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Measuring the Intangible Benefits of Incentives

Non-cash recognition and reward programs on things like engagement and retention are worth measuring

It has been well-established that non-cash incentive, recognition and reward programs bring substantial financial benefits to companies that invest in them. But they also bring many intangible benefits that, while harder to measure, are capable of having a substantial impact on the bottom line.

A new white paper from the Incentive Research Foundation (IRF), "Establishing the Intangible, Non-Financial Value of Awards Programs," looks at the way non-cash recognition programs strengthen culture, improve collaboration, and spur better teamwork, among other benefits.

Noting that the value of companies like Amazon and Apple is based largely on intangible assets such as ideas, brands, human capital, and managerial expertise, Melissa Van Dyke, president of the IRF, says "many of the cultural conditions that drive an organization's intangible value stem from incentives, rewards, and recognition. 'Establishing the Intangible, Non-Financial Value of Awards Programs' explains how a broad mix of tangible and intangible rewards create the conditions that set high performing organizations apart from the competition."

Based on a survey of 137 managers specializing in reward management, the research found that one-third of the respondents strongly believe that their programs "have increased intangible benefits, including employee teamwork, learning, innovation, engagement in training, organizational culture, and engagement in organizational values," the IRF found.

The survey participants were also more positive about non-cash incentive programs, noting that they are 50 percent to 150 percent "more likely to be linked to employee retention, satisfaction, and performance than cash-only incentive structures."

And finally, they were very positive about the intangible value of award programs, rating them 5.5 on a 7-point scale. 

The study also notes that a relatively small percent of companies attempt to measure the benefits of either cash or non-cash programs on these intangible assets, with less than 30 percent measuring it on employee retention and satisfaction, and less than 20 percent on absenteeism and presenteeism. Nearly 45 percent measured its impact on employee performance. That's compared to just 22 percent that measure the impact of these programs on sales and slightly more than 18 percent who do so for revenue. With cash programs, a slightly higher percentage measure the impact on sales and revenue, and the same number measure the impact on performance. But even fewer measure employee retention, satisfaction, absenteeism, and presenteeism.