Non-cash rewards are more efficient because they are more effective. Let me break this down for you.
First of all they have a higher dollar-for-dollar impact than payroll, bonuses or stock options because they can be promoted publically. That gives companies the ability to make the connection between an employee’s efforts and the desired organizational outcomes more effectively.
Second, when you reward an employee’s actions (or for that matter aptitude) you stroke their intrinsic desires to bond and learn.
As more and more CEOs become increasingly concerned about their ability to attract and retain top talent in the most cost efficient manner possible, non-cash rewards (and by that I mean catalogue merchandise, gift and debit cards, and individual travel) are becoming a bigger part of the total rewards formula. Why? Because they do more than cash alone can.
Compelling arguments and points that should be made in your business case; but even with this rational you can expect pushback. And it will probably come in the form of a business leader saying something like, “interesting but I have other issues that are more important.”
That’s why the best business cases do three things; anticipate and address objections, frame the benefit in the language of finance and position the proposed solution—in this case the role of recognition—as a tool that will help the business accomplish key objectives.
Want to know how to translate these benefits into tangible financial outcomes? More importantly do you want to see exactly how it works within a recognition portal? Give us a call and well show you how to build a better business case for recognition.
A good manager is just like a good coach. At least that’s the comparison made recently in a posting on CBS Money Watch.
Just like coaches who care adept at breaking down “game tape” and using that process to point out areas that need practice, a good manager relies on observation and reinforcement to point out various skills and habits that could become strengths for the individual worker (and the company) with some extra attention and effort.
Like any good coach the best managers have a keen eye for how a slight tweak in a process or an approach can help each employee on their team perform better.
And employees respond to that attention. Earlier this year Blessing White updated its Employee Engagement Report and reiterated that there is a sharp correlation between a manager’s frequent interaction and the employee’s attitude toward their job’s purpose. These employees are more productive and, as such, more profitable.
Employees are more likely to be engaged when they feel their manager understands what they do well, encourages them to use those skills as much as possible, and recognizes and rewards their achievements when they do. Here a good manager—like a good coach—use a combination of interaction and reinforcement to get more out of their “players”.
Businesses need employees who are both prepared and motivated to meet the challenges and opportunities that they face in the real world. And managers need recognition tools that can help them coach employees along. The best systems make the process easy; fully automating all the mechanics of goal setting, communication and rewarding. So if you want your managers to become better coaches start your game plan by making sure they have the best recognition system available.
According to a blurb published in the Wall Street Journal, consumers have less go-to brands today than they did before the great economic meltdown.
What is a “go-to brand” exactly? It’s a product or service that buyers must have; one they won’t substitute for and are willing to pay a premium for because they believe in its quality and value.
Go-to brands are big money makers for the companies that possess them. Satisfied customers spend more over their lifetimes; they recommend those services or products to others and they continue to remain loyal even in the face of modest cost increases or the occasional service miscue.
And while tougher economic times may have shortened the elasticity between price and blind loyalty, no marketer would argue that a brand’s reputation is not the biggest competitive advantage a company can have. And in that calculation employee actions and attitudes are paramount.
The authenticity of any brand—its perception of being genuine, legitimate and trustworthy—is directly dependent on the willingness of the company’s employees to act and deliver in a manner that is consistent with customer expectations . Here a solid recognition program can help you communicate what it is that your customers except and what role the employees play in satisfying them. Here HR (and marketing) can work together to communicate goals to employees, measure the results, and reward the desired outcomes.
So much is riding on the brand and in today’s economy its reputation can be the difference corporate growth and stagnation. As you think about ways to make your brand a “go-to” choice for your targeted customers, think about the role your recognition program can play in making that happened.
Have we reached a tipping point in the cash vs. non-cash utilization? Have the value spreads between what constitutes a cash bonus and what is an acceptable amount for a non-cash award narrowed?
Most companies use cash for the big bonuses and non-cash for the smaller ones. But according to the Incentive Research Foundation, the gap is becoming less prominent. About two-thirds of companies give their employees gift cards, says the IRF. Almost half as holiday gifts or year-end bonuses.
And while these particular IRF findings (published late last year but recently discussed in Time Magazine) don’t address other forms of non-cash compensation like; catalogue merchandize, company sponsored debit cards and individual or group travel, I would venture to say that the trend is rising across the board.
Why is that? Most business leaders understand that non-cash awards deliver more “bang” for the compensation buck. They recognize that non-cash awards are more efficient because they are more effective. They have read the studies that non-cash awards can do more to capture an employee’s attention than bigger cash bonuses can. And because of their celebratory nature, they realize non-cash is more promotable within the organization. These aspects play a huge role in helping companies more effectively connect individual behavior with organizational goals.
As compensation leaders examine the impact of any and all elements within the total rewards framework, the debate over where and when to use each has shifted. Non-cash awards are now seen as a growing and more viable component within the comp mix; options that employers can rely on more when trying to motivate employees.
Are you giving employees what they really want?
Is non-cash playing the proper role within your totals rewards mix?
The use of pay for performance (PFP) has been increasing in businesses. Depending on which sources you cite, up to 83% of all companies have some form of a performance-based, cash payout component in place.
While these businesses have bought into the concept of PFP, the majority also feel that they are not getting the desired rate of return. That “satisfaction gap” comes from relying too much on cash and opens a window for compensation leaders to examine additional non-cash rewards as an alternative incentive. Advocates of PFPs will stipulate that when implemented correctly they do increase employee productivity.
The question worth asking is this: When it comes to optimizing pay for performance, do you have the right award mix in place?
Companies that rely on cash alone, but fall into the “unsatisfied” camp may be interested in a study out of Wichita State University that found when people make a hypothetical choice between cash and non-cash incentives, cash is indeed preferred by employees. However—and here is the hook—when it’s no longer hypothetical, meaning when an award is identified, employees actually performed better in pursuit of it, even when the award was of equal value to the cash alternative . In other words when employees can zoom in and identify something that they really want they really prefer the non-cash alternative.
As organizations look to do more with less, the argument can be made that introducing a non-cash component to a PFP scheme (remember the majority of executives feel they are underperforming) may make the PFP more effective and there for more efficient than one with an “all cash” payout.
