Cash Is King (Or Is It?)

Why Non-Cash Incentives Produce More Feel-Good Results 

If you had a nickel for every time your client told you that cash was king you’d be a millionaire. This is a long-standing belief in the business world regarding the strength of cash as a motivator—but it’s not true. Studies show that employees perform at a higher level for non-cash awards, that tangible rewards are a better value overall for the sponsoring company and that non-cash awards presented in a personal and public way are more memorable and have a longer-term impact on the recipient.

We Want Cash!

When asked what type of award they prefer, most employees will say they prefer cash. However, studies show that people work harder for more tangible rewards. Do we really not know what we want, or are there other factors involved?

Scott Jeffrey, PhD, conducted a study at the University of Chicago to understand the types of rewards that would be most effective in getting university staff members to improve speed and accuracy in the incentive lab, as reported by BI Worldwide in the white paper, “Why Cash is a Less Effective Incentive.” Jeffrey compared cash against two non-cash awards: a verbal “thank you” from management and stress-relieving and relaxing massages.

The cash reward group improved their performance by 14.6 percent over the control group that received only the “thank you” (even the control group improved their performance because just the act of measuring the behavior is likely to improve the results. We pay attention to what we measure). But the tangible rewards group who got massages improved by 38.6 percent over the control group.

Curiously, when asked to rate their preference for cash in a post-program survey, two-thirds of those who earned non-cash awards in the study still said they would prefer the cash value of the prize, even though they had out-performed those who received cash in the study.

Other benefits of using merchandise awards vs. cash are these:

• Merchandise can be tied to the theme of the program or the marketing message, reinforcing the message the sponsoring company wants to send.

• Merchandise is purchased at a discount for corporate programs; cash costs more than face value to administer and disperse.

• Merchandise offers “trophy value.” Recipients are more likely to tell friends and family about a merchandise award than they are to discuss a cash award.

• Recipients often choose award items they would not normally buy for themselves; cash is often used for gas or groceries, with nothing tangible to show for it, and many times the recipient can’t even remember how they spent a cash award. This translates to little residual value for the sponsoring company.

The Incentive Research Foundation (, in cooperation with the Incentive Marketing Association (, recently completed a participant study documenting incentive program participant preferences. This in-depth study, conducted by an outside agency, captured information from more than 450 participants on preferences of more than 80 non-cash award types as well as cash to determine preferences. Recognition aspects were also included to determine each person’s most- and least-desired total award experience.

Following are just a few of the findings:

• Of 452 participants, 448 had unique award profiles (an indicator that it makes sense to offer a choice of rewards).

• When looking at the total award experience, the study found that for large rewards (e.g. typical for an annual sales program), when participants were rewarded by the appropriate level of management, with effective communication and appropriate professional development, 80 percent would prefer incentive travel and experiences over cash in that award scenario.

• For small awards (e.g. those typical of short-term and spot recognition programs), when participants were rewarded by the appropriate level of management, with the effective communication and professional development impact, about two-thirds preferred a personally meaningful non-cash award to cash as well.

• The study also found that between 40 and 70 percent of a participant’s desired award experience was determined by non-award presentation factors, such as who gives the award, how it’s communicated and what professional impact it carries.

Awards To Satisfy Higher Needs

There are several behavioral and motivational theories that explain our need for recognition. An example that is most often used is Maslow’s Hierarchy of Needs. Maslow suggests that our basic need for physical comfort must be met before we can address other needs. Translated to the business environment, once we are receiving a living wage, have a roof over our head and reasonable economic security, we look for social interaction in a family/friends/work team environment—then our position and status (personal esteem) becomes a factor. Only after all of these other needs have been met do we focus on challenge or reaching our full potential (self-actualization), according to Maslow.

While it would be great if all employees were self-motivated and responded to intrinsic rewards (such as the satisfaction of doing a job well, challenge or rewards that are self-administered), a certain percentage of the workforce is not intrinsically motivated and will respond to extrinsic rewards administered by others, such as award merchandise, trips, plaques or other recognition. Well-designed employee programs provide a mix of both intrinsic and extrinsic rewards. (The 10 steps to designing effective incentive programs and links to incentive professionals can be found at

The Way You Make Me Feel

Study after study has shown that tangible incentives (non-cash awards) are more effective in improving performance than cash, and that the way in which the employee is recognized for the achievement is a critical component.

Poet Maya Angelou said, “I’ve learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel.” The same can be applied to employee recognition.

Online programs have streamlined the program process such that it’s tempting to manage the entire program online, from e-mail announcements and promotion of the program to point banks for online ordering, to the award delivery that arrives at the recipient’s home.

Even in an online world, you can make the award presentation meaningful, memorable and personal. Although the merchandise award may be shipping directly to the recipient, the accomplishments can still be called out in a personal presentation. For example:

• Arrange for a personal presentation of a point certificate/plaque or acknowledgement with a photo and a handshake from the department head, company president or chair of the board.

• Recognize achievers at an annual meeting or sales meeting in the presence of their peers.

• Announce and recognize achievement via satellite or Skype for employees in virtual offices.

Choose The Right Tangible Rewards

It’s clear that tangible rewards offer a number of benefits to both the recipient and the sponsoring company, but how do you choose the right rewards for your audience?

• Involve your participant audience in the selection. Participants are likely to be more invested in the program when they’ve had input as to award choices and other aspects of the program or project.

• Set your personal preferences aside. The buyer of the awards is typically not the same demographic as the participant audience. If you can’t get input from your audience, at the very least put yourself in their shoes when making the selections.

• Think upgrade. Include categories of merchandise that might offer a feature or style upgrade to the recipient. Everyone probably has a coffeemaker or other small kitchen appliance, but do they have the model with the latest features in the hot colors for this season?

• Think brands. The awards you choose should be a good match to your own company’s brand attributes. If you are a high-end, quality brand, you will want the merchandise awards you choose to be consistent with or superior to your brand and image.

Lasting Impact

Tangible rewards offer the best residual value for the sponsoring company because they are memorable and recipients are likely to share news of their accomplishments. Suggest that your clients save the cash component for their 401k program or year-end bonuses based on company profitability. To ensure that budget dollars allocated to employee recognition, sales incentives or performance improvement have the most lasting impact, choose targeted merchandise rewards that are appropriate to the audience and recognize achievement in a respectful, public way that honors the recipient.

Barb Hendrickson is president of Visible Communication, a firm that helps companies become more visible in their marketplace through effective communication strategies such as content creation, inbound marketing, social media strategy, reputation management and more. She has spent more than 30 years as a manufacturer’s representative for brand-name incentive merchandise and promotional products, and she is past president of the Incentive Marketing Association. Hendrickson is author of It’s NOT About the Money: 10 steps to designing effective non-cash incentive programs that retain employees, engage customers and improve business.

Get Hands-On In January

At next month’s PPAI Expo in Las Vegas, you can learn more about how to plan, execute and measure incentive programs. On Monday, January 11, from 8 am to 2:05 pm, PPAI is running five sessions within its incentives and recognition track. Most of the sessions are free to PPAI members and to nonmembers with a ticket, and all earn certification points. Find the full list of sessions and descriptions at and register for the sessions when you register for the show at







filed under december-2015 | ppb
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