Cash vs. Corporate Gifts

Compensation is linked to security and safety. Most people won’t feel safe unless they are sufficiently compensated to meet their needs. Recognition, on the other hand, appeals to social and self-esteem needs. People have a self-sustaining motivation that thrives on continually improving their work and its end results.

Even though the distinction between compensation and recognition is clear in theory, many companies continue to confuse them in practice. This happens because most organizations develop incentive and performance strategies without determining whether they want to compensate employees or recognize them.

There certainly is no debate that cash is the best form of compensation. Any employee will vow to the fact that what they want most in return for their work is money. Try taking cash away entirely and replacing it with tangible awards and you’ll quickly experience a revolt!

However, recognition is a trickier issue. Money is rarely accepted as a means of recognition. It is true that winners of awards in sports, business, or science usually receive cash awards, but when they attend an awards dinner they get merchandise, trophies, and public expressions of gratitude. Likewise, most companies don’t give cash to express thanks. Instead they use tangible expressions of gratitude, such as corporate gifts. These are more personal and meaningful.

This distinction can help clarify the confusion between cash and tangible awards. If you want to compensate people for extra performance, then gift them with cash. But if you’d like to show gratitude, recognition, and express your thanks for good performance, consider something tangible that has staying power.

Just make sure not to fall into the trap of bribing employees to achieve goals. If you want self-motivated employees, the best approach is to emphasize the need for continuous improvement at all times. Put less emphasis on the compensation or recognition received for it. Whatever your goal is, your program will become addictive if you put too much emphasis on the award. So focus on the inner satisfaction that employees should experience with accomplishment, and you’ll be on a good path to success.