Q: You keep talking about compensation that converts into cash, but aren't some other forms of compensation equally powerful as a reward? What are the best non-cash rewards?-A. C.

CompDoctor™: Ah, A.C., you bring back memories of happier days, when everyone was content to work from 8 to 5, take their paychecks and go home to their families. None of this fancy flex-time, no petty squabbles about whether to institute casual dress on Fridays. (Sigh.) Now, cash is no longer good enough. Noooooo. Everybody wants prizes, accolades and trinkets. Life was so much easier in the past. Employees were just so much more grateful.

Nevertheless, A.C., compensation experts and human behaviorists have found that non-cash rewards can be even more powerful than cash when it comes to motivating and retaining employees. What are we talking about? Non-cash rewards are anything that serves to reward and recognize an employee for completing a job. They include everything from a nice thank you note or a plaque to a parking space close the building; from an afternoon off to an all-expenses-paid trip to Bali. What these have in common is that they cannot be converted into cash. They can be experienced, displayed, bragged about and remembered, but they cannot be spent.

The variety of non-cash rewards is endless, limited only by your imagination. However, the ones that carry a wallop are those that meet the following criteria:

1. They are observable to co-workers. A plaque, a parking space, a name on the wall or a listing in the company newsletter meets this criteria.

2. They involve the family of the employee. A trip that involves the family, or, at least the spouse, will qualify for this.

3. They are never repeated in the same fashion. In other words, the same employee cannot earn the same reward again. If the employee is eligible for another non-cash reward, it should be something completely different.

4. They are developed with the help of employees. Bosses should not develop non-cash rewards without talking to employees, because what employees find rewarding is probably different from what you find rewarding.

5. They are specific to the individual. For example, giving an Eskimo a refrigerator is probably not going to be meaningful unless he lives in the desert.

6. They are given to the employee immediately after the behavior. In psychology, if you want someone to repeat a desired behavior, you reward them right after the behavior.

7. They must be specific. Non-cash rewards should be clearly associated with specific behaviors; otherwise, it will be difficult for the employee to figure out what they did right.

are a couple of ideas taken from the book 1001 Ways to Reward Employees by Bob Nelson, to illustrate the variety of non cash rewards that you can use. Xerox Corporation gives Bellringer Awards to someone of notable achievement. To recognize the employee, a bell is rung in the corridor outside of their office. The Sherpa Corporation passed an old bowling trophy around to employees that achieved spectacular results. Finally, if the operator of a restaurant chain increased sales by 40% over the previous year's sales, he or she earned the right to drive a Lincoln Continental Mark VII for a year. If the increase was repeated the next year, they got to keep the car for good.

Why do non-cash rewards work? Quite simply, because they cannot be spent. For example, if you were rewarded with $1,000 in cash, you would probably spend it to pay bills, and the focus would be on what you owe, not what you have earned. And the positive psychological effect of the reward would last only as long as it took you to spend it. On the other hand, if you were rewarded with a new wide screen TV with surround sound (cash value, $1,000) your excitement and appreciation for the gift will last a lot longer. The TV will have a greater positive impact on your feelings for the company, and on your future behavior than would cash. Why? Because it is highly observable and it involves your family.

To give you a personal story about the power of non cash rewards, I remember a trip to Mexico that my Dad won for beating a sales goal. I was 10 at the time, and I can still remember the package that came by delivery truck, the excitement that my parents had and the week that I had with a sitter while they were on their trip. I can even remember the gifts that they brought back from that trip. They still talk about it, and I am older than 30. So for my dad, that effects of that non-cash reward lasted more than a couple of decades. In contrast, I can't remember what ever happened to the first cash bonus I received just 8 years ago.

So A.C., given the lamentable fact that nobody is satisfied with a plain old paycheck any more, you will be wise to develop a treasury of non-cash rewards and a strategy for using them. They are fun and they work-and that's something we can't always say about cash.

CompDoctor Question of the Month: What can a company do to reward employees for their performance just before the company is bought or merged? Check out the answer on our website. Go to www.foxlawson.com. Click on the CompDoctor button and log in. Follow the directions from there.

Back to top

< Back