Non-monetary incentives are impactful to keep employees motivated. While cash rewards lose efficacy over time, non-cash benefits remain significant. Non-monetary rewards can be implemented effectively using flexible options, understanding employee needs, diverse awards, providing regular feedback, and integrating recognition. Incentives are an impactful motivation that also cultivates a culture of celebration and improves the employee experience.
Who doesn’t like to earn money? Everyone does, right? In this commercialized world, living a quality lifestyle comes at a cost. So when employers give employees a raise or fish out bonuses, it makes people happy. It makes them feel that they are being valued and rewarded for their hard work. But does this work all the time? Sure, companies would want to retain their critical employees. Rewarding them frequently helps to retain them, but cash incentives can’t work all the time. They become less effective over a period of time. So what shall we do when we hit that ceiling?
Cash incentives or monetary rewards do not motivate employees after a after a point. They would desire something more, and what is that? We all know employees cherish more cash rewards, but non-monetary rewards are also effective when cash incentives reach their limit. The numbers do show that. The R&R Trends Report 2023 – Impact of R&R on Attrition by AdvantageClub.ai states that non-monetary rewards can reduce attrition in employees by 71%. Moreover, non-cash incentives have an impact on revenues as well. A Aberdeen Research showed that 100% of best-in-class companies (those with the highest customer retention and sales growth) who offer travel incentives to their employees experience a three times higher increase in revenue. For those who may not know, non-monetary recognitions are all sorts of appreciations, recognitions, and feedbacks that do not involve any money. These include verbal recognition, praise, autonomy, and learning opportunities. The above numbers and observations make it clear that non-cash benefits and incentives hold significant relevance in the rewarding strategy of your organization.
Cash vs Non-Cash Incentives
Cash incentives may have some disadvantages, while non-cash incentives can thrive.Companies need to have fat pockets to reward employees with monetary-based incentives frequently. And as we know, business environments are volatile. We recently saw many tech companies pulling back incentive-based perks to cut costs. For instance, Facebook, a Meta company pulled back its free meal perk for employees this year. Further, Google also discontinued its free laundry services for its employees. So, monetary-based rewards are expensive, whereas non-monetary rewards involve little to no money.
On the other hand, monetary rewards are pretty straightforward. When an employee does well, they get rewarded with extra money. While HRs can get creative with non-monetary rewards. We can give great experiences to employees in the form of non-cash incentives. For instance, free vouchers to the city’s best jazz restaurant or even as small as the manager giving a word of appreciation and encouragement in front of the whole team. It creates a great employee experience.
How can companies do non-monetary rewards right?
Most companies have non-monetary incentives as part of their total rewards strategy in terms of flexible policies, building a positive culture, frequent praise and appreciation by managers, and other experiential rewards. However, it is challenging to execute, implement, and design these incentives as per the needs of their workforce.
1. Flexible rewards
Today’s workforce is diverse, and every employee has a different life cycle. Some young ones have just started their workforce, while some are heading towards retirement. Employees will have different aspirations and a diverse set of needs. Many progressive companies are offering progressive benefits that are flexible in nature, and employees have diverse choices from self-learning, clothing, wellbeing and fitness, financial wellbeing, travel, or meals. For instance, a young employee would rather be rewarded with learning and development opportunities for further career development or clothing and travel discounts for a better lifestyle. On the other hand, middle-aged employees would rather like to invest in securing their family’s future or better growth for a stable career.
2. Know your employees' needs
Before we design a non-monetary recognition strategy, it is important to know the demographics of your workforce and their preferences as per their employee life cycle. We can collect this data through dipstick surveys, employee surveys, and internal employee data analysis. This exercise will ensure that companies are not following a ‘One-Size-Fits-All’ approach.
3. Have a mix of rewards
While focusing on non-monetary rewards, we should not forget about monetary rewards. Monetary rewards are as significant or more significant in certain aspects when it comes to keeping the motivational level of employees high. Since monetary incentives keep the employees satisfied, it is essential to combine both and make the total rewards strategy comprehensive, giving better employee satisfaction and experiences.
4. Embed recognition
There are different forms of non-monetary rewards or recognition. Some are experiential, such as vacations, dining, or event passes. And then we have another form of recognition which highlights the employee’s achievements and lifts their morale. Activities such as giving physical awards praising the employee or a simple form of verbal encouragement in front of the team can lift the morale high of the employee.
5. Taking regular feedback
Building a recognition program is a journey where some things might work and some may not. Similarly, companies must follow a hit-and-trial approach and regularly take feedback at designated intervals. This will tell us what are some non-monetary incentives that are working and the ones that are not. Following these feedbacks, HRs can constantly update their non-monetary incentive offerings.
Many organizations mostly focus on monetary rewards when recognizing employees, neglecting the value of non-monetary rewards. Yes! Cash incentives can give employees great satisfaction, but only monetary rewards may not work in a long-term strategy. Companies will have to deliver a better culture where achievements and performance are celebrated, coupled with giving a better employee experience to employees.
