Cash may be king in most instances but when it comes to rewarding and recognizing your employees, it really isn’t the best option.
- It’s not memorable. When an employee receives an incentive gift of cash, it’s not all that different from what they receive in the paycheck. That lack of distinction between being a reward and just being a part of their salary means the employee is less likely to remember a cash incentive and who it came from.
- It’s taxable. When you give employees cash as an incentive gift, the Internal Revenue Service identifies those rewards as taxable income. So even if you think you’re giving your employee an incentive worth X amount of dollars, you’re really giving them less than that.
- You don’t know what the employees will use it for. The primary objective of a reward is meant to make the recipient feel just that—rewarded. But when you give an employee cash, who’s to say they won’t use it to buy groceries or pay the bills? While that’s helpful for employees’ bottom lines, it doesn’t make them feel rewarded.
- There’s no real trophy value associated with cash. You can’t hang it up in your office and you can’t really brag about it with friends.
- It’s just not secure. If you’re paying employees in literal cash (as in bills), that can be easily lost and/or stolen.
So, what’s a better option? If you really want to recognize and reward your employees, don’t give them cash. Instead opt for non-cash rewards like a prepaid gift card or branded gift card, or some sort of experience, or merchandise item.
The 2015 Participant Study conducted by the Incentive Research Foundation supports this, too, and shows that, if given a choice, more employees would actually prefer a non-cash incentive award. Instead, the findings suggest, it’s far more effective and far more appreciated by employees when you give them rewards incentives that include the following: non-cash travel, merchandise, or gift cards.
It’s also not just enough to give your employees these incentives, either. To make sure the incentive makes your employee feel rewarded, motivated, and appreciated, you also have to make sure those incentives are just one part of an overall incentive program structure. And when you give these rewards, you need to deliver and target them for the right non-core job activities.
Prepaid Visa gift cards are an especially flexible and versatile option, especially since they can be used nearly everywhere credit cards are accepted. A Incentive Research Foundation survey also found that more than 75% of incentive planners find gift cards to be some of the most effective rewards in driving loyalty and engagement, and are much more meaningful, personal, and impactful than cash.