ISSUE 2 JUNE 2008
Who Says Cash Is King?
The Importance of Non-Cash Recognition in
Building Motivation across a Global Organization
Business Is Global! In today’s global economy, world-leading organizations require
the global reach necessary to recognize and reward employees and sales channels
in some of the most rapidly growing economies in the world. As more and more
global corporations open and expand operations in worldwide locations, the need
to implement relevant multicultural programs continues to increase.
barriers to recognize employees and channel part-
Previously, running global reward and recognition pro-
ners around the world in a personalized fashion.
grams was expensive, disparate, and so administrative-
ly burdensome as to be almost impossible. Expensive
As an expert in the recognition and reward industry,
shipping costs, translation charges, culturally inappro-
we help today’s world-leading companies overcome
priate rewards and various unaligned programs in dif-
the global challenge to launch successful, non-cash
ferent countries were the order of the day.
recognition programs that deliver optimal results.
Our clients may differ in size, industry, and location,
Today, Globoforce provides global corporations with
but they all faced the same set of questions when
an online platform that enables them to issue, track
setting goals and objectives for the launch of a new
and manage their entire recognition program needs
reward and recognition program.
from one system. Through this platform, we offer ap-
propriate and motivational rewards that get to their
In our experience working across a wide variety of in-
winners quickly and efficiently. We are committed
dustries, we have noted five recurring questions com-
to helping global corporations overcome geographic
panies raise while launching a recognition program.
Q1. How important is recognition?
Q2. Should our recognition program be 100% cash based?
Q3. Is a non-cash recognition program as effective in motivating employees?
Q4. How will non cash recognition impact our bottom line?
Q5. What rewards should we use?
Q1. How important is recognition?
Tip 1: Retention, Reinforcement, Today, world leading enterprises are those that base
their recognition strategies on building a culture
Return on Investment! of appreciation by acknowledging the efforts of all
deserving employees on a more personal level and
Recognition is a valuable tool for recruiting and
recognizing the behaviors that are most important to
retaining qualified employees as well as reinforcing
their company as a whole. These organizations are
positive employee performance.
successful because they know recognition of their
It should come as no surprise that employees who employees directly impacts their companies’ bottom
receive regular recognition and praise are more en- line as it helps manage retention, increase employee
gaged. This engagement leads to demonstrable in- satisfaction and thus enhance overall performance.
creases in profits, sales, customer loyalty and above
“Companies that utilized an effective employee recognition program enjoyed a 109%
Gallup studies have proven that increased employee
three-year median return to shareholders vs. a 52% return for the same period for
engagement results in:
those companies that did not.”
* 27% higher profits
- Watson Wyatt Study of 3 million employees, as quoted in Forbes magazine (2004).
* 50% higher sales
* 50% higher customer loyalty
Effect of Recognition on Company Status
Fortune’s Most Admired Companies
* 38% above average productivity.
Ultimately, your company’s success is influenced by
its ability to recognize and reinforce positive behavior Reward Programs 25%
in your people. 45%
Reward Programs 28%
According to motivation studies conducted by Fred-
Support Retention 48%
erick Hertzberg, a renowned psychologist and re-
Financial and Non-Financial
searcher of human motivation in the workplace,
Recognition Programs 28%
salary, supervision and working conditions, at best,
Line Managers Create 21%
prevent employees from being dissatisfied. It’s rec-
Positive Work Environment 41%
ognition that positively impacts morale and loyalty to
Regularly Reinforce Company 64%
the organization. Recognition is a strong influencer of
Reward Philosophy 82%
job satisfaction in that it feeds Psychic Income™—a
person’s need for social acceptance, increased self- 0 20% 40% 60% 80% 100%
esteem and self-realization. - Hay Group Research, March 2008
Q2. Should our recognition program
be 100% cash based?
Tip 2: Cash Is Not king! Cash-only recognition programs may appear to be
the quick and easy solution but, based on our cli-
Often, we hear from our clients that their employees
ents’ previous experiences with cash-only programs,
and sales partners would prefer cash. Traditionally,
they neither maintain program consistency on a
their HR departments were happy to accept that re-
global scale nor do they ensure local participants feel
motivated and involved in the organization.
* Cash is flexible
By building a recognition program on cash alone,
companies not only lose out on establishing a cul-
* Cash allows everyone to get what they want
ture of appreciation across their global organization,
* Cash is easy and works in payroll but also on delivering an extra boost to their return
* Cash helps people meet their basic needs
Recognition is no longer a nice to have. It must be
* Cash just cuts it!
part of your Total Rewards Strategy if you aim to:
1. Be competitive in the marketplace
“Recent research shows that what employees say they want and what they actually
2. Communicate to employees that they add value
work hardest to receive do not always match up… Those working for a cash incentive
and that you will acknowledge them
boosted their performance by 14.6% over those who did not receive any incentive for
performance… Those who were working toward a non-cash incentive improved by
3. Create a great place to work
38.6% relative to the no-incentive condition… For the same amount of money, a non-
cash incentive created more than twice the performance improvement!”
A Total Rewards Strategy is one that achieves the
highest return on investment for a company with the
(University of Chicago study, 2004)
optimal mix of cash and non-cash rewards. When
developing your total rewards strategy, you must first
consider your business objectives—certain objec-
tives may be better accomplished with a compensa-
tion approach (cash) while others would be met with
a recognition approach (non-cash).
Together, non-cash and cash awards provide the
Q3. Is a non-cash recognition program as effective
in motivating employees?
Tip 3: Efficient and Effective rewards, you reinforce the relationship between the
reward earner and reward provider.
Non-cash rewards are ideal for improving perfor-
Keep trying to motivate your employees with cash
mance, creating promotional value and satisfying
and you’ll soon become all too familiar with a phe-
the human ego. They appeal to the recipient’s need
nomenon that researchers call “reward inflation.”
for Psychic Income by providing your program par-
People become “habituated” to cash no matter how
ticipants with a tangible symbol of achievement that
much you give them.
fulfills their needs.
When the issue is performance, cash is often the
In addition, they reinforce the recipient’s
wrong answer because it’s viewed as an entitlement
commitment to the company, helping
without trophy value or corporate equity.
to ensure long-term success.
Cash rewards are “slippery” in that they are forget-
table or “slip” a recipient’s mind, often “slipping” gn
right into the paycheck unnoticed. As it’s not socially Incentives
acceptable to discuss cash or salaries—especially in
front of co-workers—you lose a recognition moment
by recognizing your workforce with cash rewards.
Non-cash rewards, on the other hand, are “sticky,”
ensuring that the personalized redemption options
are memorable or “stick” in the recipient’s mind. By
recognizing your program participants with “sticky” Total Rewards Strategy
Cash Is Slippery Non-Cash Is Sticky
Cannot be discussed in front of co-workers Fulfills recipients’ needs and creates memorable value
Is easily spent on necessities such as gas and groceries Reinforces recipients’ commitment to the company
Becomes an expected entitlement Provides trophy value and a tangible symbol of achievement
A 1999 Wirthlin Worldwide survey showed how cash rewards were Offers opportunity for recognition moments
spent: Enables other communications opportunities (newsletters, posters)
* Bills – 29% * Provides something physical to “show off”
* Do not remember – 18% * Are socially acceptable to brag about
* Never received a cash reward – 15% * Provides a lasting reminder of achievement
* A 2007 survey showed how cash rewards were spent: * Provides guilt-free enjoyment of the reward
* $500 reward – 25% did not recall how it was spent * Delivers a higher perceived value
* $1000 reward – 33% did not recall how it was spent * Participants may involve family in selecting reward
Cash = Poor Return on Investment Non-Cash = Next Big ROI Opportunity
Q4. How will non-cash recognition impact
our bottom line?
Tip 4: Increase Productivity and Gallup estimates that 22 million workers in the US
alone are disengaged, having a significant impact on
Save Money! the productivity and ultimate success rates of many
Engagement of your employees matters. It’s about businesses today.
creating an organization that moves forward posi-
Engagement of your employees is the next big ROI
tively, by encouraging more discretionary effort from
opportunity. Research has shown that companies
that implement a global recognition program can ex-
According to the results of a worldwide survey con- pect an ROI of 200-500%.
ducted by Gallup, employees typically fit into one of
With non-cash recognition programs, you not only
these different groups:
save money by reducing manual intervention and
1. Engaged employees work with passion and feel eliminating the paper chase, you also create this
a profound connection to their company. They drive positive, engaged environment where people see
innovation and move the organization forward. best practices, strong ethics and exceptional perfor-
mance are recognized and rewarded consistently,
2. Not-engaged employees are essentially “checked
openly and fairly. Such an environment encourages
out.” They’re sleepwalking through their work day,
loyalty, commitment and honesty of effort, resulting
putting in time—but not energy or passion—into
in significant ROI.
3. Actively disengaged employees are unhappy at
work; they’re busy acting out their unhappiness.
Every day, these workers undermine what their en-
gaged coworkers accomplish.
“Companies that recognize their people outperform those that don’t by 30% to 40%.”
- Kriegal PhD.
Extract from Contented Cows Give Better Milk
Q5. What rewards should we use?
Tip 5: Locally Relevant, Your participants are likely to be spread across the
country if not many countries. They come from dif-
Personally Meaningful and ferent backgrounds, genders, and age groups— all
Actually Motivating Rewards! with varied cultural tastes and preferences.
An essential part of a non-cash recognition program To appeal to the wide variety of needs and interests
is making sure the rewards offered actually motivate within your program participant pool, you must pro-
to your program participants. By offering them the vide variety in your rewards selection.
“gift of choice,” you ensure no one is disappointed.
By offering a worldwide “reward of choice” selection,
Many of the companies we work with today first of- global organizations can ensure every one of their
fered cash only and then merchandise before finally program participants will have something to select
settling on our gift certificate model. We’ve heard that is culturally relevant and personally meaningful
some real horror stories related to merchandise in to them —no matter where in the world they reside.
our experience in global rewards! Some of our favor-
Successful programs are those that deliver both con-
ites are related to trying to ship merchandise world-
sistency and “meaning” on a global scale by ensur-
wide! For example, the grand-father clock shipped
ing their program offers access to millions of different
from the US to Australia ended up costing five times
shopping, dining, entertainment and travel options
its value when shipping, customs and duties were
across all six continents.
paid—in addition to the two months it took to arrive!
Needless to say this is where thinking local really be-
comes essential – knowing not to talk about “French
Dollars” or knowing that electronic merchandise is
a global rewards disaster. Think about the variety of
electric plugs the world!