Feature Article - September/October 2012

The Power of Merchandise

Trends in Merchandise Rewards & Incentives

By Rick Dandes

As the global economy begins to emerge from the Great Recession of 2008, many organizations, while continuing to offer cash incentives to reward talented employees, have found that using a variety of non-financial motivators also can be highly effective. In fact, according to several experts in incentive reward program strategies, merchandise is re-emerging as a preferred award, even when compared to open and closed-loop gift cards, cash back and other types of options.

"In terms of cash vs. non-cash awards, one of the things that I think is kind of a misnomer is the idea that people are wanting more cash these days," said Mike Ryan, senior vice president, marketing and strategy, Madison Performance Group, New York City.

Managers constantly hear their employees say, "Give us more money and we will get the job done"; employees will tell you they prefer cash over non-cash. "But the research contradicts that," Ryan said. "It is simply not true that cash is the better motivator."

Non-cash awards capture an employee's attention more so than cash awards do, he said. "Non-cash awards increase interest. Now, does that increased interest correlate to increased, better performance? Well, non-cash awards appear to capture an employee's imagination and motivate them to do the work."

Merchandise is a key reward because it is something tangible that recipients mentally account for separately from their pay.

Psychology professors Victoria Shaffer, of the University of Missouri and Hal R. Arkes, of the University of Michigan, have studied employee motivators. They found that when people are asked to make a hypothetical choice between cash and non-cash, they inevitably say, "Give me cash." But when that choice is no longer hypothetical—in other words, when that choice is between cash and something that they've already aspired to and it is worth an equal amount of money—they go to the non-cash award.