People aren't so bothered about financial rewards anymore – it's all about the experience
Experiential rewards – rewards that get people out and about, and give them something to do, rather than just sticking more numbers on the pay slip – are absolutely the way forward and they're fantastic for motivating and engaging staff. Let's take a look at why.
When it comes to a reward for a job well done, it’s easy to think monetary rewards are the answer. It's probably the most traditional way to reward employees for all their hard work- but the numbers tend to get swallowed up quickly and fail to leave a lasting impression.
In fact, there's plenty of doubt to be cast on whether people will even work toward receiving a bonus anymore. Studies show that cash bonuses for top employees only really make a difference about half of the time, while merit pay rises are only effective for about one in five companies.
Let's take a closer look at why experiential rewards are the way forward...
rewards need to be meaningful
Research from CEB/Gartner uncovered something interesting about what actually drives employee behaviours when it comes to rewards. We've long known that rewards need to be relevant and meaningful to motivate people, otherwise they'll just be ignored – but this research managed to find an actual monetary figure on that meaning.
CEB/Gartner found that bonus pay-outs for top employees need to be at least 50% higher than pay-outs for the average employee to be seen as meaningful, and therefore change behaviour. They also found that financial rewards of less than $100 had hardly any impact, but once that $100 boundary was passed, the impact started to fall again. The conclusion? It's the perception that the reward is meaningful, rather than the cash value of the reward itself, that matters.
It's clear to see how, if you're handing out big cash bonuses, there's a fine line between having no effect, and wasting money. Experiences, on the other hand, have far more potential to create meaning for employees.
Whether it's a chance to drive on an F1 track, a spa visit, a theme park with the family, or even just a meal for two, an experience day can offer people something that they're unable to access on their own, wouldn't have thought to do, or might have done anyway – but for free. The value of something like this really does transcend the cash amount it's worth – helped along by social FOMO factors, of course!
However, this does mean it's important to offer a wide range of experiences throughout the course of a reward programme to make sure there's something that appeals to everyone. Not every reward will appeal to every single employee, of course, but if every experience day you ever offer is extreme sports-based, or pamper-centric, then there's going to be a section of your audience that just isn't bothered.
the rising cost of living makes an experience mean more
There's no two ways about it – prices are going up. And that means your employees are having to divert more and more of their hard-earned salary to bills, food, and fuel for the car.
You might think that financial rewards are perfect for a time like this – when money's tight, surely more money will help? Well, not always as much as you might think. Everyone knows that bonuses get eaten up by tax and whatever's left just goes into the bank account, getting spent on… rent, food, and fuel for the car.
Experiential rewards, on the other hand, mean your employees can do something they love without having to worry about what it costs. Whether it's an amazing day out, all expenses paid, or a simple restaurant gift card that can be used for a special occasion, these rewards sit outside of the weekly or monthly budget.
And, unlike cash bonuses, employees don't pay PAYE tax on vouchers for goods and services.
Better yet, experiential rewards can be bought through a well-connected supplier at discounts that mean the value is greater than what a financial reward would buy after tax.
young people love it - so you know it's the way forward
Ahh, millennials – we bend to their will whenever we can because they really are the future of our workplaces. And it turns out they're really into experiential rewards.
Our own research has found that 84% of people in the millennial bracket are up for experiences – and vouchers to choose their own experiences – as rewards.
in the end it's the memory that really matters
Whether your employees are young or old, experiential rewards are effective because they give people the chance to create memories – and it's the memory of an experience that influences behaviour, rather than the actual experience itself.
We create memories when we experience something new, or exciting, or significant to us, and travel rewards and experience days provide all of these things in spades. And the most important thing of all? These memories are all tied back to the employer who made it happen.
It's the memory, provided by a fantastic employer, that will make people work harder for the chance to make more memories. It's these memories that will be recalled when people are weighing up the possibility of moving on to new pastures. It’s sharing these memories that will bring the people into your organisation closer together – in turn motivating others to work to achieve something similar for themselves.
Whether it's sharing photos from their day out, or talking about the films they saw with their cinema rewards last weekend, these interactions will become part of what makes your workplace culture great.
So, the only question is, what experiences are you going to offer your employees?
It's a fantastic opportunity to get creative, cooking up something that you know your people are really going to love – or you could boost engagement even further by crowdsourcing suggestions.
But whatever you choose, make sure it's a fantastic memory!