By Bryan Van Noy
Cash Compensation Is Coercive and Manipulative
For employers hoping to change employee health habits (permanently) and produce a positive return on investment, the misapplication of aggressive cash rewards is often a disappointment. Nothing makes employees feel more manipulated than a hefty cash “bribe” that coerces them into an activity they wouldn’t do of their own volition.
Our experience has shown that incentives are effective at changing short-term or one-time behaviors but not at changing long-term health habits. For example, someone may give up smoking under the influence of a cash reward.
If you remove the force of the cash reward and that old habit resurfaces, you weren’t actually successful at changing the long-term habit. While financial rewards have proven to be quite effective at changing behaviors (e.g., quitting smoking for the interim), they are quite poor at changing habits (e.g., quitting smoking for life).
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So, Which Incentives Actually Work?
This is a loaded question that depends on your employee demographics, company culture, compensation ranges, and types of wellness activities in place. But, here’s a general recap that applies to pretty much all groups.
One step up from cash is gift cards, albeit an imperceptibly small step. Gift cards are tantamount to cash in that they have a true cash value, usually printed right on the card (and may often be redeemed for cash). The only advantage to gift cards over cash is that there is some sense of trophy value. These cards can be branded, and every time the person pulls it out they’ll see a reminder of a healthy accomplishment (until it’s spent, of course).
But, the best rewards instill a sense of trophy value, have high perceived value (without a high cost), and stem from social recognition rather than from financial recognition. Employees want to feel recognized and prefer their recognition to be in the form of permanent reminders of their achievements. Avoid costly bribes that fizzle away after a single “healthy” behavior. Focus instead on celebrating employees’ accomplishments and fostering a culture of improved health habits.
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Make the most of your compensation package. Download the free report, Define Your Comp Strategy. Learn More
When you are creating your compensation package, it’s important to have a strategy. Taking certain aspects of compensation into consideration from the beginning can result in a great success. Failure to do so, however, can cause trouble from unhappy workers to legal issues. Make sure you are ready with PayScale’s free report, Define Your Comp Strategy!
- How competitive you should be
- Who to involve in your comp strategy
- How to create a philosophy for your strategy
- How the process should work from start to finish
- And much more!