Cash Isn’t King: Non-Cash Rewards Speak Louder Than Dollar Bills
The Incentive Research Foundation (IRF) is one of the industry’s most respected sources for well-researched information. Their content focuses on the workplace: rewards, incentives, motivation, and recognition. When it comes to the global incentive and recognition industry, they’re pretty much the experts. Which is why we’re super excited to see what’s coming up in their summer quarterly academic review.
IRF publishes compilations of their research four times a year. And we’re pleasantly surprised to see a lot of themes that have been on our mind appearing in the publication as well. Here are some of the highlights as we see them.
Driving Productivity Via Business Incentives & Motivations
Cash vs. Non-Cash Rewards Affect the Bottom Line
Earlier this year, Carrousel Travel hosted a Motivation Forum where we learned the importance (and increased effectiveness) of non-cash rewards. That idea is reinforced in IRF’s summer issue in a study that followed a company’s switch from a merchandise rewards program to a strict, cash-only incentive program for their sales team.
In all, sales declined by 4.36% over nine months (the duration of the study). The full text includes more information regarding the numerous controls and a deeper dive into the study. But the results speak for themselves: merchandise rewards seem to be key to motivation. It’s estimated the organization saw losses into the millions in making this switch.
In that same line of thought, another study looked specifically at the type of rewards that seem to motivate employees the most. Using a short-term bonus model, this study chose three types of rewards--
- praise from a superior
- cash
- food voucher
--and observed employees over a four-week period during which they had the chance to *meet goals* and obtain one of the above bonuses (a different bonus each week).
Overall, worker productivity rose by 6% on day 1 of each cycle, with the food voucher and the praise resulting in 6.6% increases while cash only resulted in 4.3% increases. Additionally, productivity dropped steeply after the first day of the cycle most significantly for cash as well. This research shows us that while short-term bonuses will increase productivity, non-cash rewards, like incentive travel, drive higher performance at a more sustained pace.
Employer Generosity Pays Dividends
In “The Currency of Reciprocity,” groups of contract employees were informed on their first day that they would be given a gift upon the completion of their work. The gifts varied from water bottles with the price attached, unpriced water bottles, cash folded like origami, and more variations. The goal of the experiment was to see if there was an effect on worker reciprocity when promised a reward.
As you might guess, the workers receiving an additional item performed more highly than the base/control group who didn’t receive anything. What’s a little different about this study is that it was an option to receive cash wrapped origami-style that drove the highest performance and quality, implying that presentation might matter even more than actual value.
This form of employer recognition and generosity is reflected in the final study of the quarterly. A company’s “gold star” club is put under the microscope. The club is exclusively for their sales people who achieve a certain amount of sales in a certain time period. They receive some perks, including incentive travel and a literal gold star on their business cards. This study observed a group experiencing a conflict: at the point of the study, the participants needed to either up their sales to get into the club, or they could hold off until the end of the period and push those sales to gain more in commission.
It turns out that gold stars are just as motivating for adults as they are for kids in grade school: on average, sales people voluntarily turned down $30K in potential commissions to make it into the gold star club. The study presents some interesting findings when it compares men to women (men, on average, forewent $36k; women, up to $15k) as well as the nature of competition in the workplace.
Key Takeaways for Incentive Programs
The biggest takeaways are the most obvious: when it comes to business incentives or bonuses, the research seems to indicate that cash is not always king. Additionally, showing appreciation and generosity toward employees can go a long way in driving performance.
At Carrousel Travel, we’ve seen the effects that a value-based rewards program can have on employee productivity. Implementing an incentive travel program is an effective carrot to dangle before your workforce. Contact us to find out more about building a customized travel rewards program!