Non-Cash Incentive Programs

Non-Cash Incentive Programs are incentive payments not readily exchangeable for cash (e.g., extra time off, meal or merchandise awards, a reserved parking space, membership in a luncheon club).

The following are ways that companies around the country have provided their employees with non-cash rewards and incentives:

• A computer firm offered Harley Davidson motorcycles to its key programming staff if they would stay through 1998 to complete a vital project. So far, it seems to be working, and very few have left. It is only a $20,000 incentive, but the demand for these items exceeds the supply, and the employees view it as an opportunity to get a motorcycle without the waiting list.
• A Securities firm offered its IT employees a $50,000 cash bonus for staying through the Year 2000. It has not worked, and employees are leaving. The reason is that they can get a $20,000 raise now, which equates to $60,000 over the three year period. So, it was more attractive to go, than to stay. In addition, they have recently moved the salaries for the IT staff from the 50th percentile to the 75th percentile.
• Finally, if an IT employee has "hot skills" (Oracle, etc.) they are eligible for 10-15% more base pay, based on skill level.
• More flexible work schedules, and a relaxation of the dress code seem to keep employees in the IT area happier. It may not keep them, but may make them more productive if they are more comfortable, and have the flexibility to accomplish the tasks with a looser time schedule.
• Burlington Northern Santa Fe Corp pays $10,000 a month to run an "After Hours Institute" of classes for the technical staff.
• A California Software CEO owns a vacation house; employees are eligible to use the home as a reward and are awarded points for extra effort. Once enough points are earned, they can be redeemed for time in the vacation house.
• Autodesk, the Software Maker, offers "Rest & Renewal Retreats" at luxury resorts to employees who finish major software projects.

The key to developing a "stay" or "retention" bonus is to fully understand the group that you are targeting. It is essential to determine what drives them, and what motivates them. Once you have identified that, developing a program around that will usually provide the desired results. We believe that this is a short term problem, and that by 2001 the crisis will be over, and the need for these programs will diminish, so the short term reward is key in this situation.

A northern California manufacturing company couldn't afford the cash incentives that hot programmers expect these days. Recognizing golf as a popular leisure time activity at the company, a manager challenged the group to meet certain performance goals in exchange for a weekend at the legendary Pebble Beach Golf Course. As a result, employees exceeded objectives, added fun to their work and grew closer as a team. Cash value per golfer: $345/round, $20 for hot dogs and sodas mid-round and a few beers in the clubhouse afterwards.

A southern bank ($13 billion in assets) finds that the following are excellent ways to maintain happy employees:

1. Listen hard to understand what employees really want, and deliver it as a strategic imperative
2. Train IT managers in leadership qualities and consistently reinforce them
3. Connect employee satisfaction to measurable customer loyalty and profitability
4. Keep IT workers engaged and involved in where the company is heading
5. Emphasize work/family balance
   

To find out more on how Compensation Resources, Inc. can help your company with Non-Cash Incentive Programs, please contact us or call us directly to speak with our compensation consultants at 877-934-0505.