The success of a company largely depends on employee engagement. If a business wants to thrive and stay ahead in the game, it has to focus on its most important asset – the people who are working behind it, from the front-line workers to those in C-level.
This is a challenge for 21st century companies. Today’s corporate landscape is brimming with examples of how quickly the structure of things are changing. For the first time, five generations are working in a single project. Individuals no longer stay in one company for his lifetime. Many employees now prefer professional growth over compensation, and millennials, who are predicted to comprise 75% of the workforce by 2030, favor reinforcement over trophies.
Non-cash items work better than cash rewards
It’s a given that employee engagement is valuable to business, and is a key metric in predicting company success – yet most companies fall short. According to Gallup, only 15% of employees worldwide are engaged. The standard benefits – competitive salaries, vacation days, health benefits, cash rewards, and stock options – do not seem to work.
The employee rewards program needs to be changed. In a 2005 study, the Incentive Federation argues that cash rewards are too practical and unemotional, and are remembered for the shortest period of time. When cash is used as a reward, it is perceived as an entitled aspect of overall compensation.
It’s clear that cash rewards do not offer significant improvements in company motivation. According to the Incentive Research Foundation, 65% of employees would choose non-cash items over cash rewards. More importantly, the most preferred award for high-producing employees are travel and experiences.
Employees want to be identified with something exciting and extraordinary
The effects of experiences as incentive programs are worth noticing. Aberdeen Research reveals that businesses who use experiences as employee rewards gain three times higher revenue, and 100% of the top companies use these incentives to boost productivity and increase ROI.
The rationale behind this is simple: people want to be identified with something exciting, especially if these experiences create stories they can tell for a long time. No one wants to listen to a staff bragging about the new iPhone he received from the company, but let him tell another of the rush he got from a recent paragliding experience or the skills he acquired from a cooking lesson and it’s entirely a different story.
As leadership guru and popular author of Start with Why Simon Sinek says:
“When people are financially invested, they want a return.
When people are emotionally invested, they want to contribute.”
Millennials want experiences, not things
It is predicted that by 2030, 75% of workforce will be millennials and with 80 million millennials ready to be in the workforce, businesses are looking for ways to find, attract and retain the best of these talents.
This is not as easy as it looks, as some corporations found out. Millennials change jobs they believe do not align with their values, put friends and lifestyle above work, and see their jobs as “something to do between the weekends”.
Giving millennials the traditional work structure and rewards program is not enough. According to a recent survey by Gallup, “millennials want benefits and perks that directly impact their lives and the lives of their family members, and they show greater willingness to switch jobs to secure these elements.”
If companies want to retain this generation, they have to know what they want – that is, experience over things. Millennials have a fear of missing out (FOMO) and when asked by Harris Group, 72% prefer to spend money on experiences over things. This is most likely, as millennials have now access to budget fares and can travel anywhere, even with a meager paycheck.
Employee engagement is a key indicator of business success, and employee reward is the driving force behind it. For today’s modern workforce, the typical cash reward just won’t do. Most employees want a reward system that is exciting, memorable, and something they can share with others or post in social. For this reason, many companies worldwide are looking into experience gifts as the best employee rewards to improve employee satisfaction, retention, and overall productivity.