Is it more effective to scrap the whole idea of an exciting offsite meeting destination or a first-class awards dinner and instead give the constituents the cash you would have spent on them?

This guy came up to me in a bar and said, “Hey Cupcake, can I buy you a drink?” I said, “No, but I’ll take the three bucks.” — Margaret Smith

Which is a more powerful way to motivate employees, cash bonuses or incentive travel?

If we believe humans are purely rational actors, the cash value of a special event experience should have the same utility as the experience itself. Wouldn’t an employer get happier employees by giving cash awards – so the employees can buy more stuff?

Turns out, stuff doesn’t make us happy for very long, but experiences do. Experiences increase our feeling of well being long after the event is over, but “stuff” sits there, wears out and breaks. Experiences on the other hand, get better with time. That’s because experiences provide “memory capital.” Empowering memories don’t bore us – but “stuff” goes out of style and obsolete.

I read about a study that shows that buying experiences, like dinners or shows, makes us feel better than buying stuff because experiences satisfy higher order needs, like the need for connecting with others and a feeling of being alive.

When our work satisfies high-order needs, we’re happier, more productive and less likely to quit. An employer that offers meaningful rewards is an employer with a loyal staff.

San Francisco State University. “Buying Experiences, Not Possessions, Leads To Greater Happiness.” ScienceDaily 17 February 2009. 8 March 2009 <http://www.sciencedaily.com­ /releases/2009/02/090207150518.htm