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Intangible Rewards

>> HR Glossary/  Compensation & Benefits / Intangible Rewards

What are intangible rewards in the workplace?

Intangible rewards refer to non-material awards provided to an employee that do not have inherent financial value. They are used to recognize and show appreciation for an employee’s efforts and performance. Intangible rewards are usually given in response to a particular achievement by an employee.

Examples of intangible rewards include: 

  • Public praise from a manager
  • Thank you notes
  • Praise on social media
  • Flexible working hours
  • An extra day off
  • Letting an employee work a ‘half-day’
  • An employee recognition trophy
  • A free lunch
  • Time for an employee to work on their personal projects
  • Personal development opportunities
  • Providing employees with an experience they’d like 
  • Time-off for volunteering

Benefits of intangible rewards

  • Intangible rewards can be given instantly: Intangible rewards are instant and in the moment. Tangible rewards, however, may have a financial value that could be delayed due to payroll processes. 
  • Creating a significant moment: A company-wide email thanking an employee for their excellent work creates a lasting positive impact on an employee. The employee’s happiness can be more significant than a financial reward.
  • Not requiring a lot of money: You don’t need to make a large monetary investment to award intangible rewards. It may affect your bottom line (such as giving an employee additional time off), but the positive effect could outweigh the loss. 
  • Motivating employees: Employees who feel recognized and appreciated by an employer are more likely to feel motivated and work harder.  
  • Positively impacting employee engagement: Intangible rewards create an environment where employees can engage with each other and build bonds. For example, an employee’s efforts recognized by a company on social media will receive likes and comments on the post from peers. Internal messages and emails may additionally be sent to the employee. 
  • Improving retention: Employees who feel recognized are likely to remain with the organization longer. Employees are more likely to leave if they are not recognized or feel valued by the employer.

An organization should use both intangible and tangible rewards. Providing employees with only intangible rewards will create dissatisfaction, as it will create the perception that the employer is not committed to financially rewarding employees for their efforts. A good split of tangible versus intangible rewards can be seen in the diagram below:

Intangible Rewards as Part of Total Rewards
Image inspiration

Intangible rewards form a smaller part of total rewards, as most employees will likely feel happier if they receive a salary increase versus a “thank you” note. However, this varies depending on positions and individual employee preferences.

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