Recently I was reading a consumer psychology research dialogue by Thomas Gilovich. While the research concludes that people derive more satisfaction and happiness from experiential purchases as opposed to material purchases, what really intrigued me was the underlying concept of how experiences create positive psychological impressions on us and its relevance to organizations and individual employees.
If this concept of interconnection of experiences and what it does to an individual's happiness quotient, satisfaction, self worth, social relations and psychological state is extrapolated to their workplace, organizations can definitely achieve higher engagement levels.
The interesting thing about experiences as rewards is their unique effect, both as a motivator and a tool for engagement. Even if large-scale rewards and recognition platforms are not in the budget, offering experiences is arguably one of the greatest prizes employees could want.
Why is it important to focus on experience rewarding?
It is important to understand that people spend a substantial part of their lives working. As a result of this, the quality of the workplace experience is inevitably reflected in the quality of their lives. Thus it becomes all the more important for organizations to give experiences - that also give them a healthy ‘break’ from work - than material benefits to make a lasting impact.
There are many players in the R&R industry who provide a variety of experiences as engagement solutions for a demographically diverse audience. Many organizations are slowly moving towards availing these experiences than material things to engage and influence employees at various points in the employee life cycle. They are thinking of ways to engage employees at psychological level by redirecting efforts and expenses in building more enriching experiences.
In today’s workforce, five generations, from traditionalists and baby boomers to millennials, work side by side, making it important for organizations to create an inclusive culture that meets the varying needs of each generation. It seems like everyone has their own opinion on how to make culture great and no doubt, crafting an organizational culture is a daunting task.
Organisations that recognize their employees have:
A study by Bersin and Associates found that employee engagement, productivity, and customer service levels are 14% better in companies where recognition occurs, and companies that actively recognize their employees have 31% lower voluntary turnover rates than their peers.
Experiential rewards (like learning a new language, going skydiving, or taking a family getaway) change the felings of appreciation among employees, positively impact their motivation levels, and add contentment to their plans of staying at your company. That’s the power of a memorable experience. The possibilities are endless! Among many things why experiences are more valuable and impactful than any other type of rewards, here are our top three.
What are Experiences?
Put simply, experience is not how we normally picture a prize or reward. Discounts and items have a certain degree of physical permanency. Employees apply coupon vouchers to purchases that ultimately become their property, as is the case with tangible products like electronics, for instance.
Experiences are fleeting. They are active for a short period of time; however, despite the actual activity having a fixed lifespan, the effects of experiences as rewards last much longer.
The Impact of Experiences
It is proven that experiences live longer in memories and have a strong visual referencing ability, due to which an individual can revisit it any number of times and it does not depreciate in value. Not only this, it connects us to others through the storytelling power. We are happy when we share experiences. Last but not the least, they are unique and cannot be compared.
On the surface, these things seem just as fleeting as a bonus. After all, they do not last more than a week or two, depending on the experience. Some may only be designed for a few hours – such as lessons or tours.
But what experiences lack in longevity, they make up for in one key area – memories. Even the most robust items break down or become obsolete, only to be replaced and forgotten; however, a two-week cruise or day trip is something that the recipient will likely remember forever. More importantly, he or she will associate those memories with the organization that helped create them.
1. Experiential rewards although by nature are short-lived but create healthy long-term happiness
From a meal at a fancy restaurant to a luxury vacation to skydiving, experiences top the list of memorable rewards. This is because experiences can engage all the senses and create an emotional reaction that you can’t get from, say, a cash bonus or other material rewards. Although these moments last for a few minutes, but because they are so in-frequent, we tend to cherish and appreciate them more.
On the other end, the excitement stimulated from new gadgets/clothes tends to fade away quickly into the background with the mind’s adaptation of consistently having them around. In essence, an experiential reward is an event that an employee earns, whereas one gets only immediate gratification from the tangible material rewards. Interestingly, it has been found that experiences also correlate with the traits associated with higher motivation such as openness and reward-seeking. Giving your employees the gift of positive experience associates their enjoyment with your company, which increases happiness more than any monetary reward.
2. We enjoy telling stories
Above all, experiences help to create stories which are inherently shareable. The human brain is wired to compose, remember, and share stories. And so, a reward or a recognition ceremony that lends itself to a story is more likely to be shared and remembered. Who would not find it interesting and comfortable to share stories about a recent vacation, a hand-pottery or night-trekking experience, vs. their last purchase? The stories that a unique or indulgent experience can generate, might even become a part of your organization’s lore, gaining a life far beyond the actual award itself. And in fact, experiences also offer high social currency, photos or videos for social accounts of the millennial workforce.
Studies show that millennials prefer experiences over consumer goods. And with 50 percent of your workforce poised to being millennials in a few years, switching to experiential rewards is a step in the right direction.
"Buying an Apple watch isn’t going to change who you are, taking a break from work to hike the Valley Of Flowers trail from start to finish most certainly will."
3. Experiential rewards are personal and become part of our identity
One size never fits all and therefore you need experiential rewards. We all are unique and if you want to show your employees that you really care for them, you need to make recognition personal. Because earning a recognition means more, when it’s exclusive. Experiential rewards that resonate with their interests, hobbies, or that help them check something off their bucket list are a great way of expressing that you value the work that they individually contributed to.
Think how easy it would be for a geek who likes to go on foodie tours to strike a conversation with a finance guy who likes to go on kayaking trips if they can share their stories of memorable experiences which their organization rewarded them.
Gallup shared that employees with work besties are 27% more likely to feel that their job is important. Also, study shows that there exists a multiplier dynamic associated with sharing experiences. It can spark other neurochemicals, particularly those related to happiness and goal-seeking, which is an added benefit for any organization’s turnover.
4. Experience rewards are more popular among young workers
Experiences as rewards are particularly popular with millennials.
According to a study by Harris Group, 78% of millennial employees would rather spend money on experiences over other material goods. This is monumental, to say the least.
Things like concerts, parties and festivals are just a few experiences that 82% of millennials attended in 2013.
This is hardly surprising. It is common knowledge that millennials value flexibility over security. They are more likely to gravitate to a job that offers more free time to spend with friends and family, even if the pay is not as high as a more secure position.
Since younger generations are more technologically adept than their forefathers, it is no surprise that 60% of millennials share their experiences online.
Publicly sharing their experiences also taps into a unique concern among millennials. Known as “fear of missing out” – or “FOMO” for short – it is this desire for inclusion that both drives the experience-based economy and encourages workers to choose such rewards.
Overall, experiences as rewards act as a motivator due to general preference and a fear of being excluded. Appealing to these sentiments turns these rewards into powerful engagement tools.
Festivals are a great for experience rewards because they can cover a broad range of interests. From music to food and everything in between, it is highly likely that an event will pique employees’ interests.
Virtually everyone loves sports, even if they are not die-hard fans. The status of simply being at a major league hockey or baseball game will undoubtedly garner the attention of workers and their peers.
Cruises are highly sought-after, both for their monetary and personal value. Visiting multiple locations on a single trip means a plethora of lasting memories that will create a favorable impression for the company among employees.
Although a large short-term investment, the boost in productivity and loyalty will pay for itself in spades.
Adventures like rock-climbing, kayaking or white water rafting are an exciting way to encourage exercise. Physical fitness is extremely important for maintaining a healthy workforce; however, a simple gym membership or a few appointments with a trainer are unlikely to generate excitement.
Adding a little adventure to physical activity helps make it unique while allowing people to expand their horizons and build lasting memories.
Not every experience has to be action-packed or filled with activity. The relaxation offered by spas provides a great way for employees to relieve stress. In turn, they will return to work feeling rejuvenated. Add that to the inevitable improvement in morale and it is quite clear how something so simple can have such a profound impact on the worker and his or her employee.
At Xoxoday, we deeply understand the intrinsic and extrinsic motivation and engagement drivers of people, be it an employee, supplier, contract staff, gig or consumer. We bring simplicity and continuity to a complex, everyday problem.