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10/04/2011

In Today�s Economy What Motivates
Better � Cash Or Non-Cash?

As we slog through an economic atmosphere that feels more recessionary than recovery in nature, the debate over the economic impact of non-cash has a new context.

According to the most recent Performance Perspective executive briefing released by Madison Performance Group (MPG), non-cash rewards, in the right circumstances and in the right combinations, can actually be more effective and therefore more efficient than money alone.

MPG is the worldwide leader in developing employee engagement and incentive marketing programs for Fortune 1000 corporations that include Citigroup, Kawasaki and Siemens. The company implements customized strategies to motivate workers, applying proprietary sales and marketing techniques to maximize employees� success.

As highlighted in the perspective, non-cash awards � merchandise, travel, gift certificates and gift cards, a simple thank you (anything that�s processed/delivered outside of the payroll practice) � are better investments and thus more affordable solutions for companies looking to �do more with less.�

The �cash is king� bias, long held by many business leaders and the reason some organizations still have closed minds when it comes to the potential impact non-cash cash awards, could be playing within their organizations. MPG senior vice president Mike Ryan, says, �Cash should always be front and center in the compensation mix. But is the promise of money really what motivates us to do our best when we do our work? And, perhaps more importantly, does cash alone represent what we really want to get out of the job?�

Non-cash motivators, including praise from immediate managers, can be more effective than the three highest-rated financial incentives: cash bonuses, increased base pay, and stock options. Additionally, non-monetary compensation can maximize effectiveness in aligning the goals of the organization with the emotional priorities of its people.

It can be argued that people are indeed a source of unique advantage � one that is hard to replicate, and companies need to take care of today�s skilled workers by aligning reward strategies with what people really want: rewarding work, meaningful relationships, acknowledgment, freedom, and flexibility.

Even in these recessionary times, employees think more frequently about material awards than they do their cash equivalents. Employees think more frequently about tangible awards � even when they are on an equal value to cash � and that the increased interest may lead to higher performance and greater returns on the aggregate compensation investment. Non-cash enticements can be used to close performance gaps across a wide variety of enterprise-level metrics, or they can be used to encourage improved outcomes at the local level.

�As an uncertain economic forecast continues to place cost demands on companies, it�s time to reexamine the old paradigm that cash is the most reliable motivator,� Ryan concludes. �With new studies showing that non-cash, in the right circumstances and in the right combinations, can be �more effective and efficient� than money alone, companies looking to maximize the impact of their compensation costs would be wise to blend non-cash elements into the mix.�

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