Employee motivation. Employee engagement. Employee satisfaction.
All of these buzzwords begin with “employee”—which is ironic, considering these outcomes depend on actions and decisions made by employers. Many of those important decisions involve incentives. Both monetary and non-monetary incentives are crucial to the satisfaction of your team members and the health of your business, but it can be difficult to determine a healthy and productive balance between the two.
Theoretically, both options have the power to impact employee recruitment and retention, and both are popular with employees and employers alike. However, one of these options (hint: monetary incentives) consumes more than its fair share of your budget and administrative resources.
Here, we will discuss the pros and cons of each category and discuss why non-monetary incentives offer the best bet for a high-ROI, high-impact employee incentive program that really works. After diving deep into the benefits and drawbacks of each category, you can develop a strategy to better integrate non-monetary incentives into your company benefits package.
Speaking the Language of Compensation
For many employers, monetary benefits are a complicated subject. How much money can you offer your employees without breaking the bank—and how much is actually needed to incentivize and reward each member of your team? What about bonuses?
While salary reigns as the most meaningful monetary incentive, employers can also provide a whole host of other financial benefits. For reference, here are a few popular incentives that can be included as part of a comprehensive benefits package:
- Periodic raises
- 401k matching and other retirement contributions
- Travel allowances and per diem
- Profit sharing or stock options
- Wage incentives, commission percentage, and on-target earnings (OTE)
Most employers would love to reward their employees with yearly raises and higher salaries or a bonus—but we all need a stronger argument before restructuring the budget. The pros and cons below will help you determine whether increasing monetary incentives will make a difference in employee productivity, motivation, and morale.
- Monetary incentives are always expected.
There’s a lot to be said for providing what employees expect from your company. By offering yearly raises or monetary perks, including competitive “on track earnings” for commission-based roles, you’ll be insuring yourself against the most common cause of employee turnover: not enough monetary compensation.
- You could retain employees for longer.
Increasing monetary incentives over time (including raises) will help you retain your most experienced employees. If your highest-performing team members feel financially “taken care of” by your company, they’re much less likely to look for work elsewhere.
- Money speaks louder than most perks.
Trendy fringe benefits are great for attracting new talent, but employees are often motivated to make big career decisions based on financial benefit. If you offer better monetary incentives than those commonly available in your industry, you’re likely to attract some of the best and brightest employees (beating out other companies who have unique or quirky perks).
- More money doesn’t always mean more loyalty.
A certain level of monetary incentive is absolutely necessary for keeping your employees engaged and loyal to your company. However, recent studies have shown that the impact of financial benefits levels off when compared with values, culture, and other benefits. Throwing more money at your employees might not be as useful after you’ve covered your financial bases.
- Monetary benefits can’t fix cultural problems.
The hard truth is, no matter how many raises you offer, you won’t be able to retain disgruntled employees if they’re upset with management or company culture. Monetary incentives can seem disingenuous or manipulative at that point in the employee “life cycle.” Unfortunately, and contrary to popular belief, money can’t solve all your company problems.
- Monetary incentives are hard on the budget.
Increasing your financial benefits will have a serious impact on your company’s bottom line. It’s that simple. This is a significant con for most employers and is the main reason companies don’t add financial benefits to their lineup.
Are Non-Monetary Benefits Actually Worth It?
Fringe benefits are trendy on job boards and incredibly popular with Millennials—but many employers wonder if non-monetary benefits are worth the investment.
If you’re looking to add non-monetary incentives to your employee benefits package, you’ll be interested to hear that plenty of these benefits can motivate your team even more than pay raises. Some of the best non-monetary benefits include:
- Schedule flexibility and work-from-home options
- Career development opportunities
- High-tier health, dental, and vision benefits
- Recognition and rewards programs
- Branded apparel, including custom uniforms
- Vacation time
Check out our extensive incentives guide for a more in-depth look at which of these benefits employees value most—but first, the pros and cons below should give you a good idea whether or not non-monetary incentives are a wise investment for you and your company.
- Good fringe benefits attract millennials.
If you’re looking to attract fresh talent, especially those who are newly graduated from university or graduate school programs, fringe benefits are a great place to start. Unique office perks, wellness initiatives, and CSR programs are especially exciting for the youngest professionals on the market.
- Non-monetary incentives are trending right now.
Just look at major tech giants like Google—fringe benefits are incredibly popular right now, and companies that offer the most comprehensive and out-there benefits packages get a lot of free press for their efforts. On a small company scale, these incentives make your job listings really stand out when compared with your competitors’.
- Many of these incentives are inexpensive.
Yes, you could spend a fortune on an in-office movie theatre… but for the most part, non-monetary incentives can be implemented with a fairly low price tag. Subsidized gym memberships are one example—as well as high-quality employee recognition programs, which are made less expensive by their fantastic ROI.
- Some non-monetary incentives can be a waste of money.
We all know the feeling when our newly-implemented points system or team retreat doesn’t generate enough excitement to be effective. With fringe benefits, you really have to know what’s valuable and important to your employees—and if you get it wrong, you could be wasting your money.
- Full participation isn’t always guaranteed.
Money talks—but non-monetary incentives tend to be a lot less persuasive. Your team might not be motivated by the rewards you’re providing, and if that happens, your employee engagement metrics might not change in any meaningful way.
- Non-monetary incentives can be an organizational nightmare.
If you aren’t in love with your HR and accounting staff, you’ll want to get those teams into shape before taking on a whole host of non-monetary incentives. Paperwork is abundant for many of these programs, and some require an unbelievable amount of behind-the-scenes organization if you hire the wrong companies.
The Highest ROI Non-Monetary Incentive
When comparing the pros and cons of both monetary and non-monetary incentives, there’s obviously a clear winner. Monetary incentives may offer short-term benefits but involve significant downsides. Non-monetary incentives, on the other hand, can shift your company culture, especially if the benefits package is constructed with your employees in mind.
Monetary incentives can help you recruit and reward employees, to an extent. However, they don’t solve long-term issues and can, in fact, be detrimental to your company culture. Non-monetary benefits are not only highly attractive to new hires and young professionals but also have the potential to positively impact the rest of your company. Furthermore, non-monetary incentives offer the added value of connection, which can foster emotional attachments and elevated motivation. All of this results in higher levels of employee loyalty that won’t diminish as time passes. Monetary incentives, on the other hand, miss that crucial emotional aspect offered by non-monetary incentives, and after spending their reward on paying bills, employees cease to remember it altogether.
To attract and retain the best employees, put together a comprehensive and competitive benefits package that incorporates non-monetary incentives. We recommend running a cost-benefit analysis to determine which financial benefits your company can afford to incorporate, and supplementing that list with a few hand-picked non-monetary incentives.
Based on nearly two decades of experience helping companies increase employee productivity and motivation, a really fantastic employee rewards program would be at the top of our non-monetary list. Here’s why:
Good employee rewards programs motivate employees with name-brand products they love. Think Apple, Bose, Nike, and Fossil—names that mean much more than an outdated points system.
Whether your program includes custom uniforms or valuable gifts employees can use and display in the office, custom rewards programs spread like wildfire through the office. Everyone wants to get involved and achieve the rewards they see their colleagues earning.
Employee incentive programs are designed to highly motivate your employees. As your team members work toward rewards, they’re increasing their productivity and motivation, making more revenue, and offsetting the cost of the program.
Let’s Get Started
At Inproma, we’ve developed a custom employee incentive philosophy that’s helped companies increase employee motivation with a seriously high ROI.
Interested in learning what a custom employee rewards program might look like for your firm? Let’s talk.
Inproma’s custom employee incentive programs get results. From design to fulfillment, we can handle all the behind-the-scenes requirements. If your employee benefits aren’t producing the results you need, or your current incentive program isn’t getting anywhere, let’s talk.