The Role of Tangible vs. Intangible Rewards in Strategic Recognition

The value and role of tangible vs. intangible rewards is an ongoing argument. I’ve caused some of the disagreement myself with my post on Why Incentives Fail (but recognition works). Kevin Sensenig of Dale Carnegie & Associates recently summarized this issue well in the article “Human Potential Untangled”:

“The traditional forms of motivation are compensation and benefits. The problem with these tangible rewards is that they are short-term motivators. The more people get, the more they develop an entitlement mindset. Adding more and more tangible rewards does not necessarily increase motivation or engagement. However, taking away tangible benefits or entitlements really de-motivates or disengages people.

“On the other hand, intangible rewards, such as a “thank you,” “good job,” or effective coaching let people know their managers care about them and value their contributions. The more intangible forms of motivation the better—they raise engagement levels by helping people feel connected.

“The additional advantage of using intangible rewards is that while offering them greatly increases levels of engagement and motivation, withholding them tends not to have a significant long-term de-motivating impact. Additionally, intangible forms of motivation are not costly to provide. So for a small investment of time in showing appreciation, the resulting improvement in engagement and connectivity can be huge. The key is in giving credible, sincere, and respectful appreciation.” (emphasis mine)

Are you still fighting the tangible vs. intangible battle in your organization? Both have their roles, but don’t confuse one with the other. Join the conversation in comments.