by Alex Dowlin, Vice President, Healthcare Practice
Years ago, in an episode of Seinfeld, Jerry gives Elaine a stack of bills — $182 altogether — for her birthday. Her incredulous response went along these lines, “Cash? Cash? You gave me cash?” Kramer, also disbelieving, chimes in, “Cash? You gotta be kidding. What kind of a gift is that? That’s like something her uncle would get her.”
I think of that episode every time a company asks why they should offer incentives over cold, hard cash.
For starters, incentive items have longevity — or to use an industry term, they are “sticky.” Cash bonuses are fleeting – usually spent quickly and spent entirely. An incentive, i.e., “gift” is different. It has a shelf-life. Whether an iPod listened to every day or a set of golf clubs used occasionally, a gift stays around.
Because they are tangible, incentive items also lend themselves to emotional memories. Cash, on the other hand, is seen as more utilitarian. Bonuses are often spent in mundane ways like paying down bills or are simply absorbed into everyday purchases. An incentive, i.e., a “gift” is different. It has staying power. When a sales associate listens to her new iPod or prepares dinner on his new Weber gas grill, they remember how they chose and received the gift. And while it stays around, the “gift” reminds the recipient of the “giver” – the company that provided the reward.
And finally, cold, hard cash is well, cold and hard. Studies have found that employees come to regard cash bonuses as “expected,” rather than something special. The recipients don’t feel any lasting warmth as a result of receiving a cash bonus. Furthermore, it’s hard to talk about cash, depriving the recipient of “bragging rights.” Few people want to – or in some cases, are even allowed to – tell friends and extended family about a bonus received. On the other hand, they’ll speak freely, openly and kindly about the appliances, boats or trips receive.
Bottom line, I think Kramer got it right, “Cash? What kind of a gift is that?”
