Benefits and Compensation

When It Comes to Wellness, Cash Can Be a Rotten Carrot

New Year’s resolutions are coming up, and they probably revolve around wellness goals for a lot of your employees. With that in mind, we present an article by Bryan Van Noy, cofounder of Sonic Boom Wellness, arguing that cash incentives should not be the cornerstone of your organization’s wellness program.

When it comes to wellness incentives, cash is quite common. It’s commonly abused, commonly ineffective, and oh-so-commonly unoriginal. The jury may still be out on the superiority of carrots over sticks, but don’t fall victim to this obviously rotten carrot. Just because employees request cash above all other forms of incentives doesn’t mean employers should succumb. There are better (and not so uncommon) alternatives. Here are the first three of six reasons why you shouldn’t use cash as a wellness incentive.

1. It’s Fungible

Money is inherently fungible, meaning that if you give employees $100 for losing weight, those five new $20 bills automatically and seamlessly mix with the bills already living in their wallet—and they soon (if not immediately) forgets how they got that $100 in the first place. Whether it came from a standard paycheck, a meaningful health achievement, or a slot machine, cash is cash (is cash). And worse—there’s nothing preventing employees from buying beer and Twinkies with their hard-earned “wellness” dollars.


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2. It Has No Trophy Value

Tangible, noncash awards have “trophy value.” Cash does not. Trophy value means that the reward serves as an emblem of achievement … a constant reminder of success. Employees using a water bottle every day, which they won by engaging in the wellness program, are reminded with each sip how they earned the prize. These kinds of low-cost, tangible items also help promote the wellness program and have higher perceived value for recipients. It’s a win-win-win for employee motivation, engagement rates, and your budget.


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3. It’s Addicting (Like a Drug)

One of the biggest problems with financial incentives—especially cash—is that they’re subject to dose tolerance. In other words, if you had to incentivize me (read: pay me) $250 to take a health assessment this year (which I didn’t want to do, otherwise such an incentive wouldn’t be necessary), next year I’m going to expect $275 (or more) for the same effort. You have to keep upping the “dose” because money, much like any other drug, is a drug unto which we build up a tolerance.

In tomorrow’s Advisor, Van Noy presents his final three arguments against cash wellness incentives, as well as possible alternatives for employers.