Money Doesn’t Always Change Everything

 

According to the September 2021 issue of Sales and Marketing Management, using money as an incentive award doesn’t always change everything.  In fact, it may not change much of anything accept spending more and not achieving your goals.

For as long as we have been in the employee awards industry there has always been a blurred line between using cash and non-cash to improve performance.  To be overly simplistic, the easiest way to consider the two methods is in relation to what you are trying to accomplish.  Cash is part of the contract you use to hire and retain your employees.  It brings them to work, but it doesn’t necessarily motivate them to perform at the high level you want them to.  Non cash is more often than not used for achieving specific objectives with clear start and stop timing and sound measurement and feedback of that objective.  One of the biggest reasons that cash is also used in these kinds of programs is for ease of administration…all you have to do is just add some money to the paycheck.  Right?

Recently we had a potential client that had been using non-cash awards to reward employees but moved that budget to cash after a survey of employees found cash is what they wanted.  Frankly if you ask any employee group what they want for a reward they will universally say cash.  Unfortunately, when companies make that change, they rarely do any kind of measurement at the end of the reward program period to see if the change had any meaningful effect on the outcomes.  Worse, the extra cash in the paychecks will get lost in income and provide little if any motivational or lasting trophy value.  Over time it will just be considered as expected compensation and be very difficult stop.   You will assuredly end up spending more money on awards using cash than using non-cash.  In addition, the White Conference on Productivity showed conclusively that it took $3 in cash to produce the same results as $1 in non-cash.  Many clients tell us they wish they had never gone to cash rewards in the first place. 

Why consider using non-cash rewards as the best recognition for stellar work:

      ·       These rewards have emotional value that make them far more effective in driving                    employee loyalty

·       The perceived value of non-cash rewards tends to be significantly higher than the actual cost.

·       They make it easier for workers to celebrate each other’s success and talk about how they were rewarded.

·       Millennials and GenXers particularly appreciate non-cash rewards, especially for unique experiences.

 Your employees work hard.  Show your appreciation for their contributions and inspire them to reach goals with rewards they want.  Don’t just put another $50 in their paycheck.  It will get lost in the shuffle and you may lose the meaningful connection between the reward the performance. 

 

Research: Gift Cards Better Than Cash for Employee Wellness

 

When it comes to promoting healthy behaviors in workers, managers should keep their cash and reach for gift cards. That was the finding by a team of researchers at Brigham Young University, who found that gift cards were far more likely to motivate participants in a workplace wellness program to successfully complete their challenges. 

Published online at Management Accounting Research, the study was conducted by BYU researchers Bill Heninger, Steve Smith and David Wood. It tracked an institution that rewarded workers who completed a six-week wellness challenge, giving participants a choice between a cash bonus on their paycheck, a gift card or a material reward of the same value. Approximately 60 percent of participants selected cash, 30 percent chose gift cards and 10 percent selected the tangible reward.

While cash was the most popular choice, the most effective choice turned out to be gift cards. According to the findings, those who selected gift cards were approximately 25 percent more likely to complete the challenge than the participants selecting other rewards, taking into account all other factors.

"You would presume that when people pick the reward type that is the most appealing to them, it would have the most motivational power," Smith said in a statement. "But that wasn't the case. Employees choosing to be rewarded with gift cards actually reaped the greatest health benefits.

The findings add more evidence to the assertions long held by leaders of the incentive industry that gift cards are a more effective incentive than cash. The authors suggest that the gift cards might have proved more effective because they strike a balance between flexible and specific when it comes to entertainment or fun. 

"People keep mental accounts," Wood explained. "If you work and make $10, that's your work money. If you find 10 bucks on the ground, then that's free money. You might go out to lunch with the free money, when you normally wouldn't with your work money."

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 Gift Cards are More Compelling than Cash as Employee Awards

 

Executive responses to a recent Incentive Federation study on employee incentives showed that merchandise and travel are more compelling than cash as employee awards.  And specifically in the merchandise category gift cards were the most popular awards. 

The reasons most incentive planners feel why gift cards are more effective were listed as:

1. Trophy value: Gift card purchases are more memorable – they create a lasting reminder of achievement.

2. Viral value: Employees tell each other how they redeemed gift cards.

3. More discrete: It’s polite to mention non-cash awards.

4. True gift perception: Gift cards are not viewed as part of compensation.

5. Universal benefits: Gift cards combine the benefits of merchandise with the benefits of cash.

6. Guilt-free spending: Recipients don’t feel guilty treating themselves.

7. More likely to improve work performance: Studies show that cash doesn’t improve work performance – gift cards do.

8. Family support: Because the participant’s family is involved in selecting awards – they’re more likely to support the participant’s goals.

9. Pleasing loved ones: There is a strong motivation to earn an award for one’s significant other

10. Long-term positive feelings toward organization: Gift cards reinforce positive associations with sponsoring organizations.

To review the entire research click here.

Are Points-Based Rewards Programs Really Super Meaningful?

 

When a company budget only allows for nominal reward amounts like $25 up to per $100 person to incentivize or recognize employees, the typical award program options available to them are cash, points for awards and gift cards. Researchers have conducted many studies on the benefits of cash versus non-monetary rewards, but it is rare to find research to compare a points based reward system to other types of awards deliverable. In fact we’ve never seen one.  

The single biggest benefit of using a points based award system is being able to combine budgets from disparate departments, or over longer periods of time which allows the employee to grow their points account so they can redeem for larger more significant awards, and in many cases even travel.  When your total overall awards per employee is a less significant amount ex. $100 or $150 in awards, the excitement and motivation can wane especially considering the time between the issuance of the points and the redemption for a suitable award.

 Another benefit of a points based system is that it allows you to have a large array of award options in one place and promote them often.  Just make sure that if your assortment of awards includes very desirable and costly items that you have enough earning power in the program to be able to redeem for that item, and it doesn’t take an overly long time to earn those points. Check the average expected points issuance cost per employee during the program.  If that won’t allow the average employee to be able to redeem for 75-80% of the items in your catalog, your program is either underfunded or your award catalogs has too many high priced items.  Be realistic, it will save you a lot of complaints down the line.

 If you are going to implement a points based system, you need to be very diligent in your supplier search and be able to compare costs accurately.  Most award companies that sell their points system at low or no cost will make up that price difference making you use their awards in the system.  But those awards are usually priced unreasonably high compared to retail.  Everyone knows about the bank reward points you earn on your credit card.  But anyone you ask will also tell you that the prices of the award items in those programs are ridiculously high.  The best way to test the pricing is to look at the gift card section.  If a $25 gift card doesn’t cost you $25 in points issued, you are probably paying too much.

 Frankly points based systems can be the best type of incentive or recognition program you can implement, if you take the time to think through the steps above.  Here is a blog post we wrote a few years back that will delineate all the caveats you need to consider before you implement a program.  Don’t get caught up in thinking that a points based system will be the cure-all for your recognition needs. There are other ways.

Making Sales Motivation Programs Effective

Cash isn’t always the right award to motivate your sales force.  For years we’ve seen companies throw cash at sales objectives with poor results.  It is the obvious go to award and the easiest to implement and administer but not always the best one.  To make a motivation program effective, you need to make the rewards relevant and specific to the needs and demographics of your sales force.  

For most salespeople there are three instinctive motivations that can influence their performance:

1.     The proper balance between remuneration and rewards 

2.     The desire to achieve success and exceed goals 

3.     Recognition and security

It is essential that remuneration and rewards for salespeople be strongly linked to performance. If you already have a very strong cash incentive or bonus, it might not be best to just add more cash to it to get a boost in a particular objective.  If an increase in sales is how your salespeople earn their base and bonus compensation, the best ones will be doing all they can to earn as much as they can already.  Probably more than any one type of employee, salespeople will work to seek their comfort level, and when they achieve it, they don’t move much to get more.

If you don’t have a sound compensation package not linked to accomplishments, don’t be surprised by the poor performance of your salespeople or by seeing the best of them move on. When designing your system, it's critical to have a real gap between the excellent, the good, the average and the people who struggle. The best won't be motivated to go above and beyond if there's little-to-no difference. For motivation programs to achieve incremental performance over a short time, consider non cash awards interesting to demographics of your people.  And in those types of programs choice of award is critical.  Let them set their sights on what they want for their own lifestyle.  Do you really think that the hot briefcase of the moment or a new watch will motivate everyone?  It surely motivates the ad rep that is selling them to you.

Any decent sales person we’ve ever met is driven by success. They need victories to move forward so put in place objectives around the different selling steps for your product and formally recognize those who achieve them.  Then grow those objectives and set increasingly ambitious targets to move that group to higher and higher levels of performance and recognition.  A myriad of selling skills can be addressed in these types of programs.  One of the main benefits is that it is easy for each salesperson to measure their real contribution to the company and enjoy the recognition they receive from it.

Good salespeople are typically less concerned with job security, than the average employee. They can take risks more easily than the general population. This allows them not only to be at ease in a job where the activity is clearly measured and driven by performance, but also to change jobs if a more interesting offer comes along in another company. When you are finalizing your overall program be sure to congratulate and celebrate the ultimate successes.  These are the group of people that you will move your company forward.

Is Cash Still the King of Incentive Awards?

As has always been the case, cash is the reason we come to work.  We have to support ourselves and our families.  It is the way we exist in modern times. Without cash, the lives that we live would not be the same.  We would have to revert to feudal times where the noble class had all the money and the majority of workers had little but a place to live and food to eat. 

Reflecting on our experiences in the non-cash incentive awards industry for over forty years, it seems that the prevalent current view on what award works best is based on what employee survey you are reading today….

”Majority of employees and job seekers say money is more important than intangible rewards” or “workers care just as much—and sometimes more—about intangible recognition for a job well-done as they do about earning higher pay or receiving bonuses.”

One of the initial problems when planning any kind of employee improvement process is what award (if any) to use to motivate the performance? As cash has always been the medium we all work for, it is the first award considered.  All too often the process never goes much further and cash is chosen. With all the research and studies done over the years on the subject, there is no real empirical evidence to support using one or the other.  If the objectives are important and can result in higher profits, the awards are higher and are usually cash.  If the goals are more subjective, with less clarity on how they are measured, the awards per person are lessened and usually more non cash.

Frankly it always gets down to budget. And how much you can get from the C-suite will depend on how much value the executives place on achieving the objectives and consequently how much they are willing to spend to get it done.  Frankly this is the absolute number one problem with employee incentives and recognition programs today.  They are always (well nearly always) underfunded to get the job done, and consequently many don’t produce results.  Even worse, the program planners rarely do a complete analysis before, during and after the program to determine if successful, why, and if not, why not. 

So, during this planning conundrum, you can always find some current study or research to support using the award and budget you want.  It may work, it may not.  We wish we had the magic wand to wave over the problem and give you the perfect program but that doesn’t exist.  All we can recommend is that you get all the data you can on your own situation analyze it before, during (as often as possible) the program and at the end to know what happened.  Then, as necessary, revise, relaunch, and keep going with new and better data.  You can get it right.

If you want to throw some confusion into the mix, consider that money is the contract that gets us to go to work.  It doesn’t necessarily motivate us to work well, or the attitude we have while we are at work.  Factor that thought into your planning.

For more information on Ultimate Choice Inc.’s products or services or other white papers please contact us at Ultimatechoiceinfo@cox.net

Award Program Value and Evidence

In our last post, we introduced the recent research conducted by the Incentive Research Foundation entitled 'Award Program Value & Evidence.' While the research provided more than ample evidence to support the use of non-cash awards for employee recognition, it went even further into the many other values of non-cash awards. 

Specifically it covers:

The Psychological Mechanisms Underlying the Advantages of Tangible

Non-Cash Rewards

• Mental Accounting
• Appreciation vs Entitlement
• Effort Justification
• Social Signaling
• Perseverance, Effort and Performance
• The Reciprocity Effect
• Caution in the Use of Tangible Non-Cash Rewards
• Hedonic Adaptation
• Lower Aspirations
• Financial Hardships
• Recognition at the Forefront
• Employee Benefits
• Organizational Benefits
• Timing, Specificity, and Authenticity Matter
• Caveats
• Measure the Benefits of IRR Programs
• Focusing on Hard, Tangible Benefits
• ROI Analysis
• Supplementing ROI with Change Point Analysis

For a copy of this important report please click here.

For more information on Ultimate Choice Inc.’s products or services or other white papers please contact us at Ultimatechoiceinfo@cox.net

Why Use Non Cash Awards

Just about every year the incentive industry comes out with some kind of survey, report or article on why you should use non-cash awards in your recognition and incentive programs.  Their most recent research leaves little room to dispute the fact that a well-conceived, well-run incentive, recognition, or reward program improves productivity and performance.

For a variety of reasons, non-cash has slowly become the dominant reward for non-sales employee recognition and incentive programs.  According to the Incentive Research Foundation, one study found that after six months of well-designed program companies will see average performance gains of 44 to 48 percent in productivity. Within this research, there was evidence that non-cash rewards work better than cash.

There has always been debate surrounding the best use of different types of rewards (intrinsic, extrinsic, cash or non-cash) but there is little debate as to whether rewards work to increase productivity.  While studies today focus on the emerging approach and the principles of award program design the discussion that emphasizes the use of cash and tangible non-cash rewards as symbols of recognition remains important, possibly even more so.

The recent study that discusses the cash/non-cash question quite extensively is titled “Award Program Value and Evidence.”  It is by far the best discussion we have ever seen on the subject.  While it covers territory that we have been discussing for years, it goes a lot deeper into those with sound psychological reasoning non-cash works so well. 

Executive management expects their investments in incentive, reward, and recognition programs to produce some return on investment.  This study presents a strong case for using non-cash reward programs to motivate employees and practical advice on how to measure the success of these programs to ensure goals are met.

You can download a copy of this study here.

For more information on Ultimate Choice Inc.’s products or services or other white papers please contact us at Ultimatechoiceinfo@cox.net

Why Using Cash Incentives Doesn't Work

Organizations continue to spend millions of dollars trying to motivate their employees with cash?  Why, if everyone who has studied the incentive business in any depth knows these programs don’t work.

Instead you might want to try identity exactly what motivates your employees through solid research.  Determining solutions to do those things you uncover is not the easiest approach to implementing an incentive program, but it has proven to be the most effective.

We all love cash, so what are the reasons why using cash incentives just don’t work?   Here are a few:

• People are already motivated. And additional cash incentives at best are effective only 20-25% of the time.
• You can’t motivate the middle 80% of your workforce with a single strategy.  But you can provide an environment where they can tap into what already motivates them. An inducement won’t motivate performance if it’s not what the individual wants.
• Cash won’t buy engagement. You can’t read a human resources magazine without seeing something about employee engagement.  It’s estimated that only 13% of employees worldwide are engaged at work.
• Most cash incentives are macro in nature, with little involvement by the immediate supervisor.  Yet the most critical relationship exists between the employee and their immediate supervisor.
• Cash won’t necessary create better leaders, but leadership development definitely can.  If you have the cash to spend, get something for it and invest in leadership development.

Cash incentives are the easy way out.  Sometimes it’s just easier to give $25 than creating a truly motivational timing.

The argument about of cash incentives has been around for decades.  To see more information on the differences between using cash or non-cash as a motivational award, please click here.

For more information on Ultimate Choice Inc.’s products or services or other white papers please contact us at Ultimatechoiceinfo@cox.net

Compare Cash or Non Cash as Employee Awards

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 reward 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 or sales 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. 

All too often when faced with the choice of choosing an award in a program designed to change behavior, the planners immediately go to cash thinking that it is the best way.  There are times, especially when the objective is to increase sales performance, when cash may not be the best award and in fact may not motivate at all.  In the least, research has shown that it takes 3 times more cash than other rewards to receive the same results.  That reason alone may be sufficient to investigate other reward options.

For a systematic and thorough review of the features and benefits of cash and non cash please click here.

For more information on Ultimate Choice Inc.’s products or services or other white papers please contact us at Ultimatechoiceinfo@cox.net