For all the salary discussions happening in the workplace, the reality for many workers is that the money doesn’t matter. In Singapore, the recent Lumesse survey showed that local workers are the least happy and least loyal of any employee population in the world. This is not tied to financial compensation, but rather a lack of recognition and dissatisfaction with management, notes the Singapore Human Resource Institute, so fixing these results isn’t simply a matter of throwing money at the problem.
Instead, non-financial incentive plans have been shown to be much more effective at improving loyalty, retention, and worker motivation, according to a 72 month long empirical study published in The Accounting Review.
The study noted that non-financial incentives can take many forms. They may be additional vacation hour awards, competitions for prizes, or recognition from management. One of the best known non-financial awards programs in the world is the “Employee of the Month” scheme, where employees can earn their photo on a wall as the top worker for that month. While they receive no cash for the honour, the prestige and public recognition can lead to fierce ongoing competitions among teams to be that month’s winner.
To design a non-financial incentive plan at your own firm, consider the following questions:
What are my core objectives? It is important to have a link between the incentive plan and your business objectives. You want to make sure any award programs target the right behaviours to move the bar on your key corporate objectives, notes the Center for Competitive Management.
What award metrics will I use? Workers will reject any reward program that is seen as unfair or an opportunity for management to play favourites. Metrics used to decide which employees are rewarded, need to clear, specific, fair and give all targeted staff an equal opportunity to compete to win. After all, if workers think the system is stacked against them or rigged, they won’t even try to participate.
What prizes, recognition items, or experiences do my workers value? Workers don’t all value the same things, but your organizational culture can give you clues. Would a one-on-one lunch with a senior executive be valued? How is prestige valued at your firm? The Center for Competitive Management notes that Wall of Fame photos may work better in some environments, while trophies for individual desks might work better in other situations. A choice parking spot, on the other hand, may be the ultimate prize at your workplace. With a little consideration, a number of desired prize items can easily be uncovered.
How will I measure the success of this program? Any new program launch should come with a means to measure its success, according to George Milkovich’s, Compensation. Will you be looking at turnover rates, staff morale levels, or sales quotas? What’s your plan to continue or discontinue the program based on your success points?
Each of these questions should help you lay out the framework for a successful non-financial compensation program to supplement or replace your current incentive plan. At the end of the day, you want a plan that works to successfully motivate your staff. When the money no longer matters, making a strategic turn to non-financial rewards may be just what is needed.