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MONEY TALKS, BUT YOU MAY NOT LIKE WHAT IT’S SAYING

Last week, Michael C. Fina hosted a few customer representatives who handle rewards and recognition for leading healthcare organizations.  Seven HR reps. from hospitals large and small, participated in a roundtable discussion to share their insights and reveal some industry-specific best practices and challenges with members of our company’s management team.

While the session yielded a lot of valuable information across a number of fronts (check back later for more), one thing in particular surprised me.  Most of these HR professionals acknowledged that their organizations still occasionally used cash for rewards, even though none of them could correlate the rewards with the goals their recognition programs or strategies sought to accomplish. We’re not talking about compensation like salaries, raises and standard bonuses – we’re talking about cash as a means of recognition for going above and beyond or hitting key milestones. In fact, one rep. acknowledged that taking away their cash reward program caused some issues with her staff – until they replaced it with a program that allowed employees to select their own reward gifts.

Most recognition specialists will tell you it’s a bad idea to reward your employees with cash. But why? Everybody likes a little extra coin now and then, and who doesn’t appreciate cash? Like Wu-Tang Clan said, “Cash rules everything around me.” Maybe this rings true in the rap world, but what about the corporate world?

Mike Fina, our EVP of Technology and Innovation hit on the topic in his book Perspectives on Managing Employees:

I learned long ago that the world is full of uncertainties. But there is one thing that managers can be sure of: If you ask an employee if he or she wants more money, the answer will always be yes. I have yet to meet the employee who would not like to receive more cash. If you are simply looking for the fastest, easiest way to celebrate employees, give ‘em money. That said, this approach is proven to be the least effective way to promote loyalty, motivation or trust. You cannot build caring professional relationships with money, nor can you express true gratitude with money.

For decades, theorists have put forth opinions as to why cash is not an effective motivator. Most theories link cash to basic human need for safety, security and survival. In other words people associate cash with these needs because you need money to stay alive. Increases in compensation, then, are associated with these needs, not with recognition or performance.

Here are a few other theories:

• Cash cannot reinforce a brand or a culture. Companies looking to get employees engaged and committed to their brand cannot do it through cash. It is only through the culture and messages from trusted leaders that people will become passionate about a company. It is trust and relationships that result in people getting engaged and staying engaged. When an employee chooses to do something great, that person will most likely do so because of his or her commitment to the culture and the organization.
• More money cannot make your organization stand out among the competition. Cash is a commodity, not a differentiators. Employees are more willing to brag about non-cash rewards than money, which is perceived to be a part of compensation. The true differentiators are the intangibles that really make a difference in an organization’s culture – the ways the organization and its leaders use recognition and rewards to engage employees and build relationships.
• Cash programs inevitably end up becoming entitlements and are therefore hard to take away. You must have the flexibility to change your organization’s reward structure when necessary, and cash programs make this difficult. Any company that has used chase as a reward and later tried to change its reward structure has felt the pain of this type of change.
• Cash has no trophy value. It is not memorable. Most people cannot remember what they spent their last bonus on. Even when we receive personal gifts of money, we usually forget how much we received and what we did with the money. Sure, an employee might use a cash reward to buy something memorable, but most current evidence indicates that cash rewards just go to pay bills and debt.

Regardless of how much money a company spends annually on employee rewards, if employees are not celebrated in a meaningful way by a trusted manger, these individual rewards will be meaningless.