Cash rewards vs. non-cash rewards: which works better for motivating employees?

Your question is well put. Not which works, but which works better.

Both can work quite well. Money will always work better. Money represents things like status, purchasing power, increased opportunity, the ability to change your life... very few, if any, non-monetary rewards carry that kind of juice.

That is not to minimize the effect of the non-monetary reward. Developers at Apple would walk on their lips through broken glass for a pat on the back from Steve Jobs. Probably a good way to gauge the value of the non-monetary reward would be to look at the reward itself, and to look at the leadership of the person leading the people he/she is trying to motivate with said non-monetary reward. A good prima facie reward incorrectly applied or given to an individual for a team effort can backfire into demotivator instead of a motivator.

I always love your questions, Caty.

The easiest way to know clearly what would best motivate others is to think very clearly about what would motivate YOU.

CE Stowe said something I quote a lot:

"Common sense is the knack of seeing things as they are, and doing things as they ought to be done."

Did you notice his order of things? First, see things as they are. Then, how they ought to be done will become self-evident.

So we should ask ourselves a question in hyperbole: "Would I rather hate my job but get a thousand dollar bonus quarterly, or would I rather never get a bonus but love what I am doing and be excited about going to work every day?"

People do not all fall on the same side of this question, right? So next consider this: What culture will best suit the former, compared to what culture would suit the latter? Which of those cultures do you want to cultivate in your organization?

Wow. The question can get deep when that kind of thought is put into it. Let's add one more consideration: What are you most likely to GET from the group motivated by the bonus compared to the group motivated by daily job satisfaction? Money motivated people might tend to be self-serving while those who just want to enjoy their daily jobs a lot may present more as team players.

Okay those questions help in the 'see things as they are' department. Now which choice you make will depend on which people you are seeking to attract.

Now what remains is to 'do things as they ought to be done'.

I will conclude with this: Provide me a place to work where I am appreciated, that I look forward to coming to every day, and that has a true team in place, and I will have the motivation (individually and as part of the team entity) to move mountains for you.

Together, let's put the fun back into work!
Belldon Colme
belldoncolme@gmail.com

cash rewards works better tha non-cash rewards. employees ultimately looks for how much can earn. Money matters everywhere. some employees gets more enlightened, if they receive non-cash rewards, but as per the survey cash rewards encourages an employee work more efficiently and effectively.

http://www.nichesuite.com/

Caty, both of your questions are a little different. When choosing between cash and non-cash rewards, there's plenty of evidence that non-cash rewards can and often are more effective for promoting engagement and retention because they can bolster the connection between the employee and their manager.

When it comes to motivating employees, Jim's response is dead-on. Every employee has different values and expectations. I think that if you can't enhance an employee's engagement through responsibilities, work environment and relationships, then cash rewards will have little impact.

Some good answers here. Neither work well in a vacuum. Neither work for the long-term without matching the employee with the company culture.

Most companies need a simple, repeatable solution, but they should start with culture (what is said and what is communicated by actions), then look at their employees. As others have stated everyone has their own cash/non-cash equation and designing a program that meets the needs and expectations of as many of them as possible, without creating chaos, is a best practice in my book.

I think as Jim comments this is never a situation where one size fits all. There is a reason why Maslow's hierarchy is a hierarchy. If you are at a place where survival is tantamount then having enough compensation to vreate security is highly important. As that dissipates other forms of motivation kick in.
Some people are highly motivated by money or compensation because it allows them to facilitate other goals (retirement, aquiring things) or just bluntly keeping score.
I think Dan raises an excellent point about starting with your culture and organizational mission and then recruiting and selecting people who align with it.
If you are running a not for profit then trying to recruit/retain people who are highly motivated by compensation is a non starter...
Again to Jim Brennan's point we don't "motivate" people. The mostly highly skilled and successful organizations create an environment of alignment where the line of sight between the employees goals, objectives, and values are very transparent and congruent.
The other "wild card" is that peoples needs change. A change in personal circumstances can cause an individuals motivation factors to shift. At the very least they evolve.
The same thing applies to sales- figure out what need a customer is trying to satisfy and how to meet it rather than what you want to sell them and you will ultimately be more successful...
Using compensation by itself to create alignment has been the prevailing wisdom for over 100 years. It has resulted in distrust, disatisfaction, and the lowest employee engagement scores since we began recording them and has also translated into billions in lost productivity, turnover, increased health care expenditures, etc.
You would think we would learn....