. Cash Isn't King | Northstar Meetings Group

Cash Isn't King

A major study conducted by the IMA and IRF refutes myth that cash is the number one motivator

IRF President Melissa Van Dyke

Everybody knows that if you ask the participants in an incentive program what kind of award they prefer, they'll always say "cash." But like many things that "everybody knows," this universal preference for cash awards doesn't stand up to scrutiny.

That is the core finding of the largest and most complex study to date of how incentive program participants really prefer to be rewarded. Conceived and funded by the Incentive Marketing Association (IMA) and planned and carried out by the Incentive Research Foundation (IRF), the new research project, called the "Participant Study," offers what may be the best proof yet of the motivational power of non-cash incentives, while refuting what IRF President Melissa Van Dyke calls "the myth that if you give participants a choice, they will always choose cash."

In fact, the study found that as many as four-fifths of program participants would prefer non-cash awards as part of a "total award experience."

Making Motivation Meaningful 
That last phrase -- total award experience -- is the key to this study. Most of the research done about cash versus non-cash awards takes a very simplistic approach, asking something along the lines of, "If you are going to get a $50 award, do you want cash or merchandise?" Van Dyke says. And yes, that question has largely drawn the answer, cash. "We've done a lot of studies that have gone down that path," she adds.

The "Participant Study," however, spent a lot of time figuring out exactly what type of non-cash award each respondent would prefer in an incentive program with a large award, like a year-long President's Club sales program, and with a small award, such as a spot reward for doing a good job on a short project.

Another big difference was focusing just as much attention on each individual participant's preferences about who gives the award, how they give that award, and what doors it opens for the recipient professionally.

When all of that was factored in, Van Dyke says, the research showed that "when recipients find [the total award experience] personally meaningful, cash did not have the strength that we often think it does in these scenarios."

In fact, she says, the study found that 65 percent of people in a small-reward scenario and more than 80 percent in a large-award scenario will choose the non-cash award.

But it also showed that whom the recipient is recognized by, how the award is communicated, and especially what professional development opportunities come along with the award, carry far more weight with participants than anyone in the incentive industry realizes. In fact, when it comes to large incentives, those three factors together carry slightly more weight than the award itself.

"The way that an award is presented is a critical part of any program," says Richard L. Low, vice president of Special Markets for Citizen Watch Company and immediate past president of the IMA. "Companies that run incentive programs do not always factor that in when planning those programs. A manager giving a $1,000 Citizen watch as an incentive award can forget to focus on the way it is presented, and how that motivates and educates others in the company. They focus on the item, rather than the process."

Convincing the people running corporate incentive programs that it is worth training managers and executives on how to present an award is an issue that the incentive industry has struggled with over the years.

"Not everyone knows [how to give an award], and getting it wrong can reduce the impact," says Van Dyke, who recalls the way she received a length-of-service incentive award as a consultant at Ernst & Young.

"They sent me a pen -- a really nice pen -- through the mail, but I didn't even know what it was for," she recalls. "I actually had to go ask someone. They told me that in consulting, it's really hard to keep people for more than a year, and I was at my two-year mark, so they recognized me. [But] nobody knew I was getting it and I had to ask somebody else who'd been there longer than me -- one of the few --what it was for. It's so funny because we'll invest some money in the thing, but miss the purpose altogether."

Low, who was president of the IMA when the study was conceived, adds, "One of the things this study shows is this should be a top [priority], something that we all need to remind the companies that we work with."