Home > Engaging through Recognition and Incentives > The Function of Employee Incentives and Awards

The Function of Employee Incentives and Awards

The debate will always exist with employee incentive program managers and their participants whether to use Cash or non-cash tangible merchandise as incentive awards. Employees may undoubtedly indicate their preference of cash over merchandise rewards, but research has consistently shows that cash is a very poor motivator because of its lack of “trophy” or “memory” value.

When cash and monetary awards are presented, employees see it to be part of their total compensation package, and simply use it to pay for the same things that would be paid by their regular compensation. As a result they easily and quickly forget that the cash award was presented in recognition or as an element of an incentive program resulting in a loss of impact of the value of the cash bonus as an award for performance, or for their years of service.

Research and experience consistently show that non-cash incentives, in the form of merchandise, are much more successful than money as an incentive award. Why are non-cash/merchandise awards better? Here are some very important reasons.

Non-Cash Awards…

  1. Satisfy Wants not Needs – Cash is typically spent on everyday NEEDS like groceries, bills, gasoline, etc.). But non-cash awards are used for WANTs (such as new chair massager, a new watch or TV). Satisfying a participant’s WANTS is the goal and function of incentives, satisfying NEEDS is the goal and function of compensation (cash).
  2. Eliminate Guilt – When a bill is due, it is harder to justify a purchase of a new set of a new TV instead of that almost due budget item to your spouse or yourself. But if your incentive award is for a selection of merchandise… you CANNOT use it to pay bills, you’re forced to use it on your WANTS or desires. Since there is no choice, there is no guilt!
  3. Are Noticeable! We rarely take the time to brag about the ability to pay for necessities. But we definitely like to take pleasure in showing off our new TV, or talking about our cool watch we won. Non-cash awards are physical signs of our achievement, and they provide an acceptable way for us to fulfill our emotional needs for peer recognition.
  4. Have Memory Value – Think about a special gift you have received in the past, one that you use around the house. Do you remember when you got it? Do you remember who gave it to you, and how you felt when you received it? You probably do. But who remembers where the last paycheck went? Merchandise awards provide a continuous, long-lasting reminder of accomplishments and milestones. They also provide a fond recollection of the company who gave it to them. Whether the selection is for a toaster oven or a TV the recipient will always remember how they got every time it’s used or watched.

Find out more about a Merchandise Award Program for your company.

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