Cash is quick to award and easy to plan for, so why do experts warn against it as an employee incentive reward? Because experiences are so much more effective.
When asked by a REBA study on how being recognised with rewards made them feel, 64 per cent of employees surveyed said either 'valued' or 'motivated'. Rewards are hugely powerful, with the potential to shape the engagement of your employees and, as a result, the future of your company.
But is cash enough? Cash payments are simple to organise and employees can spend them on whatever they want, so why then are so many rewards experts warning against cash in favour of non-cash variants such as travel? Well, it's because experiences are so much more effective.
Here, we'll prove it.
Cash doesn't motivate employees as much as the promise of a unique experience.
Reason 1: Cash isn't as motivating
Cash doesn't motivate employees as much as the promise of a unique experience. For starters, cash isn't considered meaningful - if you want an employee to find their payout meaningful, you must pay them as much as 50 per cent more than the average employee bonus otherwise it has little impact, according to Gartner. Can you afford to constantly up your bonuses by 50 per cent?
Even if you can, consider not trying: The Incentive Marketing Association found that 80 per cent of employees receiving a large reward (i.e. annual sales recognition) prefer incentive travel and experiences to cash. For small rewards (i.e. spot recognition), 66 per cent of employees prefer a personally meaningful reward over cash.
Reason 2: Experiences equal happiness
A good employee is a happy employee - indeed, productivity increases in the workplace as happiness does, says a study by Warwick University.
Unique, valuable experiences can have bold effects on people's happiness. Research from Cornell University found that experiential purchases tend to provide more long-lasting happiness than material purchases. Interestingly, the study also concluded that the mere act of anticipating an experience is enough to boost happiness levels. So the benefits of experiential rewards such as incentive travel programmes begin well before anyone has even stepped foot on a plane.
Reason 3: Experiences create memories
One of the reasons experiences provide such long-lasting happiness is because they create memories, and humans treasure memories for a very long time. We turn memories into stories, and stories are what we share with our friends and family, whether casually at a pub or passing down to our children. As an employer, you have the power to create these life-changing moments for your employees by offering them experiences they would otherwise never consider for themselves.
Researchers at the University of Liverpool linked positive emotions with memory as they tested a mental coping technique. The study asked participants to rate their measure of self-deprecating thoughts and feelings of social safeness before and after an exercise that recalled their happy social memories. Their safe, warm and relaxed feelings increased during the test, and negative thoughts decreased, suggesting a link between feeling happy now and remembering happiness from the past.
As far as motivation and happiness go, cash has little impact.
Consider this: With cash an employee subsidises their bills for the month or perhaps splashes out and buys a new gadget. Now compare that to a five-day tour of Vietnam, a place they've never been but always wanted to see. In a week, which reward are they most likely to still treasure and be thankful for? Now think of a year, two years, even 10 years. Which memory lingers?
At Power2Motivate, we have specialised in incentive rewards programmes for over 25 years. We aim to develop experiential rewards that inspire employees, boosting their happiness and in turn their engagement. With these rewards on offer, your team will have something to get excited about long before they have earned their award, and that they'll hold onto long after.
To find out more, contact the team today or request a demo.