If the workplace was a body, money would be the blood getting pumped around, keeping everything ticking over. But beyond standard financial compensation, is throwing money at employees the best way to stimulate performance? Finding ways of rewarding employees without money being involved can help create a more gratifying workplace culture.
And anyway, research shows that performance-based financial incentives are very far from being an ideal solution. So, with that in mind, let’s look at some of the potential alternatives.
Why financial incentives aren’t always the best idea
On the face of it, using money as a performance motivator seems like a fairly solid and straightforward idea. Pay employees a wage, and they do their job. Dangle more money in front of them, and they pick up the pace. But how does that work out in practice?
The cost of financial incentives
One of the biggest reasons you need to find ways of rewarding employees without money is how expensive it can get. Follow it up to the CEO level of large companies, and you’ll regularly see millions of dollars, pounds, or your preferred currency being passed around like After-Eights.
Take David Gibbs, the CEO of Yum Brands (the conglomerate behind fast-food brands such as KFC, Pizza Hut and Taco Bell) for example. He received over $9 million after his board ruled it “unfair” that he not receive a bonus due to the business’s drop in earnings over the pandemic. He’s also joined by Foot Locker CEO Richard Johnson, who was given more than $3 million as a bonus despite the company furloughing the majority of its workers without pay during lockdown.
Rewarding employees with money isn‘t effective in the long-term
Finally, the biggest reason to find ways of rewarding employees without money is the simple fact that performance-based financial incentives just aren’t effective in the long run. Research has shown that bonuses are less effective for motivating engagement in the long-term than managerial praise.
On top of that, findings from Vlerick Business School show that, while bonuses can initially boost CEO and CFO performance, these benefits disappear within two years, and can quickly start damaging the business’s profitability. So, now we know employee bonuses aren’t all that, it’s time to look at methods for rewarding employees without money.
10 ways of rewarding employees without money
Rewarding employees without spending money might seem like a bit of a head-scratcher. But don’t worry, we’ve got you covered. While not every entry on this list is something you can do at literally no expense, we promise each one is still better than waving a wad of notes at your staff and demanding they work harder.
1. Provide visibility and recognition from managers
Given that managerial praise is more effective than financial incentives, it should go without saying that leaders in your business need to be in the habit of recognising employee accomplishments and highlighting them for others to see.
2. But remember that peer feedback and recognition are just as vital
Managerial recognition may be important, but it seems that peer recognition is even more-so. In fact, peer-to-peer recognition has been found to have 35% more positive impact on financial productivity than manager-only recognition. So, not only is peer recognition cost-free, it could actually make you money.
3. Take an interest in your staff
For this entry, we’re talking about more than just acknowledging their contributions. Sometimes, the best way of rewarding employees without money is to just talk to them like people. Taking an interest in their pets, how their kids are doing, or where they’re thinking of going on holiday shows that you think of them as a person and not just a cog in your machine.
4. Reward employees with trust not money
There’s no shortcut to building up a trusting relationship with your team. But you can take the biggest plunge and acknowledge their dedication by giving employees autonomy over how they work. Aside from showing you trust them to deliver results, autonomy can also make employees’ lives less stressful because they can control their workflow.
5. Set up social activities
If there’s one thing people have been missing, it’s their regular social interactions with colleagues. But you have a whole range of options for helping your employees connect with each other. There are literally free activities, such as an online array of free games and ice-breakers. Or you could go out for a team meal or a night out together. Just make sure all workplace social activities are optional, because mandatory fun is definitely an oxymoron.
6. Reward employees with genuinely useful perks rather than money
There’s a lot of debate about the actual efficacy of perks. It’s certainly true that shallow perks don’t really do a lot for long-term engagement and productivity. But perks which genuinely improve the lives of your staff can make a lot of difference, rather than rewarding employees with money. You could offer gym memberships to employees or day care access to busy working parents, for example.
7. Be willing to promote internally
Sometimes, you have to look beyond your company for someone with the right skills. But promoting internally when feasible is one of the best things you can do to show employees you value them. It proves that hard work pays off, while making promoted staff members even greater contributors to business success.
8. Allow for job flexibility if you can’t stretch to rewarding employees with money
Gone are the days when job flexibility was some fringe benefit for only the longest-serving employees. Nowadays, it’s a basic expectation, with remote work proving popular with nearly 100% of those who’ve experienced it.
9. Help employees to up-skill
Supporting career development is one of the most practical ways of rewarding employees without money. Whether you put them on a skills course, or have them shadow the sort of person they want to learn from, investing in employee education is a great way to show appreciation while getting the most out of your top talent.
10. Provide time off and encouragement to use it
And finally, one of the best ways to reward employees is to simply give them a break. We’ve seen various businesses do this recently, from the Japanese CEO who gave his staff time off to play Monster Hunter: Rise, to tech companies like Bumble giving employees an entire week off to recover from burnout.
