Most companies reward employees with commissions, bonuses, and cash rewards for their contributions.
While these are effective and impactful (we all have bills to pay, after all), employees care about more than just financial compensation.
Your team members will call you a "great place to work" because of the non-monetary incentives they get from working for you.
What are non-monetary incentives?
Non-monetary incentives are conditional rewards companies promise employees in return for exceptional performance, high productivity, or achieving a particular goal.
- 'Non-monetary' means they don't involve cash.
- 'Incentive' means they are performance-based (not everyone gets them).
Instead of fulfilling a financial need, non-monetary incentives give employees mental, physical, or social satisfaction.
When to offer non-monetary incentives:
As part of your total rewards strategy, non-monetary incentives can help you accomplish one or more of the following:
- Facilitate a more collaborative and supportive work culture
- Develop and launch a new product or service
- Reach ambitious sales, revenue, or growth targets
- Improve customer service or customer success metrics
- Motivate employees to take ownership of their work and contribute more proactively
- Help an employee advance their careers
- Improve your team members' work-life balance
You can also offer non-cash rewards to show appreciation for employees who consistently go above and beyond, are always top performers, or have been loyal to the company for several years.
Monetary vs. non-monetary incentives
Traditionally, money has always been seen as the primary motivational tool in the workplace. The expectation is that better performance equals higher salaries and bonuses.
Monetary incentives have explicit cash value — they either hit your employee's bank account right away or can be easily liquidated in the future. Examples include commissions, profit sharing, stock options, and stipends and reimbursements.
While cash rewards are still an important element of total compensation, they have their limitations:
- Depending on the amount, they may not be enough to motivate employees.
- Employees care about more than just money.
- Only focusing on money means you miss out on an opportunity to support employees in other ways.
Non-monetary rewards fill in the gaps. They're often more meaningful, personalized, and enable you to improve employees' lives in other ways. They also have a lasting impact that can motivate and engage employees long-term.
Monetary and non-monetary incentives are not mutually exclusive, nor is one a substitute for the other. To create a well-rounded compensation plan, you need a healthy mix of both.
Employees care about non-monetary rewards...
According to new workplace insights from Gallup, nearly two-thirds (65%) of employees say they prefer non-monetary rewards to their cash-based counterparts.
That's hardly a surprise, considering those who don't get the recognition they deserve are twice as likely to say they'd quit in the next 12 months.
Concerning employees who followed through with quitting, Pew Research Center examined their reasons for doing so. At the top of the list was "low pay," but the other eight were:
- No advancement opportunities
- Feeling disrespected by their employer
- Childcare issues
- A lack of flexibility
- Poor fringe benefits
- Company culture
- Job stress or burnout
- Strained management-employee relationships
These issues permeate nearly every organization in one way or another. None of them are fixable with money alone.
For that, you need fair, merit-based opportunities for career advancement, more autonomy, social recognition, and work-life balance improvements. And that's what non-monetary compensation is all about.
...and you should care, too.
Even if your they weren't the resource your company depends on most (which they are), it's still in your best interest to make sure employees feel valued.
According to recent data from the Incentive Federation, 84% of companies invest a collective $176 billion in incentives that aren't related to money.
Why, you ask?
- They provide (near) instant gratification. Compared to cash incentives, which you'd normally disburse through payroll at the next payday, you can give them straight away.
- You'll get surprisingly good value for your money. For a financial reward to be compelling enough to motivate someone, you'd need to spend at least a few hundred dollars. Recognition is free. Tangible rewards generally cost a lot less (especially if you're creative). They're also usually deductible as business expenses.
- They boost employee morale. Employee engagement and job satisfaction are closely tied to your company culture and ability to make them feel appreciated. By giving them positive reinforcement, helping them grow, and including your whole team, you're creating a work environment that's much more enjoyable to be a part of.
- They help with employee retention and talent sourcing. It's hard to leave a company you intrinsically feel a part of. But employees do more than just ~not leave~. They'll also be your best advocates when it comes to sourcing new talent.
Plus, they're memorable! This is especially true for personalized rewards — for a team member, two tickets to see their favorite band will almost definitely leave a longer-lasting impression on them than a cash bonus.
Our 10 favorite non-monetary rewards (and how to offer them)
1. Flexible working arrangements
Flexibility is far and away the most valuable non-monetary reward you can offer.
New McKinsey research finds that nearly all employees (94%) say they'd benefit from more flexibility. Other data shows 51% would give up a salary boost for more flexibility. And it's one of the most widely adopted benefits you can offer — 87% of workers take the flexible working arrangements their company offers.
Now..."flexibility" is quite possibly the most ambiguous term ever. Depending on the nature of your company (and an employee's role), its application varies.
- Flexible hours make sense for roles with set shifts (e.g., call center workers). They're also well-suited to asynchronous work, like some data analytics and software development roles.
- Hybrid models are quite common — almost three-quarters of all businesses use one or plan to in 2024.
We say it's best to interpret "flexibility" in the broadest sense of the word. As much as possible, given the constraints of the role, offer employees the ability to work how they prefer.
Salesforce does quite a good job of this. Employees in roles that allow remote work are able to (a) work 100% from home, (b) work a few days in the office, or (c) work on-site.
2. Employee recognition
Taking the extra step to recognize employees for the work they do is absolutely critical. There are two sides to this coin:
- Manager- or executive-led recognition — Higher-ups give team members shoutouts and positive reinforcement for a job well done
- Peer-to-peer recognition — Team members acknowledge each other's successes and achievements
Social media shoutouts, blog mentions, employee spotlights, and simple Slack messages (pro tip: create a dedicated channel for this) are all quick, easy, and free ways to recognize employees.
*Psst...over here!* We finally rolled out our new "shoutout" feature, which allows employees to recognize each other. It's the most engaging way to launch your recognition program and get the whole team involved. Want to see how it works?
3. Extra PTO
Aside from flexibility in how your employees work, you can also improve work-life balance by rewarding employees with more personal time.
PTO is something that's already part of your employee benefits strategy, so it's fairly easy to tack on more of it as part of an incentive program.
You could even make it part of your employee giving program by letting team members take extra (paid) time off for volunteer work.
4. Experiential rewards
If you're trying to rally your deal toward a major goal, like an ambitious sales target, few non-monetary incentives are as effective for employee motivation as experience-based rewards.
There are tons of different ways you could do this:
- Incentive trips are common for top-performing department leaders and reps.
- Company-sponsored team outings (think: escape rooms, sporting events, concerts) are a fun experience that also encourages team bonding.
- Social events like happy hours, game nights, or even just a potluck lunch are also easy ways to bring your team together to celebrate a significant milestone.
Experiences are most impactful when they're personal. For example, if the customer service rep who just won your month-long upselling competition is a big fan of the Green Bay Packers, you could send them and a friend or family member to a game.
5. Professional development opportunities
Professional development is a great non-monetary incentive because it's a win-win: you invest in an employee's growth and development, and the investment comes back to you in the form of high employee job satisfaction and retention rates.
For what it's worth, 86% of employees say they'd leave their current job for one that offered them more opportunities to grow.
You can offer personal growth opportunities in a number of ways:
- More responsibility
- Clear promotion targets
- Skills training (e.g. coding classes, public speaking workshops)
- Online professional development courses
- Conference or seminar attendance
To ensure fairness across team members in the same role, structured promotion targets are an absolute must.
For other types of growth opportunities, a word of caution: you want to have flexibility to accommodate each employee's career goals. Create a budget for these kinds of incentives, but allow your employees to choose (within reason) what exactly they want to pursue.
6. Health and wellness programs
Other than flexibility, mental and physical health are probably the #1 and #2 things on your employees' minds.
Besides health and wellness stipends (which are obviously monetary), there are plenty of health-related ways to incentivize employees to perform better.
- Team wellness challenges (e.g., step counting, fitness goals, healthy eating)
- Standing desks, treadmill desks, and other ergonomic office furniture
- Gym memberships
- Other health-related employee perks like meal prep delivery
7. Mentorship programs
Mentorship is one of the best types of non-cash incentives because it (a) strengthens alignment between employee and employer goals and (b) fosters a collaborative relationship between the mentor and mentee.
Mentorship programs can be as large-scale as you want them to be. You could:
- Set up a formal 1:1 mentorship program
- Encourage employees to internally seek out and connect with mentors
- Partner with a mentorship organization or program in your community
- Give employees the resources they need to find and connect with their own mentor
Of those with a mentor, 97% say they're a valuable resource for career development.
Take Sodexo's "Spirit of Mentoring" program (launched in 2009, available to all U.S. employees) as an example. It focuses on career mentoring and includes the IMPACT program, which fosters long-lasting partnerships between mentors and mentees.
They also have informal programs like Bridge and Peer-to-Peer Programs, which promote knowledge sharing and diversity among frontline managers and new hires.
8. Company-sponsored events
The best way to rally your team around a big goal or to demonstrate appreciation for their hard work is to throw a company-wide event.
- Crushed Q2's sales targets?
- Just raised another round of funding?
- Executed an insane project for a huge client?
- Launched a new product and you want to treat your dev team?
Those are the things you want to celebrate collectively.
It could be as simple (and low-cost) as a company barbecue or as extravagant as an all-expenses-paid trip to a luxurious vacation spot.
Regardless of the specifics, company-sponsored events are great for boosting employee morale and reinforcing the sense of community among them. They also give you a chance to publicly acknowledge individual or team achievements in front of the entire company.
9. Time to work on personal projects
Depending on the nature of your company (and their work) and the job roles of your employees, you could also consider giving them free time to work on passion projects.
Famously, Google mentioned its "20% time" policy (now discontinued) in its 2004 IPO letter. The program allowed employee engineers to take 20% of their time to work on side projects.
This gave rise to successful Google products like Gmail, Google Maps, and AdSense, which were all "20% time" projects.
Myplanet's approach to side projects has been a part of their culture for over a decade. The projects undertaken during "Awesome Time" have varied widely, including creating a company podcast station, training self-driving vehicles for competitions, and helping refugees acclimate to life in Canada.
Interestingly, while some of these projects have directly benefited the company, the primary goal is to foster employee growth and satisfaction.
10. Personalized rewards
We can't stress this enough...giving employees a personal touch with any form of non-monetary incentive makes it 100x more impactful.
You'll have to know your employees for this one, though. Pay attention to what they care about, what motivates them, and what their interests are.
Some common ways to personalize non-monetary rewards include:
- Getting concert tickets to their favorite artist because you know they're coming to town
- Setting them and their significant other up with a fun date-night experience, like wine tasting or a cooking class
- Putting together a personalized thank-you package (e.g. catered lunch from their favorite restaurant, company swag with inside jokes)
If you've only got a few prepackaged non-monetary incentives, they'll get old once your team members realize "everybody" can get them.
How to offer the right non-monetary incentives:
1. Assess your financial compensation package.
Before you can even think about non-monetary incentives, you do have to make sure your employees are paid fairly for the work they do.
Look at your compensation strategy (check out our in-depth guide on the subject to get a sense of what we mean).
If your current salary, commission/bonuses, and benefits packages are subpar, investing in those should be your initial focus.
2. Figure out what matters most to your team.
The best way to do this is to...ASK!!!
When you run your employee benefits survey, include questions about prospective non-monetary incentives.
Ask them what they would find most valuable, what they would like to see more of, and what creative ideas they have for incentives.
3. Determine the appropriate time for each incentive.
A lot of the components of an incentive program will permeate throughout the rest of your employee engagement strategy. You need structure.
Start by separating the immediate rewards from longer-term rewards.
- Immediate rewards like "employee of the month" recognition or spot awards serve as a thank-you for recent successes and hard work. They're generally smaller, more frequent rewards.
- Longer-term rewards like time off or employee development programs (like the mentoring and project work we mentioned earlier) are incentives meant to encourage longevity, engagement, and high performance. Think of them more as "something to work hard towards."
Take care here to ensure your program is inclusive and fair. The whole point of an incentive program is to give all the team members in a particular role to have the same access to potential rewards. If individuals qualify for non-monetary incentives (instead of the collective team), tie it to a KPI that individuals can't exploit — for example, new pipeline generated.
4. Play to each employee's preferences.
Keeping a pulse on employee preferences, especially around non-monetary incentives, is key. Don't forget about:
- Those team members who aren't as vocal in expressing their interests
- People who might like gifts (or experiences), and what those are
- Employees with different backgrounds and cultures, and what specific incentives might be valuable to them
- Team members who love public recognition vs. those who don't
This is where anonymous surveys and individual discussions can help you find out what gives each employee intrinsic motivation.
5. Gamify the experience.
With non-monetary incentives, it's best to have some sort of challenge or competition employees can work towards. This not only adds excitement and motivation, but it's also perceived as more fair than simply being given rewards on a decision basis.
If you're incentivizing your entire team (e.g., dev team for a product launch or marketing for GTM execution), you don't have to worry about this too much.
But, for merit- or KPI-driven incentives, implement a tracking mechanism and leaderboards to drive engagement.
You can also consider different tiers of incentives based on performance levels, adding an additional layer of competition and motivation.
6. Create a long-term rewards strategy.
One of the biggest problems we see with non-monetary incentives is they're few and far between. If you're only offering a few disjointed company incentives throughout the year, you aren't approaching it strategically.
Simple things like regular team check-ins, celebrating project wins, and giving management an employee rewards and recognition budget go a long way in creating a positive environment where your employees feel heard, seen, and aligned.
And that's the biggest reward of them all.
With Compt, you can manage your monetary AND non-monetary incentives in one place. See how it works.