Rewarding employees is an important part of management. When employees feel rewarded for good work, they’re motivated to do more good work. Rewards can also go a long way in improving employee morale and encouraging company-wide progress.
When many people think “reward,” they think “cash.” And while that works sometimes, for some employees, it’s not going to work every time, for everyone. Knowing whether to give your employees cash or non-cash rewards can help you strike the right chord with your staff. Today, we’re talking about the pros and cons of cash and non-cash rewards for employees.
First, let’s talk about cash rewards. Most often, this will look like a bonus on a paycheck, but it could be given in other forms, too.
Cash rewards seem very appealing for a number of reasons:
- They’re flexible, allowing the employee to use the cash however they want
- They’re straightforward, and require little work on the part of the employer
- They’re universally appealing (who doesn’t want a little extra money?)
However, cash rewards aren’t always as effective as employers might think, especially in the long term. This is because:
- Cash rewards aren’t tied to company values
- Cash rewards don’t offer personalized incentives to employees
- Cash rewards feel intangible, temporary, and anticlimactic
Still, employees might prefer cash to non-cash rewards, especially on the surface. One study on the subject revealed that more people, if given the choice, would choose a cash reward as opposed to an equivalent non-cash reward; however, when asked which reward would bring them greater satisfaction and happiness, they picked the non-cash reward.
This suggests that there is more to the story than simple monetary value. Which brings us to…
While non-cash rewards might seem less universally appealing at first, evidence suggests that these rewards are more effective at helping employees feel celebrated.
Non-cash rewards might include things like:
- Tickets to a sporting event, play, or movie
- A trip
- A TV, phone, or tablet
- Experiences, such as a ski trip or a wine tasting
Rewards like these have their own benefits. Non-cash rewards might appeal to employees because:
- They’re personal and make the employee feel seen
- They’re tangible and often feel longer lasting
- While cash would likely be used to pay bills or contribute to savings, non-cash rewards are often more “fun” and personal
Plus, research shows that non-cash rewards seem to yield greater results in terms of employee effort, as employees feel more grateful for them, they are often more visible to coworkers, and they provide a tangible consequence for hard work.
Non-cash rewards might require more work on the employer’s part, as they’ll need to find out which rewards would be meaningful to their employees. But the potential positive effects of non-cash rewards make it worth the effort.
The importance of recognition
Whether you use cash or non-cash rewards, remember that one of the biggest ways to help employees feel rewarded is simply through recognition. Sincere appreciation, publicly calling out their success, creating channels for peers to recognize each other, and so on, can all go a long way towards helping employees feel the rewards that can come from their efforts.
Rewarding your employees can be a win-win situation. Make sure you make the most of it by choosing the right kind of reward to give, and giving plenty of recognition where it is due. If you can do this, you’re more likely to have a motivated, happy, loyal team who is ready and willing to do great work.
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