For example, a study conducted for the Goodyear Tire & Rubber Company compared the performance of two groups of participants: one rewarded with cash, and the other rewarded with merchandise and travel. Both groups recorded a performance improvement in response to the incentive offered; however, the group receiving tangible rewards had results nearly 50% higher than their cash-motivated counterparts.
A major drawback of cash is that it lacks “trophy value.” When 1,010 people were asked in a survey how they spent their last cash reward, cash incentive or cash bonus, close to half responded “bills” or “do not remember.” These answers (detailed below) underscore the limited impact of money as a motivator.
Bills.......29%
Do not remember.......18%
Never received cash reward/bonus....... 15%
Gifts for family.......11%
Household items.......11%
Savings.......11%
Special personal treat.......9%
Vacation.......5%
Something else.......2%
LIMITATIONS OF CASH INCENTIVES - In a poll conducted by American Express Incentive Services, 17% of American employees surveyed said they had received a year-end cash bonus from their company; yet a full 32% of those who had been rewarded monetarily admitted the bonus did not impact their work performance.
In a separate study of incentive planners-
1) 68% of respondents said cash bonuses can have a negative impact if they are considered to be too small
2) Three of five respondents said that merchandise and travel are better rewards because they are more like a gift
3) Three of five respondents said that cash rewards tend to be perceived as part of an employee’s compensation package.
Source: The Society of Incentive & Travel Executives
CASE STUDY - A national financial services company attracted new agents and sent sales skyrocketing by abandoning its annual cash incentive program for a more inclusive campaign offering merchandise and travel. Whereas only top-producing agents were rewarded in previous years, the new program provided multiple award levels and involved new agents, as well. Results were astounding. By program end, policy enrollments were up 700% over goal, with 10,000 certificates issued—more than twice as many as planned.
HOW MUCH CAN AN INCENTIVE PROGRAM IMPROVE PERFORMANCE? Research indicates that a well-designed incentive program offering non-cash rewards will increase performance an average 22%. Team incentives increase performance by as much as 44%.*
The key to success is in program design: targeting the right behaviors, offering rewards that are meaningful to your audience, and executing and tracking flawlessly.
*Source: Incentives, Motivation and Workplace Performance—Research and Best Practices (International Society of Performance Improvement)
THE POWER OF INCENTIVE PROGRAMS - A study by The Society of Incentive & Travel Executives (SITE) Foundation confirms the impact of incentive programs offering tangible rewards. In addition to increasing work performance an average 22%, such programs also help create positive emotion in the workplace, which greatly influences commitment to a work task, according to Mike Hadlow, president of SITE Foundation. “Incentive programs may be the single most important performance improvement tool available to executives today,” he says.
Finally, keep in mind that incentive programs are investments designed to produced positive ROI. So it’s critical to choose an incentive supplier with know-how. Let us put our expertise to work for you! Take a moment touring our self-paced on-line incentive program demo by clicking on the first button shown below:
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