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Everyone asks: “What is better: cash or non-cash awards?” The mob of sales reps clamor, “Give me cash, not prizes.”

Before launching a spiff program, Human Resources wisdom advises that existing compensation structures must first satisfy basic monetary needs.  Conclusion: Cash is king for base pay and commissions – but non-cash spiffs add extra motivation.

Scott Jeffrey’s research paper, “The Benefits of Tangible Non-Monetary Incentives,” serves as a fundamental resource for assessing cash versus non-cash rewards. As an assistant professor at the University of Waterloo, Ontario, Jeffrey identified four primary reasons for utilizing non-cash rewards in incentive programs, to which I intend to add two supplementary reasons. Plus, as a bonus, to simplify the multisyllabic words researchers like Dr. Jeffrey use, I’m adding a research-for-dummies translation for regular folks like us.

Here are the six reasons to consider merchandise or gift cards for the next sales contest:

1.  Evaluability – “Daydream Value”

When non-cash rewards are presented well, they light up your imagination, making them feel more valuable. Often, how you react to a prize matters more than its actual value.

Think about all the times you got cash as a gift. Do you remember the amount or what you did to earn it? Now, recall any trips, cool stuff, or gift cards you won. Chances are, these exciting prizes stand out more in your memory and are treasured, unlike cash gifts that tend to fade from memory quickly.

2.  Separability – “Not Compensation”

Non-cash rewards provide heightened motivation and recognition as they remain distinct from regular compensation. Cash tends to transform additional rewards into anticipated pay, fostering a sense of entitlement that cannot easily be reversed.

Non-cash incentives offer flexibility without triggering entitlement issues. For instance, in a quarterly sales competition, a trip or merchandise reward doesn’t create the same expectation for the following quarter. It distinctly stands apart and can be managed without the expectation of continuity.

3.  Justifiability – “Guilt-Free Splurge”

Individuals derive unique satisfaction from non-cash rewards as they can use them without feeling any sense of guilt. For instance, a male participant with 50,000 points can freely redeem them for an 80″ HD TV for the upcoming football season without any guilt. However, if the reward were $2,500 in cash, he and his wife might  debate over whether to use it to pay off a credit card or start a college fund.

Which award do you think will generate more excitement at the next sales meeting?

4.  Social Reinforcement – “Trophy Value”

People feel free to talk about non-cash rewards in a way that would be inappropriate for cash compensation.  It’s socially unacceptable to brag about your bonus or commissions, but others are intrigued about your incentive trip to Maui.  Non-cash prizes provide a tangible symbol of achievement that all can recognize.

5.  Memorable – “Halo Effect”

Surveys show that merchandise and travel rewards are remembered longer than cash, with a longer-lasting boost in performance.  They provide a lasting reminder of success and reinforce a positive association with the sponsoring company.  For example, try to remember a fantastic employee reward, trip, or merchandise you won.  Got it?  Now, do you remember the amount of your bonus that year?

6. Promotable – “Buzz Factor”

Cash is difficult to promote – unless you keep increasing the amount.  A trip to Monaco, a new HD TV, the latest i-anything from Apple, or shiny diamonds – create a visual interest that engages participants’ brains.  In essence, they see the reward, want it, and consider how they can improve their performance to earn it.  It doesn’t hurt that this creates a buzz factor around the office when employees discuss what prizes they’re going after.

There is more to it than just not using cash. Choosing the right types of awards for your audience and knowing how long to keep a program running are necessary to motivate your team correctly. You can find all the details in our eBook called 5 Keys to Selecting Motivational Rewards. Click the link below!

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Mike May

Author Mike May

Mike is a wearer of many hats. President of Brightspot, author of 12.5 Steps to a Perfect Incentive Program, past Chairman of the Incentive Research Foundation (IRF), and recognized as one of the Top 25 Most Influential People in the Incentive Industry. His expertise includes bucket-list incentive trips, motivational incentive program design, matching event goals with the perfect destination & hotel, cost savings strategies, global channel reward programs, and targeted communications. Mike maintains his certifications in many specialties including Certified Meeting Professional (CMP), Certified Incentive Travel Professional (CITP), and Incentive Professional (IP).

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