Which method is more effective to motivate and reward employees?
Each year companies debate over providing an annual incentive trip or cash rewards. If you ask employees over 70% will choose the cash rewards if presented an option (when trip is of almost equal value) but follow up surveys revealed satisfaction is actually greater when providing incentive travel.
There are three main reasons incentive travel is more effective than cash rewards:
- Forced Vacation, Forced Recognition and Forced Team Building
- Incentive Travel costs a company between 2-5% of total compensation whereas Cash Rewards average 10% of total compensation to be effective.
- Incentive Travel is "guilt-free" earnings. With cash rewards the individuals feel obligated to spend those rewards on family or monthly bills.
A non-cash reward such as an incentive trip allows the attendees to receive public recognition, forces them to take a few days out of the office to relax, and motivates them even more than chasing a cash reward.
What's Best For You?
Each company is different but before you jump to a quick decision to provide quarterly or annual cash bonuses it might be more effective and budget friendly to provide a non-cash reward such as an incentive trip.
Here's a great piece with more data backing why non-cash rewards can be more effective than cash rewards; http://www.giftcertificates.com/content/documents/GC_Cash_vs_NonCash_Awards.pdf
