non monetary rewards in the workplace

Non-Monetary Rewards in the Workplace

            Non-monetary rewards have been proven to be as effective in motivating employees and increasing productivity as monetary rewards. This is the reason why more and more companies are now using it as a motivational tool not only for the purpose of inspiring employees to perform better but also for retaining quality employees. (Willamson, 2007)

            The reward system of a business organization complements its performance appraisal program. It may not be the principal reason why performance appraisals are conducted, but it is what gives significance and substance to performance appraisals. Without rewards, performance appraisal loses some of its significance in the context of the system of free enterprise which is characterized by a reward system based on performance. In fact there are arguments that appraising how well employees are doing their jobs is a useless exercise if management does not intend to reward outstanding performers. (Rue & Byars, 2004)

            If handled properly, a reward system is a potent instrument for motivating employees and increasing productivity.  It becomes most effective if it could be done in conjunction with the objectives of an organization. For instance, if the present strategy of a company is to reduce cost, the reward should be granted to the employees who come up with the most efficient method of reducing cost. (Ryan, n.d.)

            Rewards could either be monetary and non-monetary. Business organizations have been in the practice of granting monetary incentives since time immemorial. It had taken the form of cash bonuses, merit increases in basic salaries, fat commissions, or stock options, to name only a few. However, in the race for highly competent talents amidst the ever tightening market for qualified workers, monetary rewards proved inadequate in many instances. Organizations that persisted in their search for the best alternative solutions have started focusing on non-monetary rewards after surveys showed that an increasing number of younger talents have shown preference for non-monetary incentives. Watson Wyatt found this out in their annual survey for 2000. The top performers of 410 companies pooled by Watson Wyatt who were below thirty years of age indicated that their decisions in choosing employers were influenced by non-monetary factors. Specifically, the top five factors were: “opportunity to develop skills; opportunity for promotion; compensation; vacation/paid time off; [and] type of people culture.” Clearly, monetary incentive was no longer a priority among younger workers during the survey period. The survey also found out that more employers were already granting non-monetary rewards as of 2000. Among the companies who were granting non-monetary rewards, 76% were giving their top performers ample opportunities for advancement while 73% were amenable to granting “flexible work schedules” as a reward for excellent performance. Another 68% of employers pooled allowed their top performers the chance to “learn new skills.” (HR.BLR.COM, n.d.)

            Non-monetary rewards differ from company to company. Experts in the field also have their own preferred forms. Steve Penny, a motivational speaker and author, says that there are seven non-monetary ways of rewarding deserving employees. According to him this could be done by: treating workers with respect; telling them that they are doing right in their jobs; communicating company goals clearly to employees; listening to their ideas; giving them enough freedom in doing their job; letting them learn new things; and giving them pride in being a “part of something bigger than themselves.” (#4)

            Opportunities for development like appointment to special assignments or projects was singled out by Weyerhaeuser Company Vice President Mike Rushby as an effective non-monetary reward because, according to him, this “helps employees gain new skills and experiences, demonstrates trust in their abilities, and adds variety to an individual’s work.” (as cited by Ryan, n.d.) Holding recognition programs for good performers, meanwhile, was observed to have succeeded at Walt Disney World (Lynch, 2003 as cited by Ryan, n.d.)

            Jerry McAdams[1], meanwhile, opined that non-monetary rewards are often more advantageous than monetary rewards. He cited four advantages of non-monetary rewards, namely: “memory value, trophy value, flexibility,” and the fact that monetary rewards are more costly. “Memory value” means that a non-monetary recognition award’s value lasts longer than cash because while money is easily spent, a trophy or a plaque stays with the awardee longer. Adams explained that a non-monetary award has a “trophy value” because whatever form it takes, be it a plaque or a cup, it could be shown to relatives and friends as a “trophy” which was received in recognition of a job well done. Flexibility, as clarified by Adams, has something to do with designing the actual prize in order to go with the specific objective achieved by the performer. He cited as an example a mug engraved with the logo of the team given the award for promptly achieving a short-term objective of the organization. Finally, Adams asserted that nonmonetary awards are less expensive than monetary awards. He mentioned a study made of the awards system being observed by private businesses which found that in spite of the fact that non-monetary awards are cheaper, its “perceived value” is the same as that of the cash awards received by employees. He interpreted this to mean that as far as motivation is concerned, non-monetary rewards are at par with monetary rewards. (as cited by U.S. Office of Personnel Management, 1995)

            Also worth mentioning here is the innovative “Thanks! You Made A Difference” award down at the Naval Aviation Supply Office located in Philadelphia, Pennsylvania. This award is granted to an employee for going “the extra mile” just to help his/her co-employees at the office. The recipient of this award is the unanimous choice of the entire workforce of the Naval Aviation Supply Office. What makes the award even more valuable and meaningful is the standing ovation given to the awardee as he/she receives the commendation during the awarding ceremonies held just for this purpose, complete with helium ballons being freed into the air. There is more to this award: the recipient also gets a six-month reservation to a spot in the parking area, and a lunch and a picture-taking date with their Commanding Officer, with their pictures being exhibited in a conspicuous place in the office complex. The awardee could even have a hallway at the office christened after him/her.  (U.S. Office of Personnel Management, 1995)

            Williamson (n.d.), in his article entitled “Some non-monetary rewards in the workplace,” contributed his own version of non-monetary rewards that, according to him, “employees want.” He suggested that non-monetary incentives should not only be granted to reward good performers but also to encourage good performance from the entire workforce. Towards this end, he laid down his own five recommendations. His first suggestion was to grant employees the “Opportunity to Learn, Develop and Advance as an Employee.” He said that workers realize that they have to grow intellectually and acquire additional skills to guarantee their career advancement. For this to take place, he suggested that employees should be allowed to pick the assignments that would present them with new challenges and opportunities, thereby permitting them to really grow.

The second suggestion coming from Williamson (n.d.) was the granting of flexible working hours. Williamson explained that workers should have time to attend to the needs of their families, to socialize with friends, attend church activities, and engage in sports and other worthwhile hobbies. He recommended sporadic time off from work or work schedule which is flexible enough to allow workers to meet such demands. According to him there are people who consider this particular non-monetary incentive as the most important workplace reward that an employer could grant a worker. Recognition was next in his list. Williamson said that recognizing the efforts of employees verbally and in writing goes a long way towards motivating employees and encouraging them to keep up the good work. He even hinted that if an employer really wants to motivate his/her employees, a public announcement for good performance should not be totally out of the question. Williamson also proposed that employees should be given the “opportunity to contribute.” This means that employees should actually be made an integral part of the whole team by letting them work directly with managers, be included in decision-making activities, and in the process, be heard, their inputs and contributions noted and acted upon. Finally, he advocated for “independence and autonomy.” This final suggestion was based on the fact that employees work better if nobody watches closely over them every step of the way, probing their every move, and even doubting some of their motives before any work gets done. He expressed his belief that it would be better if employees are simply assigned their tasks, given their completion deadlines together with the working guidelines and then left to their own. He claimed that although this is a rather important non-monetary reward which an employer could grant his/her workers, this has not really been obvious to many. (Williamson, n.d.)

The Society for Human Resource Management (SHRM), in an article entitled “Excerpt: Managing Employee Retention,” added its own counsel regarding this subject. One of these is that in presenting a non-monetary reward, it should be well published and should be known to all the employees of the company for it to be well appreciated. It also recommended the granting of “spontaneous or on-the-spot awards” based on credible criteria and established company standards. According to SHRM, this kind of reward had been observed to be very motivating. Furthermore, SHRM cautioned that the criteria and standards laid down for non-monetary rewards being announced by a company should be attainable so as not to leave the employees in frustration. (SHRM, 2007)

Non-monetary rewards in the workplace are now being accorded equal significance by human resource practitioners because aside from the fact that they cost less, they are as strong a motivational tool as monetary rewards are. In fact non-monetary rewards do not only motivate workers – they also help employers retain critical skill workers.


HR.BLR.COM. (n.d.). Non-Monetary Rewards Increasing in War for Talent. Retrieved

            July 13, 2007, from:

Penny, S. 7 Ways To Motivate People That Don’t Cost a Penny: Non-Monetary Rewards.

            Retrieved July 13, 2007, from:

Rue, L.W. & Byars, L.L. (2004). Supervision: Key link to productivity (8th ed.) New York:


Ryan, S. (n.d.). Rewards and Recognition. Retrieved July 13, 2007, from:

Society for Human Resource Management. (2007). Excerpt: Managing Employee

            Retention. Retrieved July 13, 2007, from:

U.S. Office of Personnel Management. (1995). Benefits of Using Nonmonetary Awards.

            Retrieved July 13, 2007, from:

Williamson, S. (n.d.). Some non-monetary rewards in the workplace. Retrieved July 13,

            2007, from:

[1] Jerry McAdams was a co-author of the American Association Compensation’s Report entitled “Organizational Performance and Rewards.

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