Non-Financial Incentives for Employees

By Wagepoint

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Discover the Best Methods for Driving Engagement with Your Workforce


Every employee certainly appreciates more money, but money does not buy happiness, nor does it buy engagement and loyalty. Non-financial incentives inspire and engage employees in ways that money is incapable of doing.

Non-financial incentives are the types of rewards that are not a part of an employee’s pay. Typically, they cost the company little or no money, yet carry significant weight. Incentives of this nature are particularly effective for workers who are comfortable with their salaries or have been in the position for a long time.

As companies continue to make cuts to employee compensation, non-financial incentives for employees are more crucial than ever.

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Relationships Matter

All too often, workers feel abused and unappreciated by the companies for which they toil day in and day out. Layoffs, stressful work conditions, ever-increasing demands, unappreciative bosses, and unsupportive peers contribute to employee disengagement. At the heart of the matter is the employee-employer relationship. To perform at their best, workers must feel welcomed, valued, and appreciated. Non-financial incentives help companies address these relationship needs.

In many ways, employee engagement and satisfaction is like a marriage. The two parties enter the relationship with high hopes, great aspirations, and the best of intentions. Over time, if the two spouses are not appreciative of and thankful for one another, the relationship breaks down, and the marriage falls apart.

The same dynamic happens with employee-employer relationships. When they fail, it has a substantial negative impact on the employee’s morale. The dynamic may even impact profits if the problem is system-wide. Now is the time for companies to recognize there are many types of non-financial incentives they can use to retain top talent and affirm vital relationships with employees.

Rethinking Non-financial Incentives

In a 2009 survey conducted by McKinsey & Company, non-financial incentives were rated as more powerful motivators than financial incentives. The top three financial rewards were performance-based cash bonuses, increase in base pay, and stock or stock options. The top three non-financial incentives were praise and commendation from immediate manager, attention from leaders, and opportunities to lead projects or task forces.

  • The most popular incentive on the survey was praise from the boss.
  • The second most popular was attention from leaders.
  • The least popular was stock or stock options.
  • All three of the non-financial incentives were more popular than the leading financial incentive.

According to the survey, the top two incentives are based on receiving praise and validation. These two elements are essential to all relationships, including employee-employer. Praise and validation should be the focus of non-financial incentives for employees. This is why we built Wagepoint Play as a free tool to help employers motivate and engage their employees by creating a company culture that recognizes employee efforts and gives them the recognition they deserve.

Types of Non-financial Incentives

Most types of non-financial incentives fall into four buckets:  recognition, reward, opportunity, and flexibility. Consider the following list of ideas for new ways to validate and engage in lieu of a pay increase or bonus.





1. Award presentation in front of peers

1. Vouchers

1. Chance to lead teams and tasks

1. Paid personal days

2. Dinner with CEO

2. Prizes

2. Paid training

2. Flexible scheduling

3. Enhanced decision making

3. Gift cards

3. Promotion

3. Telecommuting options

4. New office or upgraded work space

4. Paid parking or transit pass

4. Mentorship program

4. Ability to stop working on least favorite task

Planning Non-financial Incentives

Effective non-financial incentives for employees reach out and touch the emotions to make the employee feel welcomed, appreciated, and valued. Employees respond well to non-financial incentives, but be careful that they do not come off as cheap or thoughtless. Companies need to remember that employees “get” why companies are cutting costs. That said, non-financial incentives for employees cannot feel or look cheap. If they do, they will be more detrimental than helpful because they breed resentment.

Consideration also needs to be given to how the reward will be used. If it is to be used to promote competition and performance, then it needs to be something alluring and irresistible, like an iPad or night on the town prize. “On-the-fly” incentives can be small, but still need to be thoughtful and present value, like a $25 gift card or paid parking for a week.

Investing in the workforce by showing appreciation in creative ways is one of the best ways for companies to retain talented employees and create a sustainable culture of success.

This was a guest post from Wagepoint.