Cash has its place – it clearly does. Of course everyone wants to earn enough to pay the mortgage, look after the family, and have enough left over for life’s little luxuries. Evidence suggests, however, that the more people focus on their salary, the less attention they give to the factors that really help them to perform better.
There are over 240,000 academic articles and reports listed on Google Scholar about incentives in the workplace! Whilst there is an argument over the theory of motivation and reward for performance, we have seen the practical evidence that, used strategically as well as tactically, non-cash incentives can and often do make a big difference to business results.
Additionally, a recent report from the Incentive Research Foundation  stated that the executives interviewed considered cash to be serving “a completely different purpose for the organisation,” than non-cash rewards. The report also says “cash is very firmly viewed as compensation, the baseline component of an ongoing business arrangement between the firm and the employee. As the foundation of the employment agreement, cash is a table stake”
But in order to shift performance, you have got to change behaviours in the long term – and the offer of additional cash is often only a short term incentive.
So, why would a business leader contemplate using incentives to improve performance? Firstly because their competitors do it and secondly because it is an established business management tool which is hard to ignore.
Here are some guiding principles for planning incentive programmes:
- As with all business expenditure, there should be a clear set of objectives against which results can be measured – a specified Return on Investment
- Changes in behaviour produce altered outcomes. What changes are needed?
- History is the best guide to the future, so apply the lessons learned to the new plan
- Research the opinions and experiences of the people for whom the incentives are intended
- If possible, test ideas on a small randomly-selected group first, before launch
- Work with management colleagues including HR, compliance and procurement to ensure full support and the required internal resources
- Recognise that no incentive programme ever captured the imagination or gained the co-operation of an entire target audience. Make provisions for the outliers
Every organisation in ever sector had its own unique set of circumstances. There are some basic truths about incentives, however, that almost all certainly apply every time.
- Rewards – the result of someone responding to an incentive – are not all equal
- Not everyone can win the same level of reward for the same amount of effort – “talent” or individual ability will always produce winners and losers
- There is plenty of tangible evidence that the memory of positive experiences is more durable and sustainable than a trophy
- With material awards and possessions, the “satisfaction bar” gets higher the more you acquire, which makes it increasingly expensive for the company to maintain output.
- Cash is seen as an entitlement, an element of the contract between employer and employee
- “Qualitative” measures of workplace satisfaction show earnings to be well down the scale
- Incentive programmes can give people recognition and encourage colleagues to emulate the winners, but if not structured and explained logically can have the opposite effect
- Non-cash rewards can be tailored to people’s values, aspirations and interests and acquire a certain “virtue” which cash can never have
- Sometimes the focus should be on awards, not rewards. Recognition is a powerful motivator and is in itself an incentive for many to behave differently
Every team manager knows that to focus only on the star players is a dangerous strategy. Motivation at work for most people comes from understanding the importance of their personal contribution and being able to enjoy their working environment.
Extend this to enjoying their work outside of the work environment is where the use of travel as an incentive reward takes centre stage as this creates lasting memories and the sense of a shared adventure which brings people closer together. In the “league table” of performance rewards, travel is seen by many as the winner. Travel incentives have the headline wow factor to drive shifts in performance and change behaviours as the kudos associated with attending a prestigious event or being treated like a VIP for a few days is vast.
Take a moment to review how often an employee spends time in a meeting, or conference even. Ultimately that is company cash but it is not seen as clearly as cash as a reward! So imagine if you could elevate a meeting or conference to provide an incentive which in turn changes behaviour positively. With a bit of imagination like set design, or thinking about the meeting/conference as an incentive event, companies have the ability to make their cash stretch a rather long way.
Maybe it is time we started thinking of cash as time rather than an outcome – we’d probably all spend it much more wisely!