Cash VS Non-Cash Awards – It’s not a Debate. It’s A Choice. A Lazy One.

The incentive industry has pushed the “debate” on whether a company should use cash versus non-cash awards to drive behavior.  The industry’s point of view is that non-cash (merchandise, travel, other awards) create trophy value, disconnect the award and the program from compensation, is more effective (less cost for same result) and creates an “experience” that is remembered long after the award is “consumed.”

And they are right.

Research shows that all these things are inherent in non-cash awards.

(BTW – I’m not just talking incentive industry research.  Research by Ariely and others have shown that cash creates a transactional relationship between the work and the reward.  Cash creates mercenaries who want more cash.  For some research check out… The Age-Old Question: Cash versus Merchandise?, Cash Incentives vs. Merchandise – The Pros and Cons, Cash vs. noncash awards, Cash or Non-Cash awards … and How Much Is Enough?  And some of my posts:  Non-cash and pay for performance, The Upside of Irrationality, Incentives vs. commissions. )

Proponents of cash awards always talk in terms of “choice.”  Cash is the ultimate in flexibility.  If you give out cash awards the participant can get any of the things that non-cash programs offer – PLUS – anything else.  Cash is fungible and universal (is that the same thing?)  From a planning perspective it is a “pure” incentive.  Everyone wants it.  No one ever has more than they want of it.  It’s is easy to manipulate and transform into what participants really want.

And to a degree they are right.

Cash is a Choice

The bottom line though, is the facts are the facts… 

Non-cash, for both the sponsoring company and the participant – are better awards.  Yet we still see the headlines about the “debate” around which is better (see post here from @globoforce for the post that sparked this thinking.)

There is no debate.  Let me be very clear and say that again.  

There is no debate.  There is only a choice.

Companies choose cash because of the following reasons – and it has nothing to do with driving behavior or building relationships.  

Companies choose cash because… wait for it…. They are lazy.  

The Path of Least Resistance

Sorry potential client A – if you’re thinking of using cash as an award don’t try to rationalize it from a performance standpoint.  Cash doesn’t compare.  

The reasons you’re looking at cash is because:

1.  Cash is the easiest thing to use in an incentive

The systems are typically in place to issue cash to employees or vendors or channel partners.  Accounting can cut a check to almost anyone with existing systems.  Most of your administrative work can be done through existing systems.  It’s easier.

2.  You don’t want to put up with the requests from the audience for cash 

Every program that uses non-cash as an award includes some portion of the audience that “wants” cash.  Heck we all do.  But the point of your program isn’t to give the audience what they “want,”  the point of your program is to find that balance between what your COMPANY wants and needs and what your AUDIENCE wants and needs.  Like most 3-year olds – they want ice cream for breakfast even though it may not be want they should have or what they need.  Cash is ice cream to your audiences.  They ALWAYS want it but it may not be the best thing for you, your brand and truthfully – for them either.  

Face it – you’re offering cash because you’re too lazy to have the conversation with your audience when this issue comes up.

3.   It is easy to promote

$100 is a $100.  Everyone knows what a $100 buys.  I can put a picture of Ben Franklin in an email, send it out and viola!  Everyone is motivated.  Promoting non-cash awards takes some skill and creativity.  Connecting performance and effort to something that could have a variable value to your audience means you might have to do more than one email, more than one mailing, more than one discussion.  You might just have to work a couple of angles because Participant A wants a TV and participant B wants a trip to Bali.  It’s harder to create a communication campaign that creates an individual visual of the award in everyone’s mind and connects their efforts to that award.  You’re doing cash ‘cuz you don’t want to do communication.

4.  Nobody got fired for buying IBM  

That was an old saw when IBM was the king of the hill in computer hardware.  Cash is the new IBM.  Your boss is motivated by cash (you know he/she gets a big bonus!) therefore, they think everyone else is motivated by cash.  You don’t want to have a long, intelligent discussion about cash vs. non-cash with your boss because it will end up making him/her seem irrational in their pursuit of the all mighty dollar.  As my Dad used to say – “if the boss likes green ties, wear green ties.”  If the boss thinks cash is best.  Use cash.  You don’t really want to be successful and impactful.  You just want to be good enough not to get fired.  Go with cash.  No discussion there.

So… 

Bottom line.  Cash vs. Non-cash isn’t a debate.  It’s a choice.  The easy one.

But one you shouldn’t make lightly (though most do.)