employee recognition programs, employee performance programs

Cash vs. Non-Cash: When is One More Effective than the Other?

Cash is compensation, a commodity. It becomes an entitlement. Research done by Wirthlin Worldwide shows that 85% of the time employees, if asked, prefer cash as their reward, but, when asked later to recall what they did with the cash, 29% paid bills, 11% bought something for the house, 15% said they never received cash, and 18% could not tell you what they did with it. Another 11% think they may have saved it.

Studies have shown that Non-Cash rewards are 2 to 3 times more effective than Cash rewards when used along with individual recognition. In our experience, Non-Cash rewards, as an element in an overall employee recognition strategy, are more powerful than Cash rewards.

Cash is just not as effective when it comes to motivating and engaging employees. [See Table Below]

Comparing Cash Vs. Non-Cash Superiority on Organizational Objectives Based Upon Management Perceptions*


Organizational Objectives Ranked By Effectiveness	Mean Effectiveness	Cash Superior	Equally Effective	Non-Cash Superior


Motivating Specific Behaviors/Tasks	4.30			X
Increasing Employee Retention/Loyalty	4.20			X
Generating Positive Internal Communications/Buzz	4.19			X
Increasing Sales	4.15	X
Reinforcing Organizational Values/Culture	4.11			X
Increasing Customer Satisfaction	4.10			X
Improving Teamwork	4.08			X
Increasing Profitability/ROI	3.95		X
Improving Customer Acquisition/Referral	3.87		X
Improving Product Quality	3.86		X

Can You Give Me Some Facts Comparing Cash vs. Non-Cash?

A study by the Forum for People Performance Management & Measurement concluded that Non-Cash based employee recognition programs are more effective for (8) eight of the (10) ten TOP objectives targeted by many organizations. It's simple. Cash is compensation and becomes an entitlement that has very little effect on the majority of organizational objectives. See this document for a summary. Whenever the MEAN SCORE is 3.25 or better, then Non-Cash is best with regard to meeting your organization's most common objectives.

Non-Cash Is Better

Do You Have Anymore Information Regarding the Benefits of Cash vs. Non-Cash?

There is a growing body of work being developed to help organizations understand when to use cash and when to use non-cash to motivate it's people. For an expanded view of what HR and other people-influencing managers found, see this 77 page document regarding the Strategic Guidelines for Managing Cash and Non-Cash Employee Motivation Programs. It's a detailed document with great information if you have an interest in learning more.

Managing Cash and Non-Cash Programs

The Incentive Research Foundation and Incentive Federation published this interesting document in 2011. The compilation represents a new resource that validates the use of Non-Cash incentives and recognition. Download the document now.

Non-Cash's Influence Over People More Powerful

*Forum For People Performance Management & Measurement