Live from the Mo Show: Non-Cash Awards More Effective

Posted on by Chief Marketer Staff

Cash is no longer the ultimate motivator. That’s according to preliminary data from the Forum for People Performance Management and Measurement at Northwestern University, which found that non-cash awards would be more effective in all cases expect increasing sales.

The study found that non-cash awards programs would work better than cash in such cases as reinforcing organizational values and cultures, improving teamwork, increasing customer satisfaction and motivating specific behaviors among other programs. But cash reigned as a slight favorite in driving sales.

The findings are based on surveys distributed at the National Association of Employee Recognition (NAER) annual conference this year in Los Angeles. A total 81 surveys were collected on-site. Those surveys will be combined with data collected from two more efforts, including one taking place this week at the Motivation Show. The full results of the study, Strategic Guidelines to Managing Cash and Non-Cash Employee Reward Programs, are expected to be released in November.

When queried about non-cash programs, respondents were in the most agreement with the statement: “My organization has been very successful in utilizing non-cash reward/recognition programs to motivate employees” (ranked 4.03 on a scale of 1 to 5). However, they disagreed that cash was a successful motivational tool (2.52).

The survey also found that employee recognition was the No. 1 recognition tactic used to motivate employees (cited by 98.8% of respondents). Other tactics included special events (82.7%), gift certificates (74.1%), cash (50.6%) and sweepstakes (18.5%). Group travel ranked lowest at (14.8%). Training programs drew a 55.6% response. And when asked about the effectiveness of different motivational tactics, the respondents gave work/life benefits a 4.06 (on a scale of 1 to 5) and training programs a 3.96, a sign that such programs are becoming an important part of the motivational mix.

“What we’re seeing is that professional development is becoming a very key reinforcer motivator in today’s environment,” said Rodger Stotz, VP at Maritz, Inc., who presented the data yesterday at the NAER fall summit.

He said many companies are now sitting down to interview young prospects, only to be peppered with questions about how the company will help develop and train them. Employee recognition ranked No. 1 (at 4.73) on the list of effective motivation tactics, with sweepstakes bringing up the tail end at 2.89.

“You need to be aware of the lack of the impact of sweepstakes; they can generate a lot of excitement, but it might not be seen as an effective recognition tool,” Stotz said.

Upper management was reported to have the most responsibility for selecting reward and recognition programs (65.4%), followed by human resources (64.2%), department heads (38.3%), CEOs (23.5%), operations ((18.5%), sales management (12.3%), customer service (9.9%) and marketing management (6.2%).

The most popular method of measuring the success of employee rewards programs was employee surveys (88.9%), followed by employee turnover (55.6%), customer surveys (50.6%) and ROI (32.1%).

Some 70.7% of respondents said that recognition programs focused on a combination of both individuals and teams with 25.3% reporting individuals and 4% saying teams.

“We’re seeing this as a growing trend as teams become a critical part of organizations,” Stotz said.

Stotz said the goal of the research is to develop a set of tools for managers to use to determine whether cash or non-cash incentives will work better in a particular scenario.

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