Last week, United Airlines announced their plans to replace quarterly bonuses with a lottery rewards program. As you might imagine, their employees didn’t react favorably. In fact, the backlash was so severe, the company was forced to pause their plans almost immediately.

Let’s take a closer look at what went wrong and why lottery reward systems – and even cash bonuses – can’t compete with on-the-spot values-based incentive programs.

Don’t press your luck; lotteries don’t work

Why did employees react so unfavorably to the airline’s announcement?

For starters, United’s lottery proposal would have replaced the company’s merit-based cash bonuses. Instead of rewarding every employee who reached a goal, as the company has been doing for years, they would now reward only a handful of random employees.

Second, when you’re creating or modifying a recognition program, the goal should be to increase the number of employees you recognize – not reduce them. And, let’s be clear, a “chance” to be recognized is not the same as being recognized.

Third, when you dangle a big carrot in front of employees — as United did when they offered a luxury car and a six-figure payout — you can create more problems than you solve. Employees quickly realize the value of that award could have been spread out among many employees.

Finally, many employees felt United wasn’t transparent enough about the new program. When it comes to change management, communication and transparency will get you much further in gaining buy-in than the type of last-minute announcement United made.

Contrary to popular belief, cash is not king

The lottery announcement isn’t United Airlines’ only problem. Their original recognition system, which was based on quarterly bonuses, isn’t going to achieve their desired results either. Cash bonuses aren’t as effective as one might think, and it’s likely why United was doing away with the program in the first place. That’s because cash bonuses, like lotteries, have many limitations – with two of the biggest being time and loyalty.

When you wait weeks or even months to reward your team for their hard work, employees often forget why they’re being rewarded. Instead, employees should be rewarded for their contributions on the spot with an Instant Award Card or a similar points-based award.

Second, studies indicate cash bonuses are significantly less effective at inspiring brand loyalty or creating a Culture of Engagement at your organization. Once the money is spent, studies show, the employee doesn't retain an emotional connection to the giver – YOU. Further, a study in the Journal of Management shows that cash rewards can have a negative social effect because they reinforce the money for service mentality. Giving cash can have an immediate and short-term effect on employee satisfaction, but has been found to have little to no effect on employee engagement.

Instead of cash, we like to advocate for a points-based program in which employees can earn points for desired behaviors and outcomes. The points can be used to earn rewards and experiences, which in turn are effective ways to show appreciation and recognition for performance.

If you’d like to learn more about how you can make this possible at your organization, download our complimentary ebook 35 Ways to Influence Corporate Culture and Increase Your Bottom Line.

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C.A. Short Company partners with companies to manage, drive and facilitate increased employee engagement to increase financial performance, productivity, quality, and core performance outcomes. Our process and research-based platform enables executives and managers to engage their teams to increase the bottom line, motivate staff, and incentivize positive behavior. To Request a Complimentary Consultation, click here. 

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