Cash vs Non-Cash Incentives: When to use them?

March 27, 2024
Sheetal S Kumar
Sheetal S Kumar
Sheetal S Kumar
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"If you don't create a great, rewarding place for people to work, they won't do great work.

                                                                                                                                        Ari Weinzweig"

Recognizing, appreciating, and rewarding your employees are crucial to building a successful team and organization. 

Only an environment where people’s efforts are seen and acknowledged will be returned with commitment, dedication, engagement, and loyalty. 

However, deciding on how to appreciate and reward your employees is a challenging decision that companies must make. 

Will a mere monetary prize make the employee feel happy, satisfied, and validated? Or are there things more important than money - like a work-life balance?

In this article, we will discuss cash vs non-cash incentives. We will walk you through its definitions, evaluate which is better, discuss non-cash benefits, and a few examples. We will also go through when to use monetary vs non-monetary incentives and tips for managing your non-cash incentives. 

So scroll down for a comprehensive read!  

What are Cash Incentives?

Cash incentives refer to monetary rewards offered to employees to ensure positive behavior, motivate employees for better performance, or achieve higher growth. These incentives include commissions, bonuses, performance-based rewards, referrals, profit sharing, etc. 

However, cash incentives must be effectively designed to ensure they align with the larger objectives, promote desired behavior, boost performance, and optimize operations. In addition, cash incentive programs must be built to ensure fairness, transparency, and sustainability.   

What are Non-Cash Incentives?

Non-cash incentives are the rewards and recognitions that employees receive that do not involve monetary compensation. These incentives include promotions, paid time off, recognition programs, gym vouchers, wellness leaves, work-life balance, special considerations, etc. are offered as recognition to employees for their exceptional performance and achievement. 

Non-cash incentives are equally effective as cash incentives in driving desired behavior, motivating employee performance, inspiring loyalty, fostering a positive work environment, etc. A well-thought-of non-cash incentive can resonate with the needs and requirements of the recipient.    

Cash vs. non-cash incentives

Cash vs non-cash incentives is a difficult choice to make. The relevance of each depends on the situation, the employee's needs and preferences, and the larger company objective.

Cash incentives are tangible rewards whose value can be measured. It has a universal appeal as every employee needs extra money for their personal expenses, savings, or other purchases. 

Cash incentives can be easily compared with industry standards to ensure that employees get competitive packages and rewards for their efforts and achievements. Monetary rewards have a direct link to motivating individuals and enhancing performance to achieve goals and targets.  

Individual incentive plans provide a structured framework for aligning monetary rewards with the specific goals and performance metrics of each employee, ensuring a tailored approach to motivation and goal attainment within the organization.

Non-cash incentives on the other hand have an emotional impact on employees as they bring a sense of appreciation, satisfaction, and belonging to employees. These are cost-effective motivational tools that can be personalized according to individual needs and requirements. 

In fact, in a survey conducted by WeGift on corporate gifting and recognition, 80% of respondents were happy to receive gift cards while cash rewards received a 68% vote

Recognizing and rewarding employees for their efforts and achievements will ensure employee engagement and retention. Incentives like flexible work hours and wellness programs provide work-life balance to employees. It helps enhance employee morale, ensure higher levels of satisfaction and productivity, and create a positive work culture.  

Monetary vs nonmonetary incentives provide their respective benefits that can be utilized depending on the company’s specific goals and the requirements of the employees. 

However, an effective corporate incentive program is a combination of both cash and non-cash incentives, utilizing its unique strengths at the appropriate time and situation to drive positive behavior and outcomes.      

Benefits of Non-Cash Incentives

Not all employees are motivated by monetary benefits. Some are looking for genuine feedback and recognition of their efforts, contributions, and achievements. So let's look at what are the long-term incentive benefits of non-cash rewards.

Benefits of Non-Cash Incentives

Emotional Impact

Non-cash incentives are often thoughtful rewards given by understanding the needs and requirements of the employee. Hence, it has an emotional and more significant impact on them. These recognitions and appreciation make them feel that their contribution has a direct impact on the business growth and creates a sense of belonging. 


Non-cash incentives are tailored according to the needs, requirements, and interests of the employees. These personalization of incentives make the rewards more meaningful and memorable as it shows that the company understands what the employee needs thereby enhancing the overall value of the appreciation. 

Long-Term Engagement

Non-cash incentive focuses on providing a better quality of work and personal life to their employees. This includes creating a positive work culture and ensuring work-life balance. Ensuring such quality will build stronger relations, sustain commitment and loyalty towards the company and thereby lead to long-term engagement.   


Non-cash incentives can turn out to be more cost-effective than cash rewards. For example, paid time off, flexible work hours, and employee recognition programs do not take too much of the company budget compared to the cash incentives. Non-monetary rewards can have a long-lasting effect on the engagement, morale, commitment, and loyalty of the employee. 

Promotion of Desired Behaviors

Non-cash rewards can promote desired behavior and values in employees. For example, recognition programs, team-building activities, and professional development opportunities encourage employee engagement, help enhance teamwork, and encourage innovation and development.   

Competitive Advantage

Non-cash incentives help companies to differentiate themselves from competitors. These rewards are personalized and thoughtful recognitions for the employee's efforts, contributions, and achievements. Non-monetary rewards help in employee branding which has a decisive impact in the industry. 

Non-cash incentives have a vital role in motivating, engaging, and retaining employees. It creates a sense of belonging, satisfaction, and recognition in employees which has a significant impact on employees than any monetary pay can create. 

For further reading, Building Incentive Structures for Optimal Performance. 

Examples of Non-Cash Incentives to Offer

There are a variety of non-cash incentives that companies can effectively use to bring the desired results in their operation and management. Let's look at some of these examples: 

Examples of Non-Cash Incentives to Offer

Recognition Programs

Integrating a robust sales incentive structure into recognition programs ensures that employees are not only acknowledged for their individual contributions but also incentivized to excel in meeting sales targets and driving revenue growth for the company.

Flexible Work Arrangements

Employees look for work cultures that promote flexible work hours and work-from-home options. Companies that support such flexible working arrangements help employees maintain a work-life balance and accommodate their personal preferences. 

Professional Development Opportunities

A major non-cash incentive that employees look forward to is continuous learning and skill development opportunities. This includes seminars, conferences, workshops, foreign visits, client exposure, etc. 

Wellness Initiatives

Only a healthy mind and body can contribute to the demands of professional life. Hence, companies can reward their employees through gym memberships, therapy sessions, and health insurance to promote their well-being. 

Team Building Activities

Companies can achieve their objectives only when there is coordination and teamwork between their employees. To promote such collaborations companies must organize team outings, team-building activities, and team lunches to foster a healthy and positive work culture. 

Customized Gifts

Companies can appreciate their employees' contributions by giving thoughtful and personalized gifts that suit their personal interests and preferences. Someone interested in hiking can be gifted a smartwatch, while someone who has a passion for cooking can be gifted a cooking workshop voucher etc.  

Employee Referral Programs

Implementing incentives for employees who participate in the referral program not only motivates them to actively engage in the hiring process but also fosters a sense of ownership and responsibility towards the company's talent acquisition efforts.

The diverse range of non-cash incentive rewards helps make thoughtful gestures towards employees that create a sense of achievement, belonging, and satisfaction in employees. This in turn ensures employee motivation, engagement, and retention. 

When to use cash vs. non-cash incentives

Deciding when to choose between monetary and non-monetary reward examples depends on the situation it is being used, the desired outcomes, and the objective the organization is striving to fulfill. 

Evaluating these factors will help companies decide which is the effective incentive to make use of: 

Using Cash Incentives:

Cash incentives are used to achieve specific targets or performance metrics. For example, when companies want enhanced sales performance, 100% sales quota achievement, etc. Since cash is of universal use, employees can decide how to use it according to their requirements. 

The advantage of cash incentives is that they can be compared with the market and competitor standards. When employees understand that their rewards are on par with the industry standard, it helps in sales motivation as well as employee retention.  

Cash rewards are ideal for achieving individual and short-term goals as it provides instant gratification. Cash bonuses are often given to employees for meeting their individual sales quotas or performance targets. 

Using Non-cash incentives: 

Non-cash incentives are employed for emotional impact, building work cultures and employee relationships, and long-term goals. These are the personal, thoughtful rewards that create a sense of belonging and satisfaction in employees. It makes them feel connected with the organization beyond monetary gains.  

Non-cash incentives like wellness programs, flexible work hours, and paid time off make employees feel that their organization cares about them as individuals and about their well-being. Building that emotional connection will help foster a positive and healthy work culture, shared values, and camaraderie within the organization.  

These recognitions and rewards will make employees enhance their contribution towards company success rather than achieve targets for mere money. These thoughtful appreciations lead to long-term employee retention, building inclusive work environments and thereby enhancing employee performance and productivity.   

Organizations design their effective incentive program as a combination of cash and non-cash incentives to ensure that there is a competitive reward that drives performance and results while building a culture that ensures this consistent growth. 

Tips for managing non-cash incentives

Managing your non-cash incentives requires proper planning, designing, communication, and evaluation to ensure that it is effective in bringing the desired outcomes. 

So here are a few tips for effectively managing your non-cash incentive:

Tips for managing non-cash incentives

Set Clear Objectives

While determining your non-cash incentives, companies must clearly set objectives of the desired outcome, the expected behavior, improvements, and achievements you wish to see from the reward program. 

Understand Your Audience

Non-cash incentives are personalized and thoughtful rewards given to employees. Hence, it must consider the needs, preferences, and interests of the recipients to ensure its effectiveness. 

Communicate Expectations

Companies must clearly communicate their performance expectations and incentive eligibility with employees. Similarly, they must take feedback and opinions from employees as to what they expect as rewards and incentives to ensure there is overall satisfaction in the incentive program. 

Ensure Fairness and Transparency

The reward and recognition process must be fair and transparent. Companies must choose the rightful recipient who has proved their efforts and achievements without any favoritism or bias. 

Offer Variety and Choice

Non-cash incentives face the challenge of catering to the needs and preferences of a diverse group. Hence, the choices must be varied to ensure that they satisfy them and make a meaningful impact. 

Monitor and Evaluate Performance

Any motivational tool put into use but be evaluated for its effectiveness. Gathering feedback from recipients, evaluating the overall improvement in sales, and tracking employee engagement and retention helps evaluate the performance of the non-cash incentive.   

Stay Flexible and Adaptive

Incentive programs must be flexible and adaptive to the changing market trends and employee needs. To ensure consistent effectiveness, it must be regularly evaluated, updated, and adjusted accordingly. 

Following these tips helps organizations to effectively manage their non-cash incentives, motivate employees, and ensure retention for continued organizational success. 

To read more about incentives, check  20 Effective Employee Incentive Programs to Motivate Employees. 

Final Thought

Cash vs non-cash incentives is a question that is going to confuse companies forever. 

Cash incentives satisfy the monetary needs of your employees while ensuring their recognition, satisfaction, and motivation. But not all employees are looking for that financial hike nor can money ensure a long-lasting effect. 

Cash incentives ensure short-term goal achievement and performance enhancement on an individual level. However, it is non-cash incentives that build a positive and healthy culture in the workspace, among employees and the overall organization. 

Companies need an equal share of cash vs. non-cash incentives in their compensation program. Depending on the objective, requirements, and output, companies can determine which incentive will give the best output. 

For example, cash incentives are best when trying to enhance your sales. On the other hand, non-cash incentives help ensure long-lasting customer engagement and retention. 

Striking a balance between the two and judiciously using them will help companies to effectively make use of their incentive compensation program.  

To read more about incentive-related topics, visit For more information Book A Demo NOW! 


Sheetal S Kumar

Sheetal is a content strategist and writer at Kennect. She has extensive writing experience in content marketing and research, focused on small business enterprises and B2B Saas. She is passionate about creating engaging and insightful blogs while exploring the power of content and social media.


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