What is better for employee recognition

Cash or Merchandise Awards?

Should you give Cash or Merchandise for Awards

cash-or-merchandise-awardsThis question is often debated by employee recognition program managers and company executives. Should they give employees cash as a recognition award, or should they give non-cash merchandise awards? And why?


What is the role of Employee Recognition Awards

To best answer this question, consider the role of Recognition.  It's all about motivation! While employees will always say they prefer cash to merchandise for their recognition awards, research has repeatedly shown that cash is a very poor motivator. This is due to its lack of "trophy" and "memory" value. Generally, employees don't really understand what actually motivates them to do something different.

When cash is given as a recognition award, employees will often perceive that cash to be part of their total compensation package. And, once cash awards are started, it's very hard to stop. Employees quickly begin to feel they are entitled to it, and expect it to continue. They quickly forget that the cash was part of your employee recognition program, and was an award for a specific accomplishment. Cash, as a recognition award, just does not stand out in their minds.

Research and experience clearly indicates that non-cash awards, in the form of merchandise, are much better motivators and recognition awards.

Reasons why Merchandise awards are better for Employee Recognition
  • Non-Cash Awards - satisfy an employee's Wants versus their Needs. Cash can be spent on everyday NEEDs (groceries, bills, gasoline, etc.), but non-cash employee awards are for Wants (such as a new lawn mower, a new watch, a TV, etc.). Satisfying a person's Wants is the role of employee recognition awards, while satisfying Needs is the responsibility of compensation plan (cash).
  • Non-Cash Awards - A recognition award of a merchandise item the employee chooses from a catalog, eliminates guilt. When a bill is still due, try justifying to your family that you are using the cash award on the purchase of a new set of graphite golf clubs. But if the recognition award can not be used to pay bills, the employee is forced to redeem it on their dreams and desires. Since there is no choice, there is no guilt!
  • Non-Cash Awards - Are Demonstrable! Merchandise Awards have a certain Trophy value. People don't find much satisfaction in bragging about getting cash to pay for necessities. But we do take pleasure in showing off an award, such as a new TV, or a new set of golf clubs. Non-cash awards provide visible, tangible symbols of success, and are an acceptable and important means to satisfy emotional needs, and for peer recognition.
  • Non-Cash Awards - have Memory Value. Think about a special gift you received in the past, one that you use around the house. Do you remember when you got it, and who gave it to you? Do you remember how you felt when you received it? You probably do. But who remembers where the last paycheck went?

    Unlike cash, merchandise recognition awards are memorable, and provide employees with a long-lasting reminder of their success or their years of service milestone, and the commitment and effort that went into achieving it... along with a fond remembrance of the company that gave the award to them.

If you want your employee recognition awards
to have a lasting effect,
merchandise awards are always better than cash.

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