What Are Tangible Rewards and How to Use for Motivation

In addition to receiving a base salary, most employees also have the opportunity to earn tangible rewards for their performance or for achieving specific goals. These rewards serve as a visible acknowledgment of their efforts.

Determining the right tangiable rewards structure for your organization can be challenging. It's important to understand what these rewards are, how they work, and why teams use them.

This article explores the concept and benefits of tangible rewards, their importance, how they differ from intangible incentives, provides examples, and offers insights into using them to promote employee retention.

Tangible rewards definition

Tangible rewards are rewards that provide physical, concrete benefits or items to recipients as a form of recognition or incentive. These can include items such as cash rewards, gift cards, or merchandise that have real monetary value.

When employees get tangible incentives, they see them as valuable and meaningful, which boosts their extrinsic motivation, job satisfaction, and engagement. Additionally, employees perceive cash rewards, an example of tangible rewards, as a direct and flexible form of recognition.

In fact, one study showed that tangible incentives are more effective motivators than cash and employees see cash as just more salary, but they see these incentives differently. This highlights the significance of motivating employees through tangible rewards.

Moreover, a survey of US firms found that 84% spent over $90 billion each year on tangible employee rewards like gift cards and trips to boost productivity.

Benefits of tangible rewards

Tangible incentives can effectively motivate employees by providing clear and immediate benefits. Here are some other benefits of tangible rewards, besides acting as a motivator for employees:

• Enhancing employee retention: These rewards make employees feel valued, which reduces turnover.

• Boosting productivity: Employees tend to work harder when they can earn tangible rewards.

• Improving employee morale: These rewards lift employee spirits and quickly develop a positive atmosphere.

• Encouraging competition: These rewards inspire healthy competition and drive excellence.

• Achieving a performance goal: Companies provide rewards to help employees focus on and meet targets.

• Increasing satisfaction: These rewards lead to higher job satisfaction and better performance.

• Building culture: Firms offer tangible rewards to reinforce company values and culture.

• Recognizing achievements: These rewards provide clear and impactful recognition.

• Fostering teamwork: Group rewards encourage teamwork and collaboration.

• Attracting talent: These rewards make the company more appealing to job seekers.

Possible disadvantages of tangible rewards

While tangible incentives can motivate employees, there are also drawbacks to consider:

• Focus on short-term gains: These rewards are often linked to specific achievements, encouraging employees to prioritize these goals over long-term company objectives.

• Reduced intrinsic motivation: Frequent rewards for good performance can diminish employees' motivation to excel for the sake of personal satisfaction.

• Can breed resentment: Unequal or unfair distribution of rewards may lead to resentment among employees.

• Costly: Implementing these rewards, such as cash bonuses or luxury gifts, can be expensive for high growth companies.

• Not universally motivating: While tangible incentives can motivate some employees, others may be more driven by recognition, growth opportunities, or a positive work environment.

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Difference between tangible and intangible rewards

The difference between tangible and intangible rewards is that a tangible reward is physical items or incentives that have financial value, while an intangible reward is non-physical, such as recognition, praise, or opportunities for personal or professional development.

The table below illustrates commonly cited differences between tangible vs intangible rewards, emphasizing their less similarity.

Aspect	Tangible Rewards	Intangible Rewards
Nature	Physical items or monetary incentives	Non-physical or non cash rewards, like recognition or praise
Common examples	Cash reward, gifts, merchandise	Public recognition, career advancement
Perceived value	Often easily quantifiable	Subjective, based on individual perception
Cost	Can be expensive, especially for large rewards	Generally lower cost, but effort-intensive
Immediate impact	Immediate gratification for recipients	Longer-lasting impact on employee motivation
Long-term effect	May lead to short-term focus and goal achievement	Enhances employee loyalty and satisfaction
Universality	Universally understood and appreciated	May vary in effectiveness for individuals

Tangible reward examples and ideas

Apart from employee’s salary, employers may offer various tangible incentives, including:

• Gift cards: Prepaid cards for various retailers.

• Personalized gifts: Trophies or monogrammed items.

• Merchandise: Electronics, home goods, or company products.

• Travel incentives: Paid trips for exceptional performance.

• Event tickets: Sports, entertainment, or concert tickets.

• Gift baskets: Collections of food, drinks, or luxury items.

• Company swag: Branded clothing, bags, or accessories.

• Technology gadgets: Smartphones, tablets, or wearables.

• Home appliances: Kitchen gadgets, entertainment systems, or furniture.

• Fitness equipment: Exercise machines, trackers, or gym memberships.

• Books: Bestsellers, industry-related, or personal development titles.

• Food and drink: Gourmet baskets, premium coffee, or tea sets.

• Personal care products: Spa kits, grooming items, or luxury skincare.

• Outdoor gear: Camping equipment, hiking gear, or sports gear.

• Art and decor: Paintings, sculptures, or decorative items.

• Learning opportunities: Courses, workshops, or certifications.

• Pet supplies: Toys, treats, or pet accessories.

• Subscription services: Streaming, magazines, or meal deliveries.

• Tickets to cultural events: Museum passes, theater, or art tickets.

• Charitable donations: Donations made in their name to a charity.

You can customize these rewards to fit your employees' preferences. Employees can earn cash rewards, choose from various gift card options, and select merchandise that aligns with your company's values and culture.

How to use tangible rewards to promote employee motivation

Using tangible incentives to motivate employees can be very effective. These rewards provide direct, physical benefits that employees can see and touch, making them feel more valuable. Here's how to do it:

1. Step 1: Identify the desired behavior

   Before implementing a tangible rewards system, clearly define the behaviors or outcomes you want to encourage. This could be achieving sales targets, completing projects on time, or demonstrating exceptional teamwork.

   If you need help creating an employee incentive plan, Salary.com's Consulting services can assist. They'll work with you to understand your business goals and design an incentive and rewards program that motivates employees to achieve ambitious targets and deliver results.

2. Step 2: Customize the reward to the employee

   Different employees, whether high performers or not, may be motivated by different rewards. Consider their individual preferences, interests, and needs when selecting rewards. For example, some employees may value gift cards, while others may prefer extra time off.

   Salary.com's consultants help create and implement programs tailored to your goals and business environment. They enhance your pay programs and design benefit packages, including tangible rewards, to provide a competitive advantage while managing costs.

3. Step 3: Link the tangible rewards to performance

   Ensure that the tangible incentives are directly tied to the desired behavior or performance goals. This helps employees see a clear connection between their efforts and the rewards they receive, increasing motivation.

4. Step 4: Communicate the reward system

   Communicate the tangible rewards system to all employees. Make sure they understand how they can earn rewards and what is expected of them. Employees prefer transparency, as it helps build trust and motivation.

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5. Step 5: Monitor and reward achievement

   Keep track of employee performance and achievements. When employees meet or exceed such expectations, promptly reward them with the agreed-upon tangible incentives. This reinforces positive behavior and encourages continued effort.

6. Step 6: Evaluate and adjust the system

   Regularly review the effectiveness of the system. Gather feedback from employees to see what is working well and where improvements can be made. Adjust the system as needed to ensure it remains motivating and effective.

Now that you understand tangible rewards and their value in recognizing employee contributions, you can design a rewards system that aligns with your organization's goals and values.

Remember, tangible incentives can vary widely, from gift cards and bonuses to extra vacation days or even tangible items like electronics or company-branded merchandise. The key is to choose rewards that resonate with your employees and motivate them to excel.

If you need help with your tangible reward or compensation decisions, consider using Salary.com's Consulting services. Their team has over 70 years of experience in compensation and total rewards and can assist you with your needs.