The difference between financial and non-financial rewards for employees are obvious. What is not so immediately apparent is the different outcomes they are likely to produce. Choosing the right reward for the right reasons is easier said than done, and financial incentives can easily backfire.
For clarity, we are going to say that high-priced items — gold Cartier watches, for example — fall into the ‘financial reward’ category.
Financial vs non-financial rewards
Non-financial rewards are beneficial to the bottom line of an organisation and the wellbeing of the individual. Non-financial rewards remain a positive force, unlikely to result in conflict, jealousy, or whispers of favouritism. Friendly competition?
Maybe. They are more likely than money to offer emotional and psychological benefits to the recipient. So, what makes an excellent non-financial reward that lights up the pleasure centres of the brain?
To begin, whether your reward is financial or non-financial, employers need to be specific about which behaviours, attitudes or achievements will be rewarded. Then, one must make good on that promise, or all is lost.
It almost certainly will not be enough to simply ‘offer’ an incentive. Your team needs to understand and experience a reward with all their senses, see others being rewarded, and be reminded of the benefits of a particular action regularly. They need to want to earn it, as well as the know-how to.
How to increase engagement and retain staff with non-financial rewards
Not all achievements are linked to directly boosting the money coming into your not-for-profit. So, is it fair to only remunerate the sales team? How do you reward, say, adhering to culture or consistently staying committed to a timeline? A non-financial reward can be given to any employee to offer security and recognition for the part they play.
Here are our top non-financial reward ideas to implement in your organisation.
Praise and recognition (it costs nothing)
Imagine you have just laid out all the dishes you have prepared for a delightful dinner party. After demolishing food, your guests throw a few crumpled five-dollar bills on the table — or an iTunes gift card — before leaving. It should be clear now that recognition can mean so much more than money.
Of course, we are not suggesting replacing salaries with ‘expressions of gratitude. The point worth highlighting is that rewards are best delivered in a way that ties into a person’s need to feel a sense of purpose and contribution. Actions that express gratitude are powerful signals which, unfortunately, are often underused.
Among the top reasons for an employee choosing to leave an organisation is ‘feeling undervalued. For whatever reason, the feedback loop has ceased, leaving them feeling ‘stuck’ or overlooked for their daily sacrifice to the organisational aims. It is helpful for managers to remind themselves every now and then that employees are, every day, trading in their one non-renewable resource (limited time on Earth) for a salary.
It is important to remember that one should not dish out endless praise or commend average work. Doing so will lend as much value to your words as Prussian francs.
Pro-tip: comment and commend in front of others
An email saying ‘well done is admirable, but how about an email with the General Manager cc’d in? Is there a way to commend great work in front of the steering committee, the whole department or the office? You need not keep the recognition a secret.
Many organisations become so focused on the critical work that they neglect the important part of celebrating the wins. That can be big or small – from an impromptu star performers lunch with management, to a carefully orchestrated awards ceremony. Just do not leave it a whole year before congratulating someone on their contribution.
Non-financial physical rewards
Not a shoulder rub from the manager. Never. Not ever. Physical rewards should be inexpensive items that fit with the values and purpose of the organisation.
Unlike a bump in someone’s bank account that is not really ‘seen’, physical rewards offer a concrete reminder (seen by all) of outstanding work.
Of course, there is a physical ‘trophy’ for a star performance. You could choose something that offers utility, such as a personalised Keep Cup for good environmental behaviour. Whatever the non-financial reward, it must be earned – not simply given.
We must link rewards to something specific about an achievement – not merely participation. Physical rewards should also remain special rewards. Scarcity creates value… and we all now know about the self-esteem-damaging effects of well-meaning ‘participation trophies’ for kids that grew up in the 80s and 90s.
Growth, mentorship and development
Another excellent way to show gratitude for an employee’s contribution is to invest in their further development. Doing so can increase employee engagement, benefit the organisation’s bottom line and create positive feelings of advancement and potential career progression.
In a Sprout Social poll, 34% of respondents said career development opportunities would increase their loyalty and engagement with a company.
To be clear, sending someone to mandatory customer service training is not the sort of PD we are talking about. It should be up to the employee to choose their area of interest/improvement with guidance from their manager (or at least oversight).
Whether it is an intra or interstate conference or a new online course when your organisation helps to foot the bill and invest in employee development as a reward, the rewards to the organisation could be endless.
Work flexibility as a non-financial reward
When was the last time you said ‘take the rest of the day off’ for something positive?
High performing employees get more done in less time, so why do they need to be in the office for the same 40 hours each week? If someone consistently shows that they are meeting targets, offering them flexibility in hours or working location could be an ideal non-financial reward.
The COVID pandemic showed many organisations just what was possible with remote working when it HAD to be done. While many have returned to the physical workplace if they expressed a preference for remote working, that could be an excellent no-cost work perk to offer.
For an employee, that may allow them to spend more time with the family, work down at a beach cafe, or contribute to goals at a time when they are most switched on. With the right parameters and policies, flexible arrangements as a reward could allow them to work from a hotel or holiday home, reducing the stretch between official holiday breaks to prevent burnout.
As far as being a non-financial incentive for your non-profit, remote working and flexible hours may save everyone money: your organisation, with reduced office overheads associated with hot-desking; and the employee, with reduced commuting costs and buying lunches.
We recognise that there may be reasons why someone is needed in the office at certain times. But for a team member that regularly demonstrates dedication to their work, offering more flexibility as a non-financial perk may help alleviate stress and help maintain a healthy work-life balance.
Non-financial rewards: break out of the ordinary
If the work is extraordinary, why offer an ordinary non-financial reward? Consider the opportunity on inter-state office-swaps for staff that want to spend time in a new city. Offer time from regular work commitments to focus on projects that might not be directly related to your core operations. Create an incentive reward system with your corporate partners, or a Hollywood Walk of Fame concrete pour.
To continue to become an exceptional organisation you desire to be; you must be the exception. As a not for profit, your people are already making a difference. Now it is up to you to use non-financial rewards to be the difference between good and outstanding.
