Managers Prefer Non-Cash Incentives

By Sep 06, 2006

Non-cash incentives generally motivate employees better than cash, but programs should be tailored to suit the corporate culture, desired behavior and employees’ job level.

That’s the conclusion of a study conducted by the Forum for People Performance Management and Measurement. The Chicago-based forum surveyed 235 managers to see what kind of incentives motivate employees most. The survey covered 12 tactics and 10 business objectives to see which tactics best suit each objective.

Employee recognition topped the charts, used by 84% of manager respondents. Cash was the fourth most common tool, used by 59% of respondents. That ranked below gift certificates (used by nearly 66%) and special events (63%).

Managers also favor merchandise (used by 57%), email/print communications (51%), training programs (47%), work/life benefits (37%), variable pay (30%), group travel (22%), individual travel (21%) and sweepstakes (10%).

The survey found that the success of tactics depend on the company’s size and culture; a staffer’s job function; budget; and whether objectives are short- or long-term.

The Awards Selection Study: Insights From Managers report tracked performance against ten corporate objectives: reinforcing organizational values or culture; creating positive internal buzz; improving teamwork; increasing customer satisfaction, increasing retention and loyalty; and motivating specific tasks.

The exceptions? Cash incentives work best for sales, manufacturing and call-center staffers whose goals are easy to identify and track in a pay-for-performance model. Cash works slightly better than non-cash incentives to drive customer referrals.

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