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  • 1. the case for non cash rewards Is it possible for an employee to demonstrate pride and achievement with pay based reward? Have you ever seen money displayed on someone's mantle with pride after their employer had recognised their contribution? Probably not, if anyone is awarded money for achieving a behavioral or business goal or through an incentive program in their company, they are most likely not going to show you the money, they will go and spend it. When polled, corporate employees always rank financial reward as the #1 incentive they can receive at work. However, when people are asked how they feel after receiving a specific gift or receive the equivalent financial value in their pay- cheque, they routinely report feeling better about the gift. This is one of the many considerations in the convoluted argument of cash v non-cash reward. For the modern, conscientious business, it is clearly an issue which requires more detailed discussion. An accepted proposition of modern management is that reward is an effective conduit for a productive, motivated, valued workforce, and provides positive feedback for an employee’s performance and achievement of individual and team based goals. In this context, a company’s success is directly correlative to its employee’s satisfaction. Non-cash rewards are becoming increasingly utilised by companies looking to incentivise performance and to promote a productive work ethic among their employees. This trend demands a closer look at the motivations behind the proliferation of non-cash based rewards systems in the modern business environment. While both cash and non-cash rewards recognize an employee’s contribution to a company, the similarities end there. A company’s justifications for the preference of one to the other can vary depending on the motivational connotations they attribute to a particular form of reward. Human Resource Management research routinely emphasizes the place of a motivational program in any modern management strategy. Reward systems are becoming increasingly influential in the workplace and are not only linked to performance goals, but also a rise in workplace moral and overall employee satisfaction. The cost-effectiveness of non-cash rewards has in recent years, seen them increasingly placed in a position of prominence over cash in businesses’ reward strategies. It is argued that key to the success of non-cash reward systems is the autonomy it allows the individual employee when selecting the type of reward they receive, a choice which lets the recipient feel in control of their own recognition. Monetary, or cash based awards can form a constituent part of a company’s internal rewards. Typically consisting of salary increases, profit sharing, stock options etc, cash incentives when put in place have a recognized positive contribution to an employee’s self-esteem, sense of fulfillment, motivation and need for recognition. This however is undermined to an extent by a new generation of employees who place a greater emphasis on experience, and to whom the traditional long term incentives such as stock options no longer seem relevant. The non-flexible cash based reward systems are unable to evolve to meet the aspirational requirements of a new generation of employees. The autonomy of reward ensured by non-cash reward systems is flexible to the new needs of employees, and this compatibility is demonstrated by empirical research that suggests that non-monetary rewards are seen to many as more important than their monetary equivalent (Merchant 1989).
  • 2. One of the major concerns of business is a high employee turnover. Surveys have suggested that one of the factors influencing an employee’s decision to leave is a lack of reward and recognition, and a feeling that their opportunities at work are stagnating. Other factors include a high stress work environment, poor communication and monotony. Businesses incur costs due to high employee turnover both directly and indirectly, and a comprehensive rewards strategy is a potent tool for any employer looking to recruit and retain a resourceful workforce. In addition to the retention of talented employees, rewards are considered to improve employee productivity by around 20 – 30% (Allen and Helms 2002) in the acknowledgement of personal and team based achievement that forms part of the positive catalytic effects of reward. Historically, business has favoured cash based rewards for its ease of administration from an accounting and audit perspective. This trend is now being reversed by the modern technological streamlining of non-cash reward systems and the number of businesses using non-cash reward programs is increasing (Banker et al 2000). Non-cash rewards systems are increasingly the weapon of choice for the following fundamental reasons, and allow employers to gain a competitive advantage. Feel Good Factor. People feel a little uncomfortable talking about money; however, it is easier to talk about a gift or trip. Memorability. Cash normally gets used for basic needs; therefore, it doesn't carry the same memorable qualities. Reward Value. People use cash to buy things or it is absorbed by debt. Non-cash based rewards allow the employee to indulge themselves rather than pay a bill. Gift Value. If you give cash rewards, often employees will consider this part of their compensation structure, and thus the reward becomes expected. Trophy Value. Non-cash rewards last for a long time, cash does not. People can brag about gifts. Tradition. Non-cash rewards can be utilised to establish a repeatable tradition in your company. These traditions are part of building a corporate culture. Cash Rewards Non-Cash Rewards Ultimate Flexibility Memorable No Selection Hassles Symbolic & Trophy Value PROS Easy to Give Cost-effective for Company Time efficient Considered as a Gift Bragging Rights included with reward Little Trophy Value Up to now has been difficult to administrate Expected as part of compensation package CONS Cash disappears No appropriate Bragging Rights Used to pay for Basic Needs To find out more about how we can help motivate and reward your employees please contact us: tel: 0870 908 0088 email: enquiries@peoplevalue.net