From money to merchandise: How employers motivate and reward employees to improve results

From Smart Workplace Practices newsletter

FREE guidance. Want to set up an incentive program? Employers of America can answer your questions and give you coaching on how to motivate your employees to achieve results you want. E-mail us at employer@employerhelp.org and ask about Incentives Help.

Money or merchandise? Which incentive is a better motivator for your employees? Recently, Mazda Motors and Goodyear tire tested both. Merchandise gifts generated higher sales for both companies.

In the Mazda program, dealers were offered from $75 to $250 or the merchandise equivalent for the sale of each truck. The merchandise group sold 16% over quota, the money group only 2% over quota. The Goodyear program's merchandise group generated almost 10% more sales than the money group.

One of the main problems with using cash as an incentive or award lies in its lack of trophy value. Three months after winning a cash award people are less likely to remember the program or the satisfaction felt when winning it. However, a new designer watch or crystal bowl will be remembered for years to come.

Employees at the Richmond Group are reminded each Friday that their workplace is a fun place to be! Every Friday afternoon, employees play games like Frisbee golf, hallway putting, or nerf-basketball. Other organizations have contests such as balsa-wood airplane flying, yo-yo tricks, or juggling exhibitions. These types of activities are a very effective way to build team spirit and morale.

Annette Cahoy, owner of Midwest Impressions, Ventura, IA, shares ideas on ways to motivate employees and improve morale. Here are some examples:

u Win employee respect. Stress open communication and flexibility. Flextime, telecommuting, and casual dress days can bolster employee morale without adversely affecting productivity.

u Make an impression. Give employees something memorable. At a company picnic items such as Frisbees, coolers, koozies, and sunglasses are gifts that will equate your organization with having fun.

u Improve customer service by improving employee attitude. A recent study by Sears Roebuck revealed that a highly-motivated sales staff will achieve an increase in sales by nearly 18%.

The Rockford Industries plant in Chicago used simple employee incentives to change their safety record from the worst to the first in the company. In 1998, a safety program called "Zero Disabling Injuries" was implemented. A kickoff meeting was held in January to announce the program and to show employees what awards they could receive if they were able to stay injury-free for the entire year.

At quarterly meetings, employees who remained injury-free were given gifts such as baseball caps, T-shirts, sunglasses, and first-aid kits. All of the items were imprinted with the firm's logo and safety theme. At year's end, if there were no disabling injuries, all employees received a stainless steel lunch tote/thermos. The Chicago division ended the year first in the entire company and reduced workers compensation by 33%.

Cahoy tells of another employer, a bank, that developed a great example of rewarding its employees. The bank's objective was to improve customer satisfaction. The theme "Brightest Stars" was created to provide visual and lasting recognition to employees who achieved certain goals. Awards were distributed to the "Brightest Stars" at a monthly recognition ceremony. To launch the program, helium balloons were placed in boxes filled with candy bars. Attached to each balloon was a poster explaining the program. Some of the awards that were given away: imprinted coffee mugs, acrylic paper weights, T-shirts and silver-star-shaped balloons. Desk "galaxy" kaleidoscopes were presented to top award winners. By year's end, customer satisfaction scores rose 82%.

What kind of prizes should you offer? Cahoy notes three basic choices: Merchandise, money and travel. Merchandise, such as clothes, jewelry and electronics, pleases more people if it is high quality. Awarding material items is perceived as showing more thoughtfulness. Cash is straightforward, but cold. Travel is nice, but it is hard to know if the employee will like the destination, the style or the timing of what you offer.

Says Cahoy, "Whatever you decide, don't delay handing out the awards or prizes once employees reach their goals. Keep programs short. Durations of six weeks to three months work best.