Takeaways
- Compensation ranges from salaries, bonuses, equity awards, and other benefits.
- Non-cash benefits cash can include increased flexibility, PTO, or profit-sharing.
- New employees should negotiate compensation packages before they start.
- Annual review cycles present natural points to augment compensation structures.
- Employees who negotiate their compensation composition to align with their life stage are generally the happiest and most loyal.
Beyond traditional salary adjustments and annual bonuses, companies utilize various non-cash methods to compensate employees. These employee compensation incentives aim to attract, motivate, and retain top talent while fostering employee well-being and engagement.
Take the Next Step:
on Upwork’s Website
Upwork
Smart Money Rating: 5/5
Best For: Finding Remote and Freelance Work
Success: Freelancers earned $2.3B on Upwork in 2020
7 Non-Cash Ways to Boost Your Earnings
Here are seven non-cash compensation ways to boost your flexibility, earnings, and overall net worth.
1. Stock Options
Stock options grant employees the right to purchase company stock at a predetermined price, typically at market value. Receiving these equity awards incentivizes employees to contribute to the company's long-term success because stock options' value increases as the stock price rises.
Stock options can be a powerful motivator, aligning employee interests with those of the company's shareholders. However, the value of stock options is subject to market fluctuations and may not always result in significant financial gains for employees.
2. Restricted Stock Units (RSUs)
Restricted Stock Units (RSUs) are a form of equity compensation where employees are granted shares of company stock after fulfilling specific vesting requirements, such as a certain period of employment or the achievement of performance goals.
Unlike stock options, RSUs do not require employees to purchase shares; they are granted directly to the employee.
Take the Next Step:
Acorns Website
Acorns Investing App
Smart Money Rating: 5/5
Intro Offer: $20 Bonus Investment
Best For: Beginner Investors
Annual Fee: N/A
3. Profit Sharing Plans
Profit-sharing plans distribute a portion of the company's profits to employees. These plans can take various forms, such as cash bonuses, contributions to retirement accounts, or investments in employee stock ownership plans (ESOPs).
Profit-sharing plans can be a powerful motivator, as they directly link employee rewards to the company's overall financial performance.
4. Travel Reimbursements
Many companies reimburse employees for business travel expenses, including airfare, accommodation, and transportation. This benefit not only covers the costs associated with business travel but also provides employees with a measure of convenience and flexibility.
Travel reimbursements can be particularly valuable for employees who frequently travel for work, as they can help to offset the costs associated with these trips. However, the specific reimbursement policies can vary significantly between companies, and employees are typically required to adhere to particular guidelines and submit appropriate documentation to receive reimbursement.
5. 401(k) Matching Contributions
Many employers offer 401(k) matching contributions, which match a portion of employee contributions to their 401(k) retirement savings plans. While this is technically a cash contribution, it only occurs when you first choose to contribute to your 401(k).
This benefit significantly boosts employee retirement savings and can help ensure that employees are adequately prepared for retirement.
401(k) matching contributions are a valuable benefit for all employees, but they are particularly beneficial for younger employees who have more time to benefit from the power of compound interest. However, the specific matching contribution rates and eligibility requirements can vary significantly between companies.
6. Working From Home
The ability to work from home, also known as remote work or telecommuting, has become an increasingly popular employee benefit. This flexibility allows employees to work from a location of their choosing, such as their home or a co-working space.
Working from home can improve work-life balance, reduce commuting time and costs, and increase employee productivity. However, it may not be suitable for all roles or work environments, and it requires employees to have a dedicated workspace and the discipline to maintain productivity while working remotely.
Take the Next Step:
Flexjobs Website
Flexjobs
Smart Money Rating: 4.5/5
Best For: Finding Remote and Freelance Work
Success: Secured Over 10 Million Remote Jobs
7. More Paid Time Off (PTO)
Paid time off (PTO) includes vacation time, sick leave, and personal leave. Offering generous PTO packages is a valuable benefit that can improve employee morale, reduce stress, and promote work-life balance. Recent studies show that younger employers value PTO as one of the top two workplace priorities.[1]
Employees with ample PTO are more likely to feel valued and appreciated by their employers. They are also more likely to be productive and engaged at work. However, the amount of PTO offered can vary significantly between companies and industries.
Pros of Non-Cash Compensation
- Increased employee motivation and engagement: Non-cash compensation can be highly motivating for employees, as it demonstrates employer appreciation and fosters a sense of loyalty and commitment.
- Improved employee well-being: Benefits such as flexible work arrangements, paid time off, and health and wellness programs can significantly enhance employee well-being and reduce stress levels.
- Enhanced company culture: Non-cash compensation can contribute to a positive and engaging company culture, attracting and retaining top talent.
- Tax advantages: Some non-cash compensation options, such as stock options and 401(k) matching contributions, may offer tax advantages for employees and employers.
Cons of Non-Cash Compensation
- Variability and uncertainty: The value of some non-cash compensation options, such as stock options and RSUs, can be subject to market fluctuations and may not always result in significant financial gains for employees.
- Complexity and administration: Implementing and administering some non-cash compensation programs can be complex and time-consuming for employers.
- Potential for inequity: If not implemented and administered properly, non-cash compensation programs can create disparities among employees.
- Limited liquidity: Some non-cash compensation options, such as stock options, may have limited liquidity, making it difficult for employees to convert them into cash easily.
Smart Summary
By offering a combination of equity incentives, flexible work arrangements, and other non-cash employee compensation and valuable perks, companies can attract, motivate, and retain top talent (like you). And a well-rewarded employee base can make your work environment much more positive and engaging and ultimately enhance your company’s overall success. When you are applying for new jobs, you should carefully consider each company’s programs as you weigh how to advance your career.
You Might Also Like:
(1) Ernst & Young. How can a rebalance of power help re-energize your workforce? Last Accessed January 27, 2025.
