You have put a good amount of time and resources into building your employee referral program (ERP). From making the business case for executive buy-in to defining key measures of success, you are almost ready to roll. But what about employee incentives? Should you go with monetary, non-monetary, or both?
There are pros and cons to each approach, so let’s start with monetary rewards. Perhaps one of the easiest ways to influence desired behavior, cash is most often the reward of choice for employers due to the fact that employees can use the reward for whatever they wish.
For the company, it is the most straightforward approach to employee incentives as there are no selection challenges; it is simple to give, efficient, and requires minimal effort to administer.
The flipside of the cash coin is that it doesn’t take long to disappear, and the memory of its use also quickly fades. Often the cash goes to pay the bills, which may diminish the motivational impact of the award. Due to all of these factors, monetary rewards may be less effective over time than non-monetary rewards.
Non-monetary rewards consist of gifts, such as golf clubs, tickets to sporting or music events, and gift cards as well as experiences like spa treatments, weekends away, and other activities or excursions. These gifts and experiences have memorability, which is perhaps their greatest benefit. Because cash is often used for basic necessities, it misses on the memorability factor.
Furthermore, employees may be uncomfortable discussing cash rewards, and it’s easier to talk about a gift or excursion. In addition, our newest generation of workers places a high value on experiences. A non-monetary reward may carry more value for this group than the equivalent cash reward.
There are few, if any, downsides to non-monetary rewards. There is a bit more time and effort required to understand the preferences of employees and personalize rewards; however, it’s not an impossible task. You can even allow staff to choose their reward to remove any uncertainty.
Ultimately, the decision to implement monetary or non-monetary rewards should be determined by your motivations and what you hope to achieve from your employee incentive policy. Both cash and non-cash rewards have merits and there is no one-size-fits-all solution.