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Jan 28, 2011

A couple of weeks ago, I was listening to the HR Happy Hour Internet radio show and the subject drew my attention. It was about rewards, motivation and incentives and how they best operated in the workplace.

Paul Hebert and Trish McFarlane were co-hosting the show and I thought I would call in about the question I always have about incentive programs: Why don’t we just use cash as the incentive of choice?

The problem I always have with incentive programs is that the incentive is always some sort of hat with a company logo, an iPod, a gift card, a trip or some other non-cash reward. Those are all great as long as I want any of those things (and I generally don’t unless the trip is all expenses paid to Mexico with my wife). But what if I don’t want any of those things?

The “You Don’t Want Cash” argument

Paul Hebert (whose work I greatly respect) told me I don’t really want cash. Or that maybe I think I want cash but it isn’t in my best interest. Maybe I can get attached to cash too easily, I can start to become dependent on that reward or that it becomes an entitlement.

Clark Griswold (played by Chevy Chase) made a case for the cash bonus in National Lampoon's Christmas Vacation.
Clark Griswold (played by Chevy Chase) made a case for the cash bonus in National Lampoon's Christmas Vacation.

I can take that argument at face value for many situations. The entire plot line of National Lampoon’s Christmas Vacation was based on the fact that Clark Griswold felt so entitled and attached to his bonus that he made a big down payment on a pool. When that bonus turned out to be some non-cash reward, his reaction was less than thrilled.

I’ve also seen commissioned sales people come off of sales highs and crash. Doubling their paycheck and then dropping to less than their usual monthly take home amount in a matter of weeks isn’t pretty. All that money they felt they could roll in was now zapped. It may have been a powerful motivator, but it wasn’t one that I wanted.

Show me the money

That being said, when we’re talking about incentives we aren’t typically talking about large amounts of money here (and nobody is going to push to drop yearly bonuses or commissions). I got an iPod one time, which was about $250 retail. Even if I got that as cash, I wouldn’t be changing my lifestyle over it. And I already had an iPod (a better one) so I ended up selling it on eBay for cash. I hope I didn’t break any rules doing that.

With many of the rewards programs I’ve seen, they’ve turned to points for rewards which can be used for things like iPods, company apparel, or gift cards to places like Perhaps this may be one of those generational things, but having an Amazon gift card is exactly like having cash in my mind. In fact, I so rarely carry cash for anything (except on trips) that I typically deposit money into my bank account and use my card for everything else.

Truly, I don’t need any more corporate apparel (I’m covered for life), and I prefer to purchase electronic gizmos on my own (but if anybody has a spare MacBook Pro…ah, never mind). If you want to show your appreciation for my work besides an always appreciated pat on the back, give me some cash.

Making cash an acceptable reward

Of course, some managers and HR pros are always going to heed these warnings about psychological attachment, entitlement and the like. So how can we tailor a cash incentive program that takes these things into consideration? Here are my suggestions:

  1. Differentiate the rewards. Give different amounts every time so people don’t feel like they are getting the same thing every time.
  2. Don’t give rewards at the same time. Random times could help take the entitlement factor out of the equation completely.
  3. Don’t give major rewards. Set a limit, something like 10 percent of pre-tax earnings as the maximum reward you’d want to give out at one time.

What are your thoughts on this? Do you want cash or do you see too many downsides to offer it?