Today, we're going to talk about nonmonetary compensation and how much more impactful it is than actual cash compensation. Certainly, you have to have a certain baseline of cash that competes with the general marketplace, but we're not talking about just getting the minimum.
What we want to do is have employees that go above and beyond the job description to really impact the company and help you achieve success.
So just a few items on that: to create a change in behavior,
it takes 8% more if you do it with cash, so if the baseline is $100, it takes $108 to create change using. It only takes $104 if you use non-monetary compensation for that bonus, so it's half the cost. That alone should get you excited, and there are tons of stats on these engaged employees.
Unfortunately, cash doesn't feel like appreciation. Cash feels kind of like a mandate. It’s the thought that counts when you're gifting, right? Non-monetary compensation tends to trigger connections with our employees and the feeling that we’re actually thinking about them and what would improve their lives. Here are some specific examples:
Tire sales: these are all sales bonuses based on achievement and remember, we’re dealing with people that are mostly driven by a sales commission, right? It turns out that non-monetary bonuses for sales achievements resulted in a 32% increase in sales versus monetary bonuses resulting in only 22% increase in sales.
Auto dealers: non-monetary yielded 18% increase, monetary bonuses only 9%
Window manufacturers: Non-monetary bonuses for sales drove a $66,000 per rep increase versus monetary at $51,000. That is a dramatic economic difference! You should really consider these things in your business.
From our perspective, there's three things that I think matter in non-monetary compensation. One, it has to be memorable. So it has to be something that sticks in their memory that they can kind of relive. Next, it has to have some level of a trophy value so that they can show it off to their friends. That's one of the problems with cash- it's not memorable and kind of gets baked into your lifestyle after a few weeks. It's also not a trophy. Nobody sees it. It goes directly to my checking account, so I don't even see it. The last one is, I think it has to be purposeful. Purposeful in an intra-family sense, or prideful almost. What would make them feel good and make their family feel proud of them for what they've achieved? I grew up in a factory town, so I know how this works. I always think, “what would make my mom feel proud of my dad? What would make her feel comfortable and safe?”
For example, one of the things we’ve implemented at the Graniteville factory that's been a huge hit are these Above and Beyond Bonuses. On a monthly basis, we pick one employee who's gone above and beyond their job description, and we take that employee out to dinner at the nicest restaurant in town. They get this great evening with their spouse or significant other where we pick them up in a town car and we take them out to dinner, and then we take them back to their home in a town car. It’s a very memorable event because these are restaurants they would never go into because it's just not in the budget. Regarding trophy value, not only does their neighborhood see them get picked up to go out on the town, but also their fellow employees know they were awarded this special night. That then has a viral effect because then other employees want to experience that. Regarding purposeful impact in the family: we are engaging the spouse, so now the spouse is proud of the employee and more supportive of their efforts in the workplace and wants that behavior then repeated.
So, try to think of ways that you can encourage employees to do better with non-monetary compensation. Not only would it be great impact, but also cut the cost of the monetary compensation. I hope that's helpful.