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Why Throwing More Money at Performance Problems Doesn’t Work

77% of human behaviour is driven by emotion, not cash… And this is why offering personal and inspirational rewards is more effective!

When setting up a sales incentive programme for your employees, dealers or distributors, one of the biggest things to consider is the type of reward you offer. Should it be cold hard cash, rebates or something more personal? According to Frederick Herzberg’s theory,  money is a hygiene factor which decreases employees’ dissatisfaction with the work environment but doesn’t encourage productivity or creativity, nor does it improve performance. That being said, many organisations still use commissions and bonus schemes in an attempt to promote higher activity and performance – often with mixed results.

Within most jobs around the developed world, the work itself is seen as the main driver of high performance, and people will not just ‘work harder’ for more money. In fact, purely adding more money can impair performance and cause friction between employees, leading to lower individual performance.

Many employers will choose cash as a reward to drive higher performance… but what are the pros and cons?

On the plus side, cash can be used anywhere and gives the bearer the ultimate choice on how to spend it. But cash is cold, logical and often socially awkward to talk about. Wouldn’t you prefer to show off a personal, tangible reward, such as an iPad than say you received a £200 bonus? Non-cash rewards also have greater ‘trophy-value’, stir pride, positive emotions and create experiences. These physical rewards and experiences also build emotional connections with your brand and service.

As a means of encouraging performance improvement and engagement, cash has severe limitations.

US Business Week analysed the performance of 2000 employees across 1200 companies with the conclusion that there is no real correlation between cash rewards based on performance and company performance. A follow-up study of 163 US companies concluded that the link between cash-rewarded performance and a company’s performance was virtually random – confirming that cash is generally spent on everyday bills and items, with no connection to your brand.

In the UK, a study by the Institute of Manpower found that cash rewards alone not only failed to improve staff performance but actually led to a downward spiral of motivation.

When giving cash, less than 20% is actually ever spent on an actual reward and 80% is spent on household provisions. Cash appeals to the left-hand side of the brain which deals with all of life’s cold and logical decisions. The right-hand side of the brain drives imagination and emotions, which is why non-cash rewards drive behaviours, performance and productivity.

The brain processes cash as valueless, whereas non-cash incentives stir excitement, longing and emotions. Given 77% of human behaviour is proven to be driven by emotion – no matter what the situation ­­– offering an ultimate reward choice builds an emotional connection with your brand that will ultimately drive long-term loyalty and create evangelists of your brand.

Incentivesmart can customise your reward catalogue to meet all of your needs; from food and drink, jewellery, experiences, travel and the latest gadgets. You can also include your own redemption items or corporate branded merchandise, with rewards shipped globally, if required.  If you are looking for the ultimate reward choice to stir emotions or ideas to drive long term loyalty, book a demo to see what we can offer.

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