Make no mistake, employee performance incentives are a critical part of what makes a business successful. Traditional employee incentive programs are focused mainly on monetary rewards like bonuses, commissions, and stock options. But a recent survey on non-monetary incentives for remote employees showed that 65% of employees actually prefer non-cash incentives over fiscal ones.
Non-monetary incentive programs increase employee engagement - positive workplace behaviors and attitudes. This leads to improved employee morale, more job satisfaction, and overall better business outcomes.
In this article, we discuss how invested and engaged employees find psychological and emotional satisfaction in non-cash incentives that make them feel valued in the workplace. We also talk about how to start a non-monetary incentive program to boost employee morale in your company and positively impact employee retention.
Employee morale can be defined as the collective attitude, contentment, and engagement workers display during their tenure with a company. The morale within an organization is highly dependent on how satisfied employees are with their work and working conditions. It is also highly dependent on the recognition employees receive for their effort and loyalty to the company.
The need for employee recognition in maintaining a good morale is very understandable, but often overlooked. If a team, department, or single person in a company works hard to meet their goals, but goes unacknowledged, they may ask what all the extra effort was for. Understandably, they would also be far less motivated to go to these lengths again. Of course, there are various ways to motivate and reward employees for dedication and effort. Money is an obvious and effective motivator, but non-monetary incentives are just as important - especially for morale.
A lot of companies have a reward system in place but fail to improve employee performance, employee morale, and organizational functionality. The reason that most reward systems fail is that they don’t effectively address what motivates workers. These programs wrongfully assume that all employees are intrinsically the same, and are only motivated by making more money.
Non-monetary incentives are ways to motivate employees by giving them rewards and recognition by means other than money. These incentives include praise, gifts, special perks, and more career growth opportunities.
As these incentives do not involve financial compensation it is important that they appeal to intrinsic needs, like feeling respected, valued, appreciated, and fulfilled at work. Non-monetary incentives are meant to have a positive effect on company culture by improving employee self-worth. These intrinsic rewards have a major benefit - they positively impact employee engagement and loyalty to the company, which in turn increases employee morale and productivity.
Monetary incentives give additional performance-based financial compensation to employees. These are cash rewards and bonuses given for meeting goals, or for exceptional accomplishments.
Monetary rewards are the most straightforward method of showing appreciation and there is no need for customization. Although such rewards can be effective motivators, using money as the only method of recognition is not very personal.
Non-monetary incentives do not involve direct financial compensation. These rewards tend to be more specific to the employee's achievement, goals, and personality.
Although non-monetary incentives can be an expense for the company, depending on the nature of the reward, the true value is in the gesture. Good examples of such personalized incentives are:
Research has shown that monetary incentives promote competitive behavior in employees whereas non-monetary incentives encourage creativity, camaraderie, and engagement amongst employees. They also invoke comparatively less disruptive competition.
More specifically, a rewards system that favors non-monetary incentives carries the following benefits:
Non-monetary incentives are more cost-effective than cash rewards since they don’t necessarily involve paying out additional money. Although a non-monetary incentive can have a financial cost to the company (such as paying for a lunch, a training course, or an event pass), it can also be something that requires no additional spend, such as allowing the employee to take an afternoon off.
Non-monetary incentives are more memorable because of the emotional value employees attach to them and have a longer-lasting effect on morale than financial ones.
Non-monetary incentives help build positive relationships and, as a result, can improve employee retention. This is because these rewards provide intrinsic motivation and have sentimental value. According to a recent study of non-monetary incentives, organizations that do not incorporate these rewards are more likely to have a higher employee turnover rate.
Non-monetary incentives can be particularly beneficial during periods of high inflation. Inflationary rates in the US reached 9.1% in 2022, the highest reported rate since the early 1980s.
The US economy already shrunk by 1.4% during the first quarter of 2022 with employers struggling to hire and maintain an adequate workforce. In addition, the Federal Reserve has stated that they intend to raise interest rates 6 more times before the end of 2022. This causes consumers to cut back on spending, which puts pressure on businesses to succeed. During these challenging economic times, it can be difficult for companies to raise their compensation packages to keep up with inflation. Monetary incentives that compensate for rising inflation are not always within a company’s means, but the non-monetary benefits of working there can still attract and retain top talent.
Research on non-cash rewards has shown that organizations should consider more of these incentives over fiscal ones during such downturns in the economy to boost employee morale and productivity. Non-monetary incentives are a greater motivator for employees because these rewards are more memorable than financial ones. They make employees feel valued not only for their work but also as a person.
Non-monetary incentives have been shown to directly boost employee morale. This is primarily because these rewards spark intrinsic motivation. Being praised in front of colleagues makes people feel good about themselves and leaves a lasting impression. This in turn increases employees’ self-worth which creates greater job satisfaction. The excitement that employees get from receiving these rewards is immediately gratifying.
A study was conducted by the University of Chicago on the benefits of tangible non-monetary incentives. This study focused on the psychology of value - how people feel about a reward versus its calculated value. It was determined that when people calculate the value of a real reward, like a monetary incentive, they care a great deal about the amount of that reward. But when people rely on feelings of value to assess the worth of a non-monetary reward, the importance of the reward amount diminishes.
In fact, when given the option, the majority of test subjects selected non-monetary rewards over cash rewards of equal or greater value.
A recent survey on employee recognition statistics determined that a lack of employee recognition and engagement leads to 44% of employees changing jobs. As previously mentioned in this article, a staggering 65% of workers were found to prefer non-cash incentives over fiscal ones.
To effectively implement a non-monetary rewards program, company leaders should be familiar with their team members on a personal level. This ensures the incentives are tailored to their employees’ needs and personal ambitions. Rewards can be allocated on an individual, team, or department level according to what is important to the receivers in each case.
The benefits of these non-monetary rewards should be communicated to employees clearly, as well as how they can be earned. The company should keep growing these programs by introducing bigger rewards to aim for over time. Doing so will motivate employees to maintain high-performance levels instead of focusing on a singular goal.
Research has proven that employees prefer a hybrid or remote work culture. In a survey by Gallup, 54% of employees said they would ideally split their time between working at home and in the office. 37% reported they prefer to work from home exclusively, and only 9% wanted to return to the office full time.
Not having to commute to the office every day saves employees time and money, and allows them better work-life balance. It is therefore an ideal incentive. As a benefit to the company, a remote or hybrid culture also reduces office congestion and shows a high level of trust in employees to get their work done without having to be micromanaged.
Examples of a flexible work schedule include letting employees work from home, allowing for a condensed work week that gives them an extra day off, and letting them have some say in their working hours.
These are employee benefits and perks that supplement a base salary. Research has shown that the better your benefits and perks are, the bigger the return you'll get on employee retention, productivity, and morale. In fact, 78% of employees reported they're more likely to stay with an employer because of their benefits program.
Examples of fringe benefits include wellness programs, college tuition assistance, training and development courses, company cell phones, employee discounts on company products, and a prime parking spot.
These are intangible rewards that improve an employee’s psychological well-being. Intrinsic rewards include things like praising accomplishments in front of colleagues or on social media and giving employees more autonomy in doing their work. Intrinsic rewards empower employees to have more pride in their work and take on more responsibilities. This in turn boosts employee engagement by making them feel important and competent in their tasks.
Volunteer work is great for a company’s image, gives employees more pride in where they work, and boosts their morale and sense of accomplishment. Giving employees the option of which types of volunteer work they want to do, as well as paid time to do it, makes this reward very personal.
Examples of volunteer work include cleaning up parks, tutoring children, and serving meals to the needy.
Offering access to training as an incentive benefits both the employee and the company. Career development courses improve employees’ skill sets and promote personal growth. They also help employees understand how their work fits into their company’s structure. Training programs are a great way to develop employees’ expertise and prepare them for higher-level job positions, and can thereby be used as a career growth incentive.
Examples of training programs include technical skills courses, writing courses, soft skills courses that improve communication and teamwork, and managerial and leadership training.
Fun outings help employees connect with one another on a more personal level and boost employee engagement. These social outings foster comradery and team cohesion, allowing employees to feel more relaxed at work. According to a recent happiness in the workplace survey, 22% of employees believe they are more productive, or at least as productive, when working alongside friends than acquaintances.
Examples of recreational activities include taking an employee out to lunch, attending hobby classes together, and having an in-house game room.
These are special events or experiences that employees can earn. Employees consider these rewards to be thoughtful, giving them a chance to do something they love without having to pay for it.
Experiential rewards give employees a fond memory of doing something they enjoy and they associate this experience with their employer. Examples of experiential rewards include a pass to a day spa, a paid holiday, a trip to an amusement park, or a restaurant voucher.
Allowing a top-performing employee the opportunity to lead is a constructive way to hone managerial skills while giving them the opportunity to shine. Leadership opportunities motivate employees to move up within the organization and ensure better use of their autonomy at work. They also show staff that their hard work is appreciated.
Examples of these leadership opportunities include overseeing team projects, detecting problems at work and coming up with viable solutions, and training interns.
Giving employees additional days off gives them a personal sense of freedom and work satisfaction. Extra days off help workers unplug to spend more time with friends and family. This reward will also reduce instances of employees calling in sick or not showing up for work.
Extra days off can be used for events like birthdays and anniversaries, visiting family or friends, or just enjoying a long weekend.
This is a way to showcase customer satisfaction by displaying positive feedback for others to view. Sharing customer praise for a specific employee shows them an appreciation for their customer service skills, and keeps workers enthusiastic and engaged. Employees want to know that they are having a positive impact within their organization.
Examples of framed customer feedback are posting client comments or customer surveys with the name of the employee involved on social media or the company website.
Workers need some dedicated downtime and are motivated by things they are passionate about. A lot of employee engagement ideas revolve around keeping employees passionate about their work. As an employer, you can also support their personal endeavors by giving them the time, space, and encouragement to work on whatever that may be. This, in turn, will also make them more engaged members of the organization, because they are not resentful toward work for missing out on these passions.
Examples of an employee’s personal passion you can promote include writing a book, completing a degree, or competing in a sport.
Simply saying “thank you” and “well done” is a non-monetary way to incentivize employees and make them feel valued for their work, time, and effort. Communicating praise to employees will motivate them to perform better, which helps develop team cohesiveness.
Examples of employee recognition and praise include announcing performance achievements at team meetings, assigning employee award titles, acknowledging project completion and milestone achievements, and complementing dedication and strong work ethics.
Physical rewards are gifts given by an employer to employees who meet certain performance criteria. Physical rewards create an emotional link between staff and the company, especially when they are personalized.
Examples of physical rewards include a set of golf clubs, a home office kit, an engraved plaque, or a care package. Branding a physical reward with the company’s insignia is a great way of enhancing the connection, but take care to ensure the gift is still personal for the employee. In a survey regarding employee gifts, nearly 70% of respondents admitted they want to provide input into the corporate gift they receive.
Everyone loves good food. Providing eating options is a great non-monetary incentive.
Examples of meal options include having a fully stocked break room and offering catered lunches. Providing meal options also gives a chance for employees to spend time together and bond as a team.
Access to exercise equipment and other enjoyable amenities allows employees to unwind by doing exercise. Wellness programs help manage employee stress levels keeping them more engaged when returning to work. They also give workers a chance to do something fun together.
Examples of wellness activities as part of a non-monetary reward program include having access to a tennis court, a swimming pool, and a workout facility.
This information technology and networking company excels at prioritizing the success of their employees through an extensive non-monetary rewards program. Cisco is fully committed to their employee's well-being and is partnered with Vida Health. This program gives Cisco employees free access to digital sessions with mental health professionals, doctors, dieticians and personal trainers. Up to 10 free in-person counseling sessions are made available for employees and their family members.
Employee assistance programs such as these help employees balance challenges in their personal life with work, and can help companies reduce compensation claims and health care costs.
Cisco also offers their employees other outstanding non-monetary incentives. Financial counseling sessions are available to employees to help with their personal finances. College admissions coaches are available to help workers who attend university navigate the financial aid process. For a low contribution cost, employees can also enroll in MetLife Prepaid Legal and get unlimited access to expert legal advice. In addition, their employees have access to unlimited personalized caregiving support to manage ongoing needs for themselves or a loved one.
As a result of their comprehensive non-monetary rewards program, Cisco was rated one of the top 100 companies to work for in 2021 by fortune.com.
This multinational consumer electronics company is known to attract top-class employees, in part due to a rewards system that mainly focuses on non-financial benefits. Apple has a “Total Rewards Program” that focuses on motivating employees, reducing turnover rate, and ensuring that the staff's welfare is taken care of.
Apple’s non-monetary incentives include offering their employees discounted healthcare and insurance policies. Apple gives generous employee discounts on their products, and rewards independent thinking by giving out additional stock options. Other perks offered by Apple to its employees include extended maternity leave, tuition reimbursement, subsidized student loan refinancing, and a lucrative donation matching program.
As a result of these non-monetary incentives, Apple has been rated as one of the top 100 companies to work for by Glassdoor. Over the past two years the global employee turnover rate has risen, but Apple has increased their retention rate by 28%.
This leading retail supermarket company attracts people to work for them through a reward system that recognizes and values employees. Walmart offers their employees full medical coverage. Workers are allowed to have a health reimbursement account and a health savings account. These programs allow employees and their dependents to get inexpensive quality healthcare since Walmart has agreements with top healthcare providers that offer reduced-cost medical services.
Walmart also offers a myriad of other non-monetary incentives. New mothers are granted extended maternity leave with 16 weeks of paid time off. Walmart partnered with Thrive Global, a behavioral change technology company. This enabled them to provide free resources for emotional well-being via a smartphone app. In addition, Walmart has an education program that pays 100% of their employee's college tuition and book fees.
As a result of Walmart’s non-monetary incentives, this company consistently receives above-average reviews from their employees.
This global airline company is giving their staff extra rewards as the air travel industry recovers from the impact of the pandemic. Delta CEO Ed Bastian is thanking his employees for their hard work and dedication by offering them two free global travelpasses to anywhere in the world. Bastian commended the Delta workforce, saying that “Delta employees continued to report to work during the crisis under conditions that were unimaginable a year ago. You still provide the best service and professionalism in the industry.”
Delta also provides their employees with other travel benefits, highly rated professional development and mentoring programs, extended paid leave benefits, and comprehensive life insurance. As a result of Delta’s non-monetary rewards, their employee retention rate is in the top 10% when compared to similar-sized companies.
This multinational mass media and entertainment conglomerate has over 180 employee recognition programs. Disney provides their employees with a comprehensive rewards package that encourages personal and professional growth. Workers receive complimentary theme park admission and exclusive discounts to select hotels and dining establishments.
Disney has a VoluntEARS Grants program that provides employees with skill-based community volunteering opportunities. Workers can then turn their completed hours of volunteer service into financial contributions from the company to an eligible charity.
Disney also offers other highly touted non-monetary rewards for their employees. These include career development opportunities, complimentary wellness programs, and childcare. In addition employees get lots of paid time off, tuition reimbursement, and commuter assistance. As a result of these non-monetary incentives and rewards, the Walt Disney Company was rated fourth by Fortune as one of the world’s most admired companies.
Successful companies have some of the best employee recognition programs that include non-monetary incentives. These incentives have been proven to be more effective than cash rewards in regards to increasing employee productivity, boosting employee morale, and improving employee retention.
Putting together a non-monetary rewards program is a great way for companies to satisfy and even exceed the expectations of their staff and customers.
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