipient can use it to buy anything he or she wants. But the problem is that it is a little dull. Merchandise and gift cards allow for personal choice by the recipient, especially when offered in the context of a points-based program with the kind of large, diverse award catalogue incentive management companies can offer. For many audiences, choice motivates.

Managers Prefer Non-cash

A study of 235 managers by the Forum for People Performance Management and Measurement showed that managers prefer noncash employee recognition programs. According to the study, managers view non-cash awards as “more important, more effective and generally superior for achieving the majority of specific organisational objectives”.

No Global Parity

A key issue for international businesses is to ensure reward is fair. If you operate in the UK, US and Poland, the cost of living will be different. Organisations can manage the issue of over- or under-compensation by working with non-cash reward.

To learn more about how to better your recognition strategy, download our eBook.

Author: Andy Philpott | Category: Blog | 13/11/2019 | 0

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