Imagine two scenarios – one, you get a Rs.1000 cash award credited to your salary (after tax); two, you get a Rs 1000 worth of goodies as award. Which one are you likely to remember more?
The goodies obviously! One big reason why non-cash awards seem to work better – cash awards seem to disappear somewhere in your pay slip, which most of us rarely bother to check unless there is a major upside or downside.
Add to this the fact that taxes will take a big bite out of your cash award, whereas non-cash awards have a built-in tax shelter (within Rs.5000 limit per year).