How Appropriate Employee Rewards Are Like Good Wedding Presents

I’ve written before in Compensation Café about the difference between compensation and employee recognition (and the rewards often associated with recognition). To summarize: Cash compensates. It does not motivate. 

This is largely true for three reasons:

1) Cash is expected in a set “trade” agreement.

Simply put, cash is the expected (and in many cases, legally required) recompense for services rendered. Employees expect to be paid in cash for the work they’ve provided according to agreed terms. Yes, cash is often the medium of reward given to employees in terms of a bonus, but like a paycheck, these bonus often become an expectation as well (e.g., Wall Street’s bonus culture).

Even when cash rewards are given more frequently, most organizations slip these rewards into the paycheck. This means employees often don’t realize the reward has been given as the extra cash slips right out again, leading to the second challenge of cash rewards…

2) Cash is not memorable.

When company leadership goes to the effort of investing in employee recognition and rewards, immediate benefits are the increase in positive working relationships built through the “power of thank you”. This leads to increases in employee productivity, retention and engagement.

Rewards associated with that recognition extend these benefits long after the formal recognition moment occurred. Cash, when used as a reward, loses this benefit because it is too easily spent on things of daily life – gas, rent, groceries – leading to the third challenge of cash rewards…

3) Cash cannot elicit long-term positive associations and memories.

A knock-on benefit for companies that include personal, meaningful rewards with recognition is the lasting association of positive memories with that reward for the employee. Every time the employee sees the reward item, they are reminded of the value the company places in the employee and in their work.

I was reminded of this point when skimming through an article on the power of wedding gifts – long after the wedding (and sometimes the marriage!) is over. Here’s one example:

“When my husband and I got married, we were young and very broke, and our friends and family at our very small wedding all gave us cash, at our naïve request. I regret that now. After many years and two children, the few durable wedding presents (some Tiffany plates, a blue casserole dish) hold good memories of good times. The cash, on the other hand, a stunning fortune of some $300, is long gone on something ephemeral like rent.”

Note the treasured durable presents are likely far less in value than the amount of cash, but those are also the gifts far more treasured. Similarly, strategic employee recognition and reward programs do not require a significant monetary investment – but they do require time and thought.

The same is true in employee recognition and rewards. Leave cash where it belongs – in your compensation plan. Take full advantage of your investment in employee recognition with tangible, meaningful and highly personal rewards.

As Globoforce’s Head of Strategic Consulting, Derek Irvine is an internationally minded management professional with over 20 years of experience helping global companies set a higher ambition for global strategic employee recognition, leading workshops, strategy meetings and industry sessions around the world. His articles on fostering and managing a culture of appreciation through strategic recognition have been published in Businessweek, Workspan and HR Management. Derek splits his time between Dublin and Boston. Follow Derek on Twitter at @DerekIrvine.

Comments

[E. James (Jim) Brennan]

It is socially acceptable in most cultures to be publicly recognized for a positive achievement. On the other hand, bragging about cash is generally considered crass. The recipient of recognition or an openly displayed non-cash perquisite can be used as a positive example by the employer, affirming both team status and group objectives, without offense.

Some people would do more to have a personalized parking space close to the entrance with their name on it than they would for $10,000. One gives glory, but the other (cash) disappears into the bank account where it is co-mingled and loses both its identity and its utility as a reinforcement element.

[Laura Schroeder]

Funnily enough, we were just at a wedding where the bride and groom wanted cash instead of presents. I guess they have enough stuff and/or didn't want friends and family inflicting their horrible taste on them. In Japan cash is the standard wedding present.

Nice point about cash and motivation, however - once you've banked it, the warm glow is gone.

[Derek Irvine, Globoforce]

Jim, that's an excellent point about bragging. Symantec shared with us on a webinar that's one of the reasons they're so pleased to have moved away from cash rewards. Now they're starting to hear how employees are enjoying their rewards: "Oh, I went to the spa." You certainly can't have that conversation in the hallway with a colleague if you get cash: "Yeah, I got a 100 bucks!" Just doesn't work...

[Derek Irvine, Globoforce]

Laura, that's an important point, too, about merchandise rewards. Though I didn't get into that in detail in my post, hand picked merchandise offered through a catalog is nearly as bad as cash. The catalog provider is, as you say, "inflicting their taste" on the reward recipients. Far better to give employees full choice - the fungibility of cash - while avoiding all the negative.

[Dan Walter]

Derek,

I agree with your point that durable gifts can mean more than a significantly larger amount of money. Company must also be aware that these durable gifts can also be worth much less than the cost and effort of supplying them.

In both weddings and rewards programs people sometimes choose to gift items that are unique and special to themselves, but very few others. Providing a gift like this can often serve as the butt of a joke or as a constant reminder of the disconnect between the giver and the recipient.

Care must be taken when selecting a gift or reward. Many people will not return or exchange gifts even when they HATE them. They will likely still remember the gift, even if they don;t like it.

Give rewards that your employees want, not those you wish they would want (or that you want yourself)

[Derek Irvine, Globoforce]

Dan, couldn't agree more, though I didn't go into this level in the post. That's why we offer gift cards to 2500+ brands around the world. This lets employees choose from, ultimately, 25+ million reward items, experiences, adventures (even charities) that are not only personally meaningful, but actually desired - and that no manager or peer (however well intentioned) could possibly know about.

[Sean Tucker]

I think there is a balance to be achieved between the generic gift card which can be used anywhere and knowing your employee. I think one of the lost arts of management these days is understanding who your employee is and what motivates them or excites them outside the work place. When rewarding an entire team it may be difficult to have this level of 'intimacy' and a gift card or similar may be best. When rewarding an individual it would behoove the manager to actually know the individual - do they have a favorite sports team, restaurant or food type, going fishing, trips to the spa or whatever. That gift has meaning in more ways because it shows you take interest in who they are not just what they produce.

[Robert Piller]

Nice article. I have written several articles on the power of a physical, tangible gift vs. cash.

Once the cash is put in a purse or wallet, it is never thought of again. Instead, it often gets thought of in the same terms as bills, which it too often goes to cover.

A merchandise reward shows thought and will go toward something that the recipient might not have originally purchased for themselves, though wanted to.