n the long-running battle between cash and noncash rewards, here’s a novel concept:
a truce, even an accommodation between the two. That’s not to say the battle is
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!
= Member Only
