Cash just isn't enough

Ask employees what they want as a reward, and they'll invariably say more money. But guest contributor John Schaefer says there are far better ways to recognise staff doing a good job

When surveyed, employees consistently will ask for cash, but research shows that it’s the least effective form of recognition. How come?

Steve is a loyal employee who enjoys his work, is productive and reliable – the model employee. He was surprised when his 10-year service award package offered him cash as an option. It wasn’t like he couldn’t use a few extra bucks, but the fact that his employer was able to put a price tag on ten years of his life, left him feeling a little cold and confused.

Why is it that when the company offered the very thing that employees seemed to want, that it fell short of carrying the important message: “we care about you and are glad you’re on our team”? Maybe it has something to do with the question.

Asking employees what they want tends to imply that you don’t know and really don’t care all that much. The moment they think that you are using recognition more out of obligation than desire, they will emotionally disengage, feel a bit insulted, and give you the answer they think you want to hear – “Aw, what the heck, just give me a gift card!”

It actually has to do a lot more with perception than logic. Employees want so much to be genuinely appreciated, that the minute you give them the smallest hint that you’re attempting to manipulate them with carrots and sticks, you lose.

It’s really just about doing a few very basic things right and in the correct order. This requires training supervisors to understand some straight forward principles. They should realise that it’s to their personal benefit to make recognition a powerful management tool, and learn to communicate more effectively, so their people believe they mean it.

Once honest emotional engagement is achieved, you’ll be amazed at how quickly financial incentives can take you and your firm to another level of measurable, bankable ROI that will have everybody wanting more. It’s an educational challenge that too many companies ignore, but are paying for over and over again. Here are three thoughts to consider:

  1. No one disagrees that cash is important. The reality, however, is that you owe it to yourself and your stockholders to do what’s best with the company’s money. The data overwhelmingly supports the fact that well-designed incentives will out-perform cash by more than two to one, as well as carry far lower tax consequences. You can give a gift valued at 1% of an employee’s salary, and if done enthusiastically, they’ll feel the love. But, give them a 1% bonus or raise and they’re looking at the classifieds. Same dollars, totally different result . . . it’s all about perception!


  1. Most companies use a variety of disjointed programmes to recognise and reward their people. Even if the programmes are working, it’s impossible to determine the level of participation and financial return. Imagine if you orchestrated all of the tools used to communicate with employees, so they could be properly measured, kept relevant to company goals and you could easily teach your supervisors the proper way to implement them. This is called an Umbrella Recognition Strategy and the benefits are numerous. However, there can be potential challenges involved in transitioning your organisation to this approach. Here are the three steps you should be willing to take to consider implementing an Umbrella Strategy:
  • You need to have upper management support. Only then will you be able to get all of the programme owners to open up and provide the information needed to analyse the current situation and begin to see opportunities for improvement;
  • Your team has to be open to new ideas and be willing to brainstorm all viable options. One of the few positives to this current economic downturn is that things are on the table today that would probably not be open to discussion during more robust financial times; and
  • The goal of your team needs to focus on developing the greatest ROI on your recognition investments, not protectionism or departmental isolationism. A macro-view of the situation, where everyone is considering programme initiatives from a broad perspective based on company culture, mission and long term objectives is the secret to getting the best overall programme and the ROI you deserve.


  1. As you begin to evaluate your current recognition programmes, you’ll be surprised at both the amount of money leaking out of the organisation in various ways and why there may be inherent confusion from the employees’ perspective. We recommend a Four Cornerstone approach:
  • Communications: People need to know how to give recognition, rather than just present awards;
  • Training: This focuses on the “how to do” and is an important element to overall performance improvement. Effective training avoids your best intentions being seen as nothing more than “throwing ‘em a bone”;
  • Reinforcement: Recognition is not an event, it’s a process. Employees need to “want to” achieve business goals, but how do we achieve this emotional engagement? It’s done by validating. Employees must feel important and appreciated when they go the extra mile.
  • Measurements: Things that are measured tend to improve. Measurements address the “how are we doing”. With the vision and strategy in place, the objectives and responsibilities of each employee to support the strategy must be determined. This is the most overlooked part of performance improvement programmes, because it requires responsibility and can often be uncomfortable. Outstanding employees want to be measured and ineffective employees want to remain invisible.

There’s a lot more to recognition than just handing out awards and gifts, but therein lies the opportunity to turn accepted expenses into significant profits. Companies that take on the challenge of embracing this new view of employee engagement are seeing impressive improvements in productivity, profitability, morale and teamwork, along with significant reductions in turnover, recruiting and safety related costs.

About the author
John Schaefer is one of the world’s leading expert on recognition. With more than 20 years of working with major corporations, he helps them succeed by optimising their most valuable asset – people.

This Industrial Engineer with a degree from Arizona State University worked for a 6,000-employee manufacturer, then a small family business. Driven by his personal experiences of witnessing frustration and anxiety in the workplace, along with wit and a passion for helping people, he formed his own recognition awards company in 1989. Schaefer’s notable books include The Ten Levels of Workplace Disillusionment and The Vocational Shrink Game and Action Guide and Get More Productivity for Less Money . . . Your Employees Will Love You for It!


Don’t miss
Join John Schaefer at the HRM Asia 8th Annual Compensation & Benefits Asia on 17-18 September for his exclusive workshop on how to turn your recognition expenses into profits!
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