Show me the money?
“Compensation is what you give to people for doing the job they were hired to do. Recognition, on the other hand, celebrates an effort beyond the call of duty.” – From How To Profit from Merchandise Incentives.
One of the constant struggles that managers encounter is developing ways to motivate employees. Many ideas have flowed to determine the best way to reward higher performance but in most cases creativity and implementation is hampered by issues such as the strategic thinking of the organization or even as some would argue, the status of the economy.
However, studies have confirmed that while giving cash bonuses and pay increases can sometimes motivate employees, money can only motivate a person so much. This view can be substantiated as far back as Abraham Maslow’s Content Theory – Hierarchy of Needs – which proposed that the same person is not always motivated by the same thing since their needs change over time. This reasoning has encouraged some managers to turn to non-cash incentives as an alternative to bonuses.
While there may be some truth to the adage cash is king, it is a poor philosophy when designing incentive programmes. Simply ask anyone which they would prefer: cash or a non-cash reward of the same value.
The theory is that while cash is nice, and usually needed, the recipient feels more “rewarded” when they receive something they have long wanted or may not have acquired otherwise.
According to some studies, specifically by the Madison Performance Group (a provider of employee engagement and incentive programmes), non-cash rewards, in the right circumstances and in the right combinations, are even more effective at bringing out the best in your staff.
However, before transforming your current reward policy, employers should have dialogue with employees to determine what inspires them to do their best. Reward offerings can make or break an incentive programme’s success. Managers need to understand what type of rewards will stimulate their unique group – and sustain their motivation over the life of their relationship with the organization. Some of them want money but for others, recognition or more challenging assignments might be more desirable.
According to excerpts from 1001 Ways To Reward Employees by Bob Nelson, organizations should match the reward to the person; match the reward to the achievement; and be timely and specific.
An assessment of non-cash incentive schemes in Barbados undertaken by The Productivity Council revealed that such schemes were primarily structured along two main groupings. Some were strictly non-monetary, while others consisted of cash and a keepsake.
The following are rewards that organizations can implement to compensate employees for higher performance but this list is not exhaustive. These rewards might be classified as formal (part of a predetermined programme) or informal (awarded at a spontaneous moment).
Formal /informal awards
According to author and management consultant Rosabeth Moss Kanter, “Recognition – saying thank you in public and perhaps giving a tangible gift along with those words – has multiple functions beyond simple human courtesy. To the employee, recognition signifies that someone has noticed and someone cares.
“To the rest of the organization, recognition creates role models – and communicates the standards: These are the kinds of things that constitute great performance around here.”
Kanter suggests that programmes:
• emphasize success rather than failure
• distribute recognition and rewards in an open and publicized way.
• recognize recognition. Quite simply, recognize people who recognize others for doing what is best for the company.
Organizations who provide employees with paid time off can increase job satisfaction by giving those employees an opportunity to pursue a hobby or relax without the added burden of how the time off will affect their earnings.
An employee can be given a day off for exceeding monthly sales or production goals, maintaining perfect attendance or providing the department with an innovative solution to a business problem. An organization can also offer paid time off as part of a sales or production promotion, which encourages all eligible employees to contribute more effort to meeting goals.
The argument has been posed that employees may contribute more time and effort toward an employer’s goals when they have access to personal and professional development opportunities. Financial rewards and other perks can come with success, but employees need to see that they are being distributed for genuine accomplishment.
If the organization is perceived as rewarding employees based on favouritism or increasing salaries/wages arbitrarily, this could create negative feelings in employees who failed to be acknowledged and perhaps lead to decreased performance.
Development could be advanced through formal training or simply by maintaining a company library of development-based books, audio CDs and DVDs. This would assist employees in honing personal and professional skills. Organizations that reward employees with cash or cash substitutes in the form of coupons or points allow the employee the flexibility to decide how to use the reward and so the likelihood of satisfaction increases.
Trophies/plaques are usually customized for the individual, company or event, making them potentially more valuable as motivators. This form of recognition can be more cost-effective for an organization, particularly one with a smaller budget.
What managers must ensure is that the reward is not a blanket or continuous copy where the same reward is given to every member of the organization. Top performers need to know that exceptional efforts are rewarded accordingly, otherwise these incentives can fail to achieve the goal that they were created to accomplish, specifically, to inspire employees to perform.