Cash awards are not perfect, but in some instances, they fit perfectly.

While some managers argue that cash will be used by employees to do only one thing — pay bills — others are using cash, gift certificates, and debit cards to reward all kinds of behavior in their companies.

For example, Premier Incentives, Marblehead, Mass., designed an incentive for a New York — based drugstore chain that targeted three employee trouble spots: customer service, cash drawer management, and retention. Working with the chain's human resources department and store managers, they designed a point system, with managers summarizing each employee on a monthly or quarterly basis. Employees who earned a minimum number of points were issued a personalized American Express card with the company's logo and loaded with a specified value, up to $600 a year.

The result? After implementing the American Express incentive, the drugstore chain saw a major change in employee attitudes toward customers, and cash management and retention were improved.

“We really believe in the stored value card concept,” says Dick Kisker, a vice president with Premier. And for associates whose incomes might not qualify them for their own American Express cards, the prestige may mean more than the actual value of the card. “It's a very important part of their wallets,” he says.

When CVS Corp. was looking for a way to reduce accidents at its warehouses, the Woonsocket, R.I. — based retailer decided to reward safe behavior with personalized Visa cards preloaded with $250 to $500. “When you combine the fact that these are not extremely high-earning employees, and they're getting $250 to $500 on a personalized Visa card, every time they use it they'll be reminded of the company,” says Catherine Carson, vice president of sales and Internet development for Performance Systems, the Atlanta firm that designed the CVS program. “It's a wallet-sized billboard.”

Debit cards can also be used as one component of a recognition program. For example, Atlanta-based U.S. Motivation helped a technology consulting firm to develop an awards program for associates who best exemplified commitment to a new set of core values. Department managers were responsible for singling out the most committed people. Those recognized were treated to two bonus vacation days and a customized incentive trip for two that included airfare, hotel rooms, transfers, and some meals. “As part of that, we gave them a debit card valued at $1,000,” says Mike Hadlow, U.S. Motivation's president. The card could be used for theater tickets, other entertainment, shopping — whatever the winner decided.

Mind Your Audience

Matching the incentive to the recipient is key to a successful cash award, says Hadlow. “We know from studying demographics that what motivates a young, 20-something sales audience is going to be different from what motivates a 50-something, all-male, well-traveled audience.”

If you want to hedge your bets, offer choices. “That's why we see the popularity of online catalog programs,” Hadlow adds. “There are thousands of items that someone can redeem points for.” For example, another of U.S. Motivation's clients, a power company, wanted to institute a service awards program that offered flexibility and choice and would be easy to administer. The result was a gift certificate program, with employees earning $50 to $500 toward purchases at various retailers, based on their years of service.

“The mix of retailers was put together specifically for this particular audience, and it includes retailers that would appeal to this group — not just the high-end, Sharper Image — type retailers, but Home Depot,” Hadlow says. “It's a power company, so there are a large number of blue-collar employees. These people typically would not shop at the Sharper Image, for example, because they would not necessarily perceive that to be a good value for them.”

Michael Ahern, CEO of Seattle-based GiftCertificates.com, says that companies often choose the Web site's SuperCertificate because the recipient can redeem it at any of about 300 merchants. “You have people at different economic levels. Some people might want to shop at Barneys, some at the Gap,” he says.

Funny Money

Other companies give employees the choice between cash and merchandise.

To keep his employees happy, Jim Feldman, CEO of James Feldman Associates and Incentive Travelers Cheque in Chicago, likes to mix it up and match rewards to the recipient. So it might be cash one day, a stored value card to be used for dinner another day, movie tickets, a weekend getaway, or a personal digital assistant. The last item was for a harried assistant who Feldman observes “would never have gone out and bought one for herself.”

Contests are big at Solutions Staffing, where CEO Peg Mativi and President Mary Iannarino are always seeking the next great idea. Last year, employees at the Columbus-based human resources consulting company saved up “Peggy and Mary dollars” earned for good deeds, exemplary performance, client compliments, or suggestions for improvements. “One person came up with a really good accounting idea that would save a lot of money,” Mativi says. “Another person suggested a way we could print maps for our people online.”

After enough staffers had earned the play dough, Solutions Staffing staged an online auction, with bids accepted on toys, computer games, cappuccino makers, and services such as massages and manicures, along with several $100 cash prizes. Most items were inexpensive — in the $75 to $100 range — but the response was striking. “Our employees had the best time,” Mativi recalls.

These kinds of promotions “bring to the forefront who's doing great things,” Mativi notes. “A lot of things go on in the other offices that we never hear about. We felt this would be a vehicle for us to hear about and be able to reward people for doing a great job.”