When to Use Cash or Non-Cash as Employee Awards

The argument of whether to use cash or non-cash as awards to motivate or recognize employee performance is as old as the award industry.  There have been many corporate managers who think that cash is the only way to reward behavior, and in fact as money is the contract that we have to get people to come to work, these same managers often think that we shouldn’t have to pay them anything additional to perform their jobs.  Frankly, in many respects this is a valid opinion…. the old “a day’s work for a day’s pay” attitude. 

Based on decades of experience in analyzing recognition awards programs, we have firsthand knowledge that the salary you pay employees is considered by most as merely the contract that you make with them to get them to work.  It has relatively little to do with how well they perform their responsibilities when they get there.

 Many people in the incentive industry will say that cash as an award doesn’t motivate as well as non-cash.  Frankly to say that cash doesn’t motivate is disingenuous. It is innately tied to our perceptions of cash as a universal motivator in this country.   It is easy to use, easy to distribute, and fulfills many of the needs that people have.  In difficult economic times it can certainly be very motivating.  

However, there are two sides to using cash as a motivator, and to understand when to use cash and when to use alternative awards requires an understanding of both sides.  

Over the years we have spent a great deal of time researching cash and non cash as an employee award and have come up with at least eight reasons why non cash may be a better choice when attempting to motivate and award employees.  Pease see the attached white paper for a more detailed explanation of the reasons.

Why Does Employee Recognition Matter?

 Rewarding and recognizing employees for performance has been in the business world since the beginning of the 20^th century.  With the unprecedented changes to our workforce due to the pandemic, recognizing employees and thanking them for their efforts has never been more important. 

A review of employee research and studies done over the last few years gives us a wonderful perspective of the many of the reasons that employee recognition does matter.  It is a significant strategy to employ especially at times like this when getting the right employees on the job and then motivating them to perform in the manner to achieve our objective.  There is no better time to make sure you use recognition to attract and engage your employees. 

Some reasons to remember why employee recognition does matter are: 

Recognition helps to relieve this workload stress. Due to the pandemic, many U.S. companies took cost-cutting actions that involved some sort of reduction in force, oftentimes increasing the workloads of existing employees, freezing salary increases, and reducing bonuses.

 Recognition helps to foster engagement. Gallup did a study that showed engaged employees are more productive, profitable and more customer-service-focused and more likely to stay on the job.  

Recognition drives higher return to shareholders.  A Watson Wyatt study showed that companies with effective recognition programs realized a median return to shareholders about double what companies without recognition programs achieved. 

Employee recognition can reduce turnover.  A Robert Half study, showed that 17 percent of good employees who quit their jobs did so because of lack of recognition.

Recognition builds confident employees.  According to Barbara Mitchell, a respected HR consultant, ”recognition shows confidence in employees, and confident employees are more productive.” 

Recognition encourages innovation. It encourages employees to come up with better ways to do a task resulting in higher productivity, lower costs or both. 

Recognition provides purpose for your employees.  Recognition is powerful because it answers a fundamental human need, the need to feel valued in what we do. 

Recognition increases productivity. In their book “12: The Elements of Great Managing,” Wagner and Harter drawing on ten million workplace interviews noted that variations in recognition and praise account for ten to twenty percent differences in productivity and revenue, as well as customer engagement. 

Recognition motivates repeat performance.  Robert Cialdini, in his classic book 'Influence’ noted that the principle of consistency means that when you show recognition of particular behaviors, you are encouraging more of the same in the future. So be sure to recognize what you want to encourage. An added bonus of focusing this way is that, due to the Law of Attraction, you are likely to find more behavior worthy of recognition.