The Power of Pure Recognition VS. Cash Incentives

By Bob Romano and Barbara Sanfilippo

Are you one of the growing number of executives questioning whether you are getting the best return on cash incentives for employees?   Does it seem like the more cash you give the less satisfied employees are? Well, cash can work under the right circumstances, however, it is not always the best choice for motivating employees. If money were the best motivator than every commissioned salesperson would be a superstar!

In fact we recently spoke on a conference panel when a CEO in the audience stood up and asked, "Do we really have to offer cash as a carrot to get all employees performing? Whatever happened to good old work ethic?"   We agree with this gentleman.   Be careful about falling into the trap of "bribing" staff to perform with the "cash only mentality".

The hundreds of sales and service employee climate surveys we have conducted over the past fourteens years consistently show that employees participating in cash incentive programs without a strong recognition program are less motivated and less satisfied than those who are made to feel appreciated through a pure recognition program. Pure recognition is defined as "an acknowledgement verbally or through some deed for a job well done that shows genuine appreciation for a specific behavior". Cash incentives are usually given in a check that is merely a reminder that you performed in a certain manner. But unless someone actually acknowledges the employee (verbally or in deed) that shows genuine appreciation for the behavior that prompted the cash incentive, its not recognition. It's just a check. Pure recognition programs when more formalized also include memorable experiences that have a cost attached but cash is not given outright.

A study by Gulf Oil concluded that cash could cost up to six times as much to do the same job as non-cash incentives.   Dick Gaeta, President,   of Premier Incentives in Marblehead, MA has found that his clients realize a much great ROI from noncash incentives. Let's face it, monetary rewards are simply not memorable, since they are typically lumped in with other earnings and used to pay bills. Unlike merchandise and travel, cash awards create little emotional value or memories that motivate long after the cash is spent. Recognizing top performers at quarterly or annual "achievement club" events in front of their peers is a proven method of recognition that makes an indelible impression on the psyche of most people that can last a lifetime and motivate a lot longer than cash.

Today's employees may feel guilty spending the cash on a nice dinner or weekend trip.   But when you offer them a memorable experience it creates good will towards your company, especially if you include spouses and guests.  

Barb has spoken at numerous incentive trips and dinners and seen first hand how the winners and their guests enjoy being recognized and pampered.   It's no accident that the insurance industry continues to motivate exceptional performance by offering unique travel and other experiences.  

If you are a small company you may be saying, "Bob and Barb, we don't have the budget for exotic trips".   However, we know many small companies on tight budgets that offer a one-night stay with a gourmet dinner at a hotel or resort within an hour's drive of their business which eliminates airfare and rental car expense.   Housecleaning, carpet cleaning and other personal services are also big motivators.   Plus, it's easier to also recognize support staff behind the scenes with non-cash items to avoid jealousy and favoritism.   We never cease to be amazed at how creative our clients' Sales and Service Improvement Recognition Teams(TM) are in creating unique experiences that motivate and fit their culture.

Making the switch from cash incentives can be a leap of faith for you, but the move certainly paid off for Diebold, Inc, provider of ATM machines. Get this: Diebold replaced its traditional cash awards with merchandise and travel.   The program, which targeted all employees, increased sales more than $16 million in the first year.   Many companies are reducing their cash incentive budget and increasing results simply by creating a solid recognition program.

Are you getting the bang for your buck on your incentive program?   Are you creating memorable experiences for your staff? Take a slightly different approach with both informal and formal non-cash forms of recognition.

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To jumpstart your recognition program and avoid the most common pitfalls, order Barbara's audio CD, "Recognition and Reward Programs - The Agony and the Ecstasy"

For detailed instructions on how to create an effective recognition program in your company ask about our Turnkey Recognition Process.   A team of your employees uses our GuideBooklets(TM), along with a live orientation and ongoing support.   GuideBooklets(TM) are detailed "instruction manuals" to improve sales and service results without reinventing the wheel. Click on www.romanosanfilippo.com/guidebook.html

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