How Companies Use Non-Cash Awards

By Culpepper and Associates Apr 3, 2008
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Cash is king for most compensation plans. However, many organizations use non-cash awards, incentives and recognition programs to supplement cash compensation and improve their total rewards programs.

Results from a recent Culpepper Pay Practices and Benefits Survey highlight a variety of different non-cash awards (excluding stock) used by technology and life science companies to recognize and reward employees for service, achievements and performance.

Types of Non-Cash Awards and Recognition Programs
The table below highlights different types of non-cash awards and recognition programs. Gift cards and certificates are the most popular, with 38 percent of companies providing their employees with this type of award. In general, large companies are more likely to use non-cash awards and recognition programs than small companies.

​Table 1: ​Non-Cash Awards and Recognition Programs

Non-cash award and recognition

All
companies

Percent of companies by size
(# of employees)

Up to 100

101 to 1,000

Over 1,000

Gift cards/certificates

38%

24%

43%

42%

Merchandise

19%

4%

14%

38%

Dinner

18%

6%

20%

25%

Special trip

18%

14%

18%

23%

Trophy/plaque

18%

13%

16%

25%

Top performer listing

12%

4%

12%

19%

Honorary sales club

7%

4%

2%

15%

Special parking spot

2%

0%

4%

2%


Events and Achievements Recognized and Rewarded
Companies typically recognize and reward employees with non-cash awards for long-term service, on-the-spot awards and significant achievements, as highlighted below.

Table 2: Events and Achievements for Non-Cash Awards and Recognition

Reason for non-cash award and recognition

All
companies

Percent of companies by size
(# of employees)

Up to 100

101 to 1,000

Over 1,000

Long-term service

62%

48%

58%

77%

On-the-spot award

61%

48%

63%

68%

Significant achievements

61%

52%

67%

58%

High performance

51%

39%

56%

52%

Project completion

41%

17%

44%

55%

Retirement

19%

13%

14%

29%


Budget for Non-Cash Awards and Recognition Programs
Most organizations allocate less than 1 percent of their total compensation budget for non-cash awards and recognition programs.

 


Tax Gross-Ups for Non-Cash Awards
Tax gross-ups enable employees to enjoy the benefits of a non-cash award without having to pay taxes on the value of the award. Thirty-seven percent of organizations provide employees an additional cash payment to cover the tax liability of their non-cash awards.

Table 3: Tax Gross-ups for Non-Cash Awards

Percent of companies

All companies

37%

Company Size

    Up to 100 employees

25%

    101 to 1,000 employees

39%

    Over 1,000 employees

42%

Industry Sector

    Life sciences

39%

    Technology

29%

Culpepper and Associates, founded in 1979, conducts worldwide salary surveys and provides benchmark data for compensation and employee benefit programs.

Reposted with permission

Article Source: Culpepper eBulletin, March 2008
Complimentary subscriptions at: http://www.culpepper.com/eBulletin

Data source: Culpepper Pay Practices and Benefits Survey of 121 organizations.
Survey Dates: January--March 2008

Breakdown by size:
Up to 100 employees: 28 percent.
Over 100 to 1,000 employees: 43 percent.
Over 1,000 employees: 29 percent.

Breakdown by sector:
Technology: 62 percent.
Life science: 21 percent.
Health care services: 2 percent.
Other: 14 percent.

Breakdown by country:
United States: 89 percent.
Canada: 7 percent.
Other: 4 percent.

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