How Incentives Impact Emotions

The question has been widely debated – what is the right reward for my
audience? While cash plays an important role in creating a competitive
salary base, it’s arguably, not the best option when designing your
recognition program.

Academic research shows that when trying to motivate desired behaviors,
non-cash rewards such as merchandise, event tickets, gift cards, trips,
etc., are a more effective way to engage your employees and get
them striving towards your organizational goals.

But the argument seems counterintuitive! When you ask someone if
they would prefer a cash, or non-cash reward of the same value, their
response is likely to be a resounding, “Cash, of course!”. However,
when it comes to tapping into the emotions that make recognition/
incentive programs work, the results are very different.

In practice, businesses have noted that tangible, non-cash rewards
do a better job of attracting and holding people’s interest, getting
them excited about possibilities, and motivating them to act in a
way that meets business objectives. The theory is that, while cash
is nice, and usually needed, the participant feels more “rewarded”
when they receive something they have long wanted or may not have
acquired otherwise, and it creates a more meaningful, positive, memorable

It’s not a trivial issue. Reward offerings can make or break incentive
program success. You need to understand what type of rewards will
stimulate your unique target group and sustain their motivation over
the life of their employment with your organization.

Why Cash Falls Short

Cash is not personal.
While cash is useful, it’s not something that can be used to make an emotional connection. A dollar is a dollar, but to a sports or travel enthusiast, a trip to see their favorite team play, or a beautiful vacation spot, is truly priceless. The emotional elements of non-cash rewards make these items seem to have a higher value than cash in the participant’s
mind. As a result, non-cash is a more effective motivator.

Cash is easily “lost in the shuffle”.
Cash may get spent on bills or routine expenditures, with no long-lasting association to the program, the behavior that earned the reward or the company that sponsored it.

Cash satisfies needs, not wants.
Luxurious, non-cash rewards are palatable indulgences, whereas the participant may feel irresponsible or selfish spending a cash reward to acquire such luxuries. This makes the non-cash reward highly coveted and memorable.

Cash can become an entitlement.
When employees have the opportunity to earn a non-cash reward, it tends to be perceived as an added bonus and specifically earned for a particular achievement. Whereas cash bonuses and incremental raises take on an entitlement mentality that immediately is absorbed into paycheck earnings type of thinking. The result sets the stage for the next level of raises desired/expected the following year.

Cash is not social.
Loved ones and friends can join in the fun of non-cash rewards, which furthers the “positive PR” of the program beyond the participant base. It also elevates interest and motivation by participants who want to earn something that others can enjoy. Earned rewards also create memorable experiences that can be shared with loved ones. These types of rewards create a positive association with the sponsoring company (“We’re going to the movies (or dinner) courtesy of my organization!”)

Cash offers no “trophy value”.
It’s more interesting (and socially acceptable) to tell a story of a non-cash item was earned (i.e. One might talk about how they earned a beautiful purse vs. “bragging” they were given $150). This makes the team member feel good about their achievements.

The Research

Myriad studies have demonstrated the successful impact that non-cash rewards have over cash. Grounded in behavioral economics, these
studies demonstrate that what we say and what we do are often very different when it comes to using cash as a motivator.

One example from Wichita State University, published in the Journal of Economic Psychology, showed how emotion plays into the desire for a
tangible alternative to cash. Researchers asked participants to choose between cash, a HDTV or a cruise. (All worth the same amount.) Nearly two-thirds selected cash. 

Yet results changed when researchers asked participants how happy they would be to receive a bonus of cash, or a HDTV or cruise. Consistently, the HDTV and cruise were selected over cash. The scientists hypothesized that the emotion of receiving a “gift” they wouldn’t go buy themselves creates more excitement and enjoyment versus the “responsible,” cash choice, probably due to necessity. (“I need to pay a bill,” or “I’m saving for a new car,” etc.)

LEARN MORE AT or call John Schaefer directly at 888-646-6670.