But Isn’t Money the Best Motivator?
No. Neither for customer relations nor employee relations does money serve as the best motivator. An exception to this is cents-off coupons and cash rebates on large consumer purchases. However, in terms of customer relations, a gift of money is often perceived to be a kickback or bribe. Such behavior is neither ethical nor effective in building a good working relationship.
While cash for employees does not have that stigma, it still has major problems as an effective motivator. According to business consultant Donna Deprose in the American Management Association’s book How to Recognize and Reward Employees money’s success as a motivator of employees is erratic at best. She states that as a motivator money has three strikes against it:
“1. Its impact is short lived. Most major financial rewards come annually, and the effect wears off long before the year is out. A nice bonus or a big raise may inspire a spurt of activity from a grateful employee, but once the bonus is spent or living expenses swell to meet the raise (as they always do), the reward and its motivational value become history.
“2. What starts out as a reward for exceptional performance tends to become perceived as an entitlement. A bonus or an unusually large raise is special the first time, maybe even the second time, but after that the recipient comes to expect it as part of business as usual.
“ 3. When people are paid to do specific tasks, the money tends to supplant intrinsic motivation. People often do extra work for the pure enjoyment of performing the task, the satisfaction of solving a problem, or the excitement of confronting a challenge. But when they know they will get a bonus or incentive compensation for performing this work, they will perceive themselves as doing it for the money rather than for the intrinsic, more sustaining motivation.”
She goes on to point out that while having more money is not necessarily a motivator for employees, the absence of money can be a demotivator. What typically motivates employees to maintain and improve performance depends on how their personal needs are being satisfied. On the job these needs typically center around security, socialization, esteem, achievement, power or some combination of them. For example, the desire for recognition, rewards and ego satisfaction are all related to one or more of these basic needs.
Note that because of their powerful symbolic value, promotional products and tangible incentive awards readily adapt to most of these needs. For example, programs which recognize and honor long-time service and stress the importance of the organization as a team tend to add to feelings of security in the workplace.
Similarly, being part of a team that works together and shares values is a major part of employees’ socialization need. Thus wearables that identify group members and incentives that encourage working together can add greatly to employees’ sense of belonging.
Esteem is closely tied to recognition, so all programs which provide recognition to employees apply directly to this need.
Achievement needs are directly addressed in virtually all individual and group incentive programs that encourage and reward achieving worthwhile company objectives.
Power needs are similarly addressed when promotion and incentive programs are designed to help employees feel empowered through reaping more rewards on the job.
When all of these needs are successfully addressed, the company works better and profitability tends to be higher. This, in turn adds to employees’ feelings of security, belonging, esteem, achievement and power.
Granted, promotional products are no substitute for good management and good communication. They merely multiply the effects of good management and good communication by motivating people to do desirable things they might not have done otherwise.
Finally, using promotional products as incentives avoids a tremendous potential problem that is inherent in using monetary incentives. When cash incentives are discontinued, employees can perceive the move as a pay cut. This perception serves as a disincentive to do good work. If this happens the organization is in the unfortunate position of the cash incentive being taken for granted and its discontinuation being perceived as an insult.
Employees often report a preference for receiving money. However, this desire does not translate into optimal motivation power as much as management’s spending the same amount of money on promotional products incentive programs. Here is why.
Why Use Tangible Incentives Instead of Cash
Promotional Products offer many advantages over cash when used in incentive programs. For example, tangible incentives and reinforcers are:
• Identifiable as a reward for extraordinary behavior. Cash, on the other hand, is a satisfier, more than a motivator.
• Positively associated. Gifts have a celebration connotation while cash is usually thought of in terms of paying bills, buying necessities and covering obligations.
• Guilt free. Recipients can enjoy their gifts without having to make the tradeoff of postponing a payment elsewhere.
• Symbols of success. While cash bonuses are generally dumped into the household budget, tangible rewards are used and displayed with pride.
• Reinforcers of the pride of achievement. When people view and show tangible awards they have won, the pride of achievement is strengthened and shared.
• Goal oriented. When a participant focuses on a particular prize to earn, the goal becomes more motivating.
• Less “fractionalized.” If one’s goal is a leather briefcase, getting almost to that prize level does not deliver the prize, so the participant is encouraged to perform better to get it. Cash, on the other hand, is easily fractionalized.
• Easier to promote. Specific gifts and prize are easier to promote due to their human interest value. Their picture and handling value tie in well with program themes.
• Wholesale. You can’t buy cash wholesale. Thus, tangible products have a higher perceived value than what they actually cost the customer.
• Lasting. The value and pride of tangible products usually lasts for many years.
• Involving. Beyond personal involvement, catalog programs and family-based incentives can involve entire families in encouraging the performance needed to earn a particular award.
• Unconnected to pay and price issues. Monetary rewards beg the question of simply paying more or lowering prices permanently. Tangible incentives are much more distant from that line of thinking.
• More bragging value. It is acceptable to show off a prize. It is less so to show off receiving money. That is why people enjoy bragging about their new cars, but not about their paychecks.
• Something different. Tangible incentives are typically out of the ordinary, often even glamorous. More money is more of the same.
• Cash flow friendly. Sponsors pay for earned tangible rewards when they are redeemed. This means the payments are made after the desired performance has been delivered and the benefits received. Cash is generally paid out all along.
• Redemption friendly. In award programs there is always some slippage–i.e., non-redemption due to small amounts of points left over after redeeming for prizes, or lost and forgotten points. This either can save the sponsor around 10% of the total cost of prizes or the prizes can be about 10% more expensive without an increase in the total allocation.
• Not a demotivator. The termination of cash incentives after they are taken for granted tends to decrease motivation.
