Exploiting the Benefits of Non-Cash Rewards

More gloomy news this week as official figures show that people in the UK are borrowing even more on credit cards, overdrafts and loans than at the height of the 2009 recession. 

Bank of England statistics show that in the past year alone, household debts have risen by more than £5 billion as people increasingly borrow money to fund their day-to-day living.  Further research, conducted by Asda, says the average family’s spending power has dipped by more than £700 over the past year due to rising petrol, energy and food prices.

At a time when employees are clearly struggling to make ends meet, it would be easy to think that cash incentives are the best way to motivate employees.  Recent research, however, suggests that non-cash rewards – such as retail or travel vouchers – are actually more appreciated by staff.

The survey, conducted by the Incentive Research Foundation (IRF) and the Incentive Federation, suggests that these non-cash incentives better capture people’s imagination and are therefore more likely to have an impact on performance levels – and ultimately the bottom line.

“Tangible awards capture employee attention,” says Jeff Broudy, Chairman of the IRF Board of Trustees.  “That attention yields better performance and drives several practical business outcomes, such as increased sales, decreased waste and reduced absenteeism.”

“The old notion that cash is preferred by employees and is therefore more impactful is not true.  Businesses need to change with the times and their reward strategies must as well.”

UK plc is of course well aware of the availability of non-cash incentives and many companies are making use of them as part of the reward mix.  There is, however, still a question in many reward managers’ minds about exactly why a voucher should be more impactful than straightforward money in the pocket.

The answer is that non-cash incentives provide a double whammy.  The employee has the satisfaction of having the voucher handed over to them – and then gets an additional warm glow a few weeks later when they actually go to redeem it.

Cash that is simply transferred into a bank account misses both of those motivational points in time.  It just merges in with the general finances and is quickly swallowed up on run-of-the-mill household expenditure rather than being used to fund a treat or visibly supplement the family income.

Non-cash incentives also give employers the opportunity to think about the kind of reward that might be most appropriate for individual employees, rather than adopting a one size fits all approach.

Edenred’s Compliments Select, for example, provides recipients with a code so that they can select their own voucher up to a given value.  The employee can choose whether to select a supermarket voucher to supplement the family food shop or to opt for a retail voucher which might count towards the cost of Christmas presents.

The reward itself has a motivational impact, but the employee also feels that the business has recognised their personal effort and is treating them like an individual.

Forward-looking organisations have recognised this and are placing more emphasis on non-cash incentives within their wider reward programmes, particularly in the run-up to the festive season.  And of course it is in January – when everyone needs a boost to get them working productively after the extended break – that they can have a particularly significant impact on the bottom line.

So what’s your experience of using non-cash incentives?  Let us know how it has helped you improve motivation and productivity.