According to a new study, paying employees in cash may not be the most effective way to motivate them. Conducted by Adam Presslee, Professor at Waterloo University, and published in the journal Accounting, Organizations, and Society published research found that tangible rewards such as gift certificates, merchandise or travel are more motivating. They are easy to handle, pleasant and unexpected and are therefore clearly different from the regular salary.
Four factors determine motivation
“If, for whatever reason, tangible rewards are the only tool available, our results provide compelling evidence that employees are motivated by rewards that are perceived as different than salary,” Presslee said in a statement.
The study examined the factors driving the preference for cash and non-cash rewards. The researchers came to the conclusion that the attributes of user-friendliness, hedonistic character, novelty and the way the bonus is presented play an important role in employee motivation. “As such, companies looking to get the most out of their compensation programs should highlight the uniqueness of these rewards, and the above attributes are four ways companies can do so.”
Consequences for a billion dollar market
“Rewards are constellations of traits, and companies should focus more on the motivating effects of the traits associated with a reward than on the nature of the reward itself,” continued Presslee. “The results confirm that each of these attributes – individually and in combination – increases employee engagement and performance.”
This finding could have important implications for the billions of dollars that companies spend each year on employee engagement programs. According to the press release, around 90 billion US corporations are invested in such tangible rewards every year.