Cash vs. Non-Cash Incentives: All You Need to Know
Cash reigns supreme. Is that the case? It's tempting to believe that money makes the world go round, but this isn't the universal case when it comes to incentives. A cash incentive is an amazing way to motivate and reward staff, but it's far from the only successful choice. While offering increased pay or cash bonuses may be alluring to recruit people and boost performance, you should also consider non-cash incentives. In short, there are two distinct pathways: cash and non-cash incentives or rewards:
- Employees receive cash incentives in the form of a cash bonus or a commission structure.
- Non-cash incentives are non-cash benefits that are linked to achieving a goal or selling a product.
What are Cash Incentives?
Cash incentives are the amount awarded to the employee for achieving their quota. A cash incentive, as its name indicates, has a clear monetary value; an employee knows exactly how much one is worth. Cash incentive motivates the employee to complete his / her quota and hence achieve the overall revenue of the company. This monetary benefit called cash incentive can be a great driver for many salespeople. Some of the cash incentives include bonuses for achieving sales quotas, cash rewards for creative ideas, providing funds for employees' education or training, team bonuses for completing projects on time, etc. Individual/ team bonuses, annual bonuses, contests with cash rewards, profit-sharing, and salary raises are all examples of cash incentives.
What are Non-Cash Incentives?
Non-cash incentives are non-monetary perks that firms provide to their employees, as the name implies. They are methods of rewarding employees in addition to monetary remuneration and bonuses. Non-cash incentives are intended to reward a significant accomplishment or completion of a task that improves an employee's work performance or worth to the company. Achieving a sales target, completing a specific research project, or graduating from a training program that leads to a sought certification are examples of meritorious categories. Non-cash rewards may be a great way to show your staff how much you appreciate their hard work. There are a variety of non-cash workplace incentives that you may test out with your staff, such as travel vouchers for excursions, tickets to a sporting event, a theatre performance, or a musical performance, a sought high-tech gadget, fine dining experiences, having lunch with the CEO, a day at the spa, a round of golf, or another leisure activity, for example.
Cash vs Non-Cash Incentives: Which are better?
“A sales incentive program can help you maximize each salesperson's potential. A cash-based sales reward scheme is used by many companies.” Often heard, right? It appears to be the quickest, easiest, and most broadly attractive option. However, you might be shocked to learn that non-cash incentives function the best in terms of cost-effectiveness, ROI, and overall results when it comes to incentives.
It's preferable to appeal to people's interests and emotions if you want to improve their participation in an activity they are already familiar with. According to research, non-cash incentives, are actually more effective in motivating workers to fulfill corporate goals.
When asked how they want to be rewarded, most people say cash, but behavioral economics research shows that the emotions associated with non-cash incentives can outweigh the dollar's straightforward utility. Non-cash sales incentives not only make your rewards more appealing and motivating, but they also allow you to pay less to obtain a higher return.
Benefits of Non-Cash Incentives
Let’s take a look at some of the benefits of non-cash rewards before we dive into our list of examples.
1. Memorable
Non-cash incentives are more unforgettable than monetary rewards, owing to the fact that they are simpler to distinguish from pay. Being honored at work with a gift, lunch, or a short trip has a longer-lasting, more favorable influence on employees than receiving additional cash. This is amplified when they're given out as part of a formal event, such as an awards dinner. This helps the employee(s) who got the reward to feel unique and cherished, which is often more difficult to do with money. It will make their experience with your company one to remember.
2. Provide Great Value for Money
You can have a big influence without shattering the budget if you use non-cash incentives. Non-cash incentives, for the most part, may be provided for a relatively modest cost. Many non-cash rewards have a hazy value attached to them. Subsidized gym memberships are one example, as are high-quality employee recognition programs, which are made less expensive by their excellent return on investment. You don't need a lot of money to start such programs, and the perks are numerous: from improved employee connections and long-term engagement to increased trust, productivity, performance, and so on. Non-cash incentives are frequently appreciated higher than their monetary worth.
3. Good Fringe Benefits Attract Millennials
Because let's be honest, money is vital. However, money isn't always the primary motivator for us to stay with or join a company. Employee benefits are a wonderful place to start if you're wanting to recruit new talent, especially those who have recently graduated from university or graduate school programs. Unique office benefits and wellness programs are particularly appealing to the market's younger workers. As a result, non-cash incentives may be an important aspect of your employer's branding strategy, and they may be the decisive factor in applicants' decisions to select you over a rival.
4. Attraction and Retention
Non-cash incentives evoke interest and motivation because they make people feel appreciated, provide opportunities for growth, and demonstrate the influence they have on the firm. They assist in employee participation. Non-cash incentives, like time off for volunteering, actual gifts, or team excursions, are wonderful conversation starters. They may be a great way for people to 'break the ice and start a discussion. We stay because of the people we work with, our boss, the job itself, and yes, the non-cash incentives. Also, you can instantaneously reward someone. Unlike a cash bonus or a salary raise, which must be delivered on the following paycheck, most non-cash incentives can be offered immediately.
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Examples of Non-Cash Incentives to Offer
Here are the top eight enticing non-cash incentives you can offer your sales reps:
1. Experiential Rewards
Experiential incentives, as opposed to transactional rewards, have the advantage of being more remembered. They also enable you to create an emotional bond between your employees and your brand. It may be anything from a trip to the spa to a trip across the world! Instead of financial compensation for their accomplishment and hard work, employees view these rewards to be more meaningful. However, the great thing about experiential rewards is that you can customize them to fit your business, your workers, and your budget. Giving your workers what they want, indulging their hobbies, or assisting them in discovering a new activity is the key. Employee engagement and retention have been shown to improve with experiential rewards.
2. Shoutout and Recognition
As corny as it may sound, a simple (open) thank you may go a long way when it comes to non-cash incentives. If there isn't enough money for prizes and awards, acknowledgment and shoutouts can suffice. Employees who have put in a lot of effort deserve to be recognized. Fostering a culture of appreciation that is backed by a strong peer recognition program and embraced by everyone in the business (from top to bottom and vice versa) is an effective method to guarantee that employees hear "thank you" when they need it. Not only may they be used to inspire employees in the same way as rewards do, but they can also serve to develop connections between employees and employers by demonstrating that their efforts are valued and establishing trust. This can take the form of a direct email complimenting them from you or a manager, a thank you letter or a written statement, noting their accomplishment at a meeting, or social media acknowledgment.
3. Extra Leave
We all enjoy a day off, so giving your employees an unexpected additional day off (outside of their yearly leave allotment) may be a terrific way to express gratitude. Employees can be rewarded with more time off by giving them an extra day or a birthday off, a longer lunch break, an early finish on Friday, or a later start on Monday. A healthy work/life balance may also help workers be healthier, happier, and more engaged at work, which is beneficial to both them and you. However, you should only do so if it serves your company goals and has no negative impact on your return on investment.
4. Flexible Work Hours
You may provide your top achievers employment flexibility in exchange for their hard work. Flexible work schedules allow them to spend more time with their family and friends while also demonstrating your confidence in them. This is, unsurprisingly, one of the most well-liked non-cash incentives among employees. This implies that workers have as much control as possible over what they do. Employees with positions that allow them to work from home have the option to work from home, come to the office a couple of days a week, or work full-time from the office. When applicants apply, certain organizations may provide them with the option of choosing between positions that are totally remote or (partially) office-based. If your sales staff fulfills your goals, there's no reason why you shouldn't provide them with a more flexible schedule.
Conclusion
Your company's specific circumstances and desired goals should guide your decision on whether to give cash or non-cash incentives to employees. You must recognize and reward people for their hard work and devotion, and being an effective manager requires knowing what sorts of incentive plans and awards your employees value. While money is useful, it cannot be used to establish an emotional relationship. As a result, non-cash incentives are a more powerful motivator. After all, people are the lifeblood of your business, and expressing gratitude is critical to its success.
Top 8 Reasons Why Sales Incentives are Important
Source from: https://incentivate.in/blog/cash-vs-non-cash-incentives/
