What Should You Avoid When Setting up a Contractor Loyalty Program
• Many non-cash incentive awards are viewed as luxuries that participants normally cannot justify purchasing. If a participant values it highly (but would not purchase it) then the opportunity to earn it as a reward for hard work does not violate the participant’s standards of justification.
• In addition, cognitive dissonance research suggests that if a participant is working hard to achieve an award, the participant will try to mentally justify that the award is worth the effort. This brings the participant’s beliefs in line with their actions and can increase the perceived value of a tangible non-monetary award.
• Non-cash incentives may be more effective than cash awards in this regard, because the participant doesn’t need to advertise earning them. For example, a friend or a colleague might ask, “So Bill, how are those golf clubs you earned from the firm?” This is a socially acceptable question. On the other hand, it is less socially acceptable to say, “So Bill, how’s the $1,000 you earned from the firm?”
• Non-cash incentives like a big screen television will serve as a reminder to the participant about his or her performance (and the firm) every time it is watched. Vacation travel provides memories, pictures, etc. Cash awards can do this somewhat, but only when a certificate, plaque, etc., is provided as a physical marker. In the case of a non-cash incentive, the award itself is the physical marker.