Mixing Cash and Noncash Rewards
The battle between the cash and non-cash providers isn't over, but at least at two of the major players, Maritz and Visa, there’s some acknowledgement that both forms of rewards offer benefits.
"We look at cash and noncash as part of a total rewards package," says Paula Godar, director of brand strategy for Maritz, a top provider in the incentives and loyalty rewards industry. "It’s not ‘versus,’ it’s ‘and.’ It’s about using the best. Cash is best used for compensation or bonuses—the bigger, less frequently negotiated amounts relating to the contract between employer and employee. It’s about doing the job."
Noncash items are best used for specific rewards and for behavior change, she says.
Maritz research shows that at least half of cash rewards typically get used for household expenses, bills, education and similar purposes. That’s not exactly what companies have in mind when they aim to reward performance or behavioral change.
Visa acknowledges that cash rewards can get lost in the noise and expenses of daily life. Its solution is the prepaid and reloadable Visa card, which can be co-branded with the employer’s name and loaded with values typically ranging from $25 to $1,000. The prepaid cards have the same incentive value as cash, but they are more discrete and visible than a reward buried in an automatic electronic paycheck deposit.
The prepaid cards come in handy for all kinds of employee recognition, including safety and performance.
"It’s a very quick way to reward employees," says Michael Chittaro, Visa’s senior business leader of prepaid products. "You don’t have to go through ordering stuff like a toaster."
In terms of the truce, the cards offer "seamless integration into an existing rewards and recognition program," Chittaro says. "For a small catalog of items, prepaid cards are a great complement." Then, as a reminder that the cash/ noncash battle isn’t entirely over, he adds, "They are a great replacement [for a catalog] too."
If employers eliminate catalogs of noncash reward items in favor of the Visa cards, Chittaro says, they also reap administrative benefits.
"They get rid of the management and distribution of products and having to refresh them," he says. Companies can also order cards in bulk that can be loaded on the spot for instant rewards or for any type of milestone or significant event.
Godar thinks that shining a spotlight on a specific behavior or achievement is best served by noncash rewards. She also says a noncash reward is better for enhancing performance over the long term. "Noncash is more effective because of the way our brains look at the proposition," she says. "If you tell me I’ll get $500 for an accomplishment, I’ll be very analytical about it, evaluating whether the money is worth the effort. If you show me a home theater system, it is more appealing on an emotional level."
Because of this emotional appeal, Godar says that noncash rewards lead to more lasting loyalty to an employer. People may not remember how they spent cash, and they can’t wave a bonus check around, but an "employee will talk about a noncash reward with family and friends. You get bragging rights with them," she says.
Chittaro argues that Visa’s prepaid cards also create long-lasting employee loyalty because they are reloadable by the employer with rewards for different events and occasions. "The card is discrete enough so that the employee sees they’re being identified for what they’ve done individually," he says. "It serves as a tangible reminder of these good events and memories."
In the spirit of détente, Godar reiterates: "Noncash is not adversarial to cash. It’s a complement to it. It’s part of the whole package."
Workforce Management, September 22, 2008, p. 28 -- Subscribe Now!