Businesses are always looking for an advantage. Often that comes in the way they utilize the various resources at their disposal to affect outcomes that are important to them.

In just about any business model the most expensive (and most critical) business resource is compensation. It can account for a huge chunk of an organization’s operating budget.

So how does non-cash compensation fit into that picture? The economic justifications for non-cash rewards are well documented. Studies confirm that material rewards are more effective for businesses because they are more efficient.

The question is why? What is it about them that give employers the dexterity they need to drive specific outcomes across specific audiences? Three words sum up non-cash’s utility: separation, promotability and flexibility.

1. Separation. Cash plays an important role in the employee/employer relationship. It puts a value on core activities. When a little extra effort is called for, non-cash allows you to blend in rewards without complicating your pay plan.

2. Promotability. When you want people to see the importance of certain activities it’s best to use real-life examples to illustrate what you mean. Employees connect with and relate to contemporary role models. Cash has limitations here. You can’t talk about how much someone earned by adopting a key behavior. With non-cash that’s not only possible, it becomes a big part of your promotional strategy.

3. Flexibility. Every business needs the means to motivate employees in a manageable manner. The inherent flexibility of non-cash allows programs sponsors to target specific segments of employees and direct them toward behaviors that represent incremental growth. That allows companies to cultivate the entire employee base in relevant and cost-effective manner.