Inspired Incentives

New Research Shows that Non-Cash Incentives Work Best

Posted by Matt Slane

Tue, Oct 08, 2013 @ 03:25 PM

non cash incentives work betterI was recently speaking with a prospective client who is looking to grow and motivate his sales channel, and the topic of cash vs. non-cash incentives came up.  Like any good professional in the incentive business would, I responded by telling him about the many studies that show non-cash programs outperform cash incentive programs.

Though I knew that there were many things I could tell him, I did a little research to prove to him that industry experts agree that non-cash incentives are not only more memorable, but they are more likely to increase sales and encourage repeat business. In the process of doing my research, the recurring theme I found is that cash is a great compensator but not necessarily a great motivator. Cash is not always bad (who doesn’t like more cash?), but for a more memorable reward, an individual travel experience or that flat screen TV might be the better way to go. 

non cash incentive awards

In a recent article in Incentive Magazine,The Continuing Case for Non-Cash Rewards, Rodger Stotz, an incentive industry veteran and chief research officer for the Incentive Research Foundation (IRF), stated that “more corporate executives, from frontline sales managers to all the way up to CEOs, are starting to see this. There are signs that the incentive industry’s argument is gaining traction among mainstream business thought leaders… There is an increased acceptance of non-cash incentives by both science and the C-suite,” says Stotz. He notes that in the recent IRF paper “2012 Trends in Rewards and Recognition,” the group referenced research published in the past four years by the Aberdeen Group, PricewaterhouseCoopers, McKinsey & Co., and in the Harvard Business Review. “What was interesting was that all of these came at [the debate] from different perspectives,” Stotz says.  But he points out that all of them arrived at the conclusion “that you have to look at other things beyond cash, beyond financial compensation.” He added that “all of them acknowledged the effectiveness or strategic business value of non-cash components. This is the first time we’ve seen this [high] volume on the conversation by non-industry people.” 

In addition to the Incentive Magazine article, a recent white paper titled, The State of Tangible Incentive Research: The Use of Tangible Incentives was published by The Incentive Research Foundation. The white paper noted that “this year a study by Je­rey & Adomdza (2011) found that non-cash awards capture employee attention. The writers concluded that employees think more frequently about these awards—even when they are an equal value to cash—and that the increased interest leads to higher performance. The logic is simple: since non-cash awards capture an employee’s imagination they also motivate them to do more. The increased motivational impact equals increased performance, and for executives focused on the bottom line this documented finding should be central to our business case.”  

Whether you are trying to gain loyalty and motivate your employees, your direct sales force, or your distribution channel, non-cash incentive programs are being looked at as a best practice and a strategy to influence behavior.

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non cash incentive awards

Topics: Non-Cash Incentives