Awards Vs. Cash—Which Is Better For Employee Motivation?

It may not surprise you to learn that non-monetary awards are better than cash for employee morale, but motivation is more complex. Intuitively, you do not need experiments to tell you that the combination of awards is the strongest motivator for people. However, social recognition and an award system are each better than money for employee motivation.

Why Employee Social Recognition Works

Social recognition is arguably the highest motivator of employee performance. If you create a well-thought-out tier system, you can inspire anticipation in your employees. Each level of achievement warrants a greater show of appreciation or more merits. Employee recognition tends to be a better motivator than cash because positive feedback is personalized. Moreover, you can put recognition on a scale just as you would with a financial award system. Telling an employee that they did an exceptional job or encouraging coworkers to post the achievements of their peers creates a feel-good work environment.

In turn, a positive work culture leads to higher retention rates and increased production. In contrast, cash rewards are impersonal, and there is usually a quick limit on how far you can scale it up. Financial awards cannot approach the engagement or sense of self-worth that social recognition garners. Salaries and wages are not sufficient to keep employees who feel their work is underappreciated or meaningless.

How to Show Employee Appreciation and Recognition

There are several meaningful methods of showing employee recognition. Personalized and private meetings are a great means to get employee feedback and, at the same time, provide a certificate or thank-you letter to express your appreciation. Taking an employee to lunch or coffee provides them with personalized time that is in itself an award. It also temporarily elevates their view of their status. However, you can also use the meeting to emphasize your employee’s contributions to the company.

A merit system with progressive incentives and coworker input is effective in getting everyone involved. You can wow exceptional employees by recognizing them on social media outlets, making them feel special and newsworthy.

Award plaques remain a tried-and-true form of recognition. A permanent fixture that recognizes an employee of the month or quarter is an award that continues to give after the initial reception. Banquets and buffets are wonderful to recognize a team or group of employees with a plaque or trophy and, at the same time, involve all personnel in a positive event.

How to Find Great Non-Monetary Employee Awards

The obvious advantage of non-monetary awards over cash is their cost-effective financial benefits for the employer. More important, nonfinancial incentives often have a more immediate impact than money. Rather than handing an employee a stack of cash for a job well done, you would instead attach a raise or bonus to their next paycheck or apply stock options or an end-of-year share dividend over time. Studies show that you modify behavior most effectively when you meet a positive action with an immediate reward.

Ideas for non-monetary awards should center around what your employees most value next to personal recognition. Likely you will discover that most people wish they had more time to accomplish vital tasks or wish they could retrieve a few of the hours or days that they unknowingly wasted. There are several examples of time-based awards for employees.

  • Extra vacation days or more leaves
  • Free time – time at the office to work on personal items or projects
  • Day away from the office – can offer employees their choice of volunteer work or send them to a workshop or continuing education seminar
  • Special days off – give an employee their birthday or another special occasion off; give a half day off as a reward for hard work or high productivity

How to Increase Employee Motivation Through Awards

Award systems are not automatically motivational for employees. To keep your awards fresh and interesting, take advantage of why non-monetary gifts are more inspiring than cash in the first place.

  • Reward or recognize an employee immediately after their achievement
  • Make awards personalized and of value to the employee
  • Involve employees – have a meeting with your staff and ask them either individually or as a group what they want as awards; you can make this question open-ended or offer choices
  • Combine cash and non-monetary incentives, especially if you have a tiered award system – if you add cash, make sure you have options for immediate distribution (gift cards, material objects like plants or gourmet treats, subscriptions)
  • Publicize awards – not only let everyone know who received an award and why, but also define a transparent system
  • Make working to achieve awards fun – games, a point system, a prize show
  • Ensure awards are fair, achievable for everyone, and based on objective accomplishments


Awards work better for employee motivation than cash because they create greater self-worth and job satisfaction. A personal touch and invested time help employees feel more involved with a team. If you make your employees feel valued and appreciated, then you will enjoy higher productivity and lower staff turnover in your company.

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