Two high-performing employees in similar roles are due for a reward. One gets a $1,000 cash bonus. The other gets an additional day of remote work per week.
Both are grateful for their rewards, and they should be–their employer tailored them to their preferences. But there's more happening beneath the surface.
The cash winner is motivated to perform and wants to keep earning extra cash. The hybrid employee is thrilled they've found a company that honors their desire for flexibility.
Each of these rewards went a long way in engaging employees. Does it matter whether one is motivated by money and the other by flexibility? Why is the reward that costs the company nothing more valuable in some eyes?
We'll explore these questions and more as we break down monetary rewards and non-monetary rewards with examples, pros, and cons.
What's the difference between monetary and non-monetary rewards?
Monetary and non-monetary rewards are two types of employee rewards. Monetary rewards focus on financial value. The benefits are immediate and tangible. Non-monetary rewards are more about emotional fulfillment. They can have a longer-term impact.
With personalization, both monetary and non-monetary rewards can serve their highest purpose. Someone who loves investing can feel lasting gratitude and stronger loyalty when offered company stock options (a monetary reward).
They can enjoy similar benefits to an ambitious, growth-oriented employee who gets mentorship from a company leader (non-monetary reward).
Choosing between the two often comes down to:
- Company values
- Company culture
- Employee preferences
- The reason for the reward
- Industry
- Budget
Striking a balance is necessary to continue making monetary rewards sustainable and non-monetary rewards meaningful.
Monetary rewards: Examples, advantages, and drawbacks
Monetary rewards boost extrinsic motivation. The reward is an external factor that drives our desire to excel.
The monetary reward we're most familiar with is a raise. We're rewarded for our loyalty and/or performance with more money. As we'll find, rewards with inherent monetary value are a relatively broad category.
Monetary rewards examples
These financial rewards include, but aren't limited to:
- Bonuses
- Raises
- Profit sharing
- Stock options
- Insurance benefits
- Discounts
- Commissions
- Educational reimbursements
- Gifts cards*
You'll notice a few of these, like insurance benefits and, in certain positions, commission, are expected. Full-time employees aren't highly motivated by them because they're considered standard for their roles. They've likely confirmed they'll receive these "rewards" before accepting an offer.
*Gift cards have a cash value and are technically monetary. However, they are more easily integrated into a meaningful, mostly non-monetary rewards program.
The pros and cons of monetary rewards
Can extrinsic motivation make you a better collaborator? Is money all we want or need from our jobs? The answer to both is "probably not," but these rewards still have a place at work.
Pros of monetary rewards
Cons of monetary rewards
Can motivate employees to meet specific goals and hit short-term targets.
Unsustainable long-term; tends to motivate employees in shorter bursts.
Most employees will easily appreciate additional financial compensation.
Can feel unfair or inequitable. Only select employees can reach performance levels that warrant the reward.
Some monetary rewards, such as bonuses, let employees spend as they like.
May lead to a sense of entitlement. Employees don't feel sufficiently recognized or rewarded without money.
A tangible, external representation of an employee's success or loyalty.
On its own, a poor strategy for increasing employee engagement and job satisfaction.
Some monetary rewards, such as stock options, can feel like they add more security to an employee's future.
Employees can feel resentful that they must do more to earn rewards that meet basic financial needs.
Non-monetary rewards: Examples, advantages, and drawbacks
On the other hand, non-monetary rewards leverage intrinsic motivation. When we're intrinsically motivated, we pursue the good feelings that come from aligned values, positivity, and growth.
When we think of non-monetary rewards, we might think of winning a title like Employee of the Month. Instead, the most popular picks focus on fostering professional growth and supporting our total well-being. They turn a basic benefits package into a holistic total rewards strategy.
They can cost the company some money, but aren't financially focused.
Non-monetary rewards examples
Thanks to personalization, few limits exist on what constitutes a non-monetary reward. Here's a list of some more common rewards:
- Flexible work arrangements
- Role autonomy
- Extra time off
- Mentorship
- Training
- Lateral movement
- Wellness programs or resources
- Office perks
- Personalized experiences
- Events or celebrations
- Meals, coffee, or snacks
- Formal recognition, like plaques or certificates
Many non-monetary rewards pay back commitment to the company's goals by acknowledging the recipient's personal goals and interests. This factor truly separates non-monetary rewards from most monetary rewards.
The pros and cons of non-monetary rewards
If an employee goes above and beyond, is lunch enough? Do some of these rewards make the company look cheap or ungrateful? This is avoidable with intentional, personalized rewards.
Cons of non-monetary rewards
Personalized rewards like flexibility and interest-based experiences can have a favorable long-term impact on employees.
Some employees may not regard non-monetary compensation as a suitable reward for exceptional performance.
Acknowledging an employee's unique interests and needs increases engagement.
Selecting a non-monetary reward may take more thought, time, and effort.
Non-monetary rewards can be more cost-effective and can be distributed regularly and sustainably.
Well-known non-monetary rewards like plaques and certificates hold little to no value to some employees.
Some rewards feel much more meaningful and sincere, conveying genuine appreciation.
If the reward isn't personalized and doesn't align with the employee's values or interests, it can be confusing or insulting.
A company can reward an entire team at once, so no one feels overlooked.
Some team members may feel they deserve more than their similarly rewarded teammates.
Monetary and non-monetary rewards: A side-by-side comparison
Let's recap some key points about these two types of employee rewards.
Non-monetary rewards
Leverages extrinsic motivation
Leverages intrinsic motivation
Some can be personalized, even if limited
High degree of personalization
It's money–everyone likes money
Makes people feel seen and valued
Excellent extra push for special short-term goals
Diverse and cost-effective enough to be given frequently
Stock options and profit sharing make employees feel like company assets
Professional development opportunities foster company loyalty
Can be financially unsustainable
Can be scaled to any budget
Can lead to entitlement or favoritism allegations
Can fall flat if not sufficiently personalized or planned
BOTTOM LINE: There's a time and a place for monetary rewards. Especially for employees who stay with the company and consistently perform.
Non-monetary rewards remain the best way to acknowledge employees regularly. We can maintain higher engagement and morale over the long term.
Non-monetary rewards ideas for teams and individuals
If you're new here, HeyTaco is a peer recognition platform that simplifies reward-giving. It's easy to track participation with HeyTaco, so you know:
1. WHEN to reward an individual or a team
2. WHY you're rewarding them
Good thing, too. Timeliness and specificity are two of the most important factors in effective recognition programs that culminate in rewards.
Thousands of companies worldwide use HeyTaco in their rewards programs. Here are some non-monetary rewards ideas we've seen implemented to great success:
- Volunteer Days. Employees get an afternoon to unite around a common cause and spend time together serving others.
- Game night. Asynchronous teams receive virtual gaming tournaments.
- Learning. Reward recipients receive special one-on-one classes, workshops, or tutorials from a department head or field experts.
- Entertainment. Reward with a Spotify or Netflix subscription, or give tickets to the local theater.
- Fitness and wellness gifts. Rewards like gym memberships or spa treatments have both intrinsic and extrinsic value when given to the right people.
Get dozens more non-monetary reward ideas from HeyTaco users and implement them today with your free 30-day trial.
Monetary rewards vs. non-monetary rewards FAQ
When should I use monetary rewards?
Monetary rewards can incentivize behavior or recognize exceptional performance. They may also be appropriate for professional milestones, like 10+ years of service. More flexible monetary rewards, like gift cards, may be given more frequently as part of a recognition program.
Does Gen Z prefer non-monetary rewards?
Research suggests that Gen Z prefers competitive pay combined with non-monetary and experiential rewards as part of a total rewards strategy. Finding meaning in their work, feeling appreciated, and having access to growth opportunities are all key.
How often should employees be rewarded?
Repeat after us: Recognition daily, rewards on occasion. In any program that includes rewards, make 80% of appreciation recognition, and about 20% rewards.
Are non-monetary rewards as motivating as money?
In some cases, non-monetary rewards are more motivating than simple cash. Intrinsic motivation has more staying power. If someone is paid fairly, perks like scheduling flexibility can sustain their motivation long-term.
