Here's Why Paid Vacation Motivates Employees Better Than Cash
Performance and profit-sharing bonuses are common (even to the point of being taken for granted). Although employees rarely give back a check, when it comes to getting them to really lean in, there may be a better way to go.
Recent studies show that employees respond better to non-cash rewards and other incentives than they do to an extra injection of moolah. It is, however, a fine line. According to the Journal of Economic Psychology, employees do choose cash over non-cash rewards when given the choice in the abstract. But they change their minds when presented with a specific non-cash reward. More important, other research suggests that non-cash incentives produce a greater measurable boost in productivity than cash does.
Effective Environmental, a Texas-based environmental services company, subscribes to this theory. Every year, Effective Environmental doles out an all-inclusive family
Why vacations? Travel, it turns out, may be the most effective incentive of all. According to a study by Site International Foundation and the Incentive Travel Council, 96% of employees say they are motivated by travel incentives, and 72% who earn the reward say they feel increased loyalty to the company.
Offering travel incentives may also be good for your bottom line - even before accounting for its effects on productivity. The U.S. Travel Association notes that "in order to achieve the same effect of incentive travel, an employee's total base compensation would need to be increased by 8.5%."
Effective Environmental also treats its employees to a generous benefits package, which includes higher-education tuition assistance for employees' dependents. The company also covers 100% of workers' health care costs. Studies have shown that health insurance not only motivates employees but also plays the single biggest role in attracting new talent.
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