Points Programs

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Just say “No” to Cash and Gift Cards as Rewards!

The Incentive Research Foundation has recently published seemingly conflicting reports—one saying pre-paid gift cards are the most widely used incentive program award and another saying that cash is not the best employee motivator. What is going on out there? A gift card is the equivalent of cash (taxed the same, not replaceable if lost or stolen, value is always known…) and yet the item we should not being using to reward employees with is the most widely used?

“Many incentive program managers,” The IRF’s State of Non Cash Award Use in US paper says, “are selecting pre-paid gift cards as awards, presumably due to ease of use and the believed preferences of employees.” Pre-paid gift cards were used by sixty five percent of all firms polled and twenty six percent of firms reported using gift cards exclusively for their employee incentive programs.

However prevalent the use of cash and its equivalents are in incentive programs, the IRF made a separate statement that cash incentives are not always the best employee motivator. I have written in the past about the top ten reasons to award tangible rewards instead of cash and still continue to find that people take what they perceive as the easiest approach to incentive program management. Instead of letting employees accrue points to spend on brand name merchandise that they choose, managers select a retailer and a dollar amount and give out gift cards. One has to wonder if in these cases the gift cards are being seen by employees as a supplement to income instead of a separate reward given to recognize an accomplishment.

The IRF statement reports that non-cash employee rewards capture imagination better, are more effective, efficient and influential. IRF President Melissa Van Dyke, as quoted on WidePR.com, states “non-cash incentives such as travel, entertainment and merchandise, are being increasingly used by smart businesses as a way to control spending and motivate employees. It is a real competitive tool in an economy defined by growing austerity.” Incentive Federation Chairman, Karen Renk goes further in the statement recommending that the incentive and recognition community teach and demonstrate the capabilities of non-cash incentive program strategies.

Gift cards and cash are:

-Always subject to personal income taxes

-Less personal and memorable

-Often spent on necessities and not something that really rewards the person

-Limited to a particular retailer, making the person go out of their way for a gift

-Not replaceable if lost or stolen

There are alternatives available to cash and gift cards and these lifestyle merchandise alternatives can be both rewarding for participants and simple for incentive program administrators. Even though most firms are currently utilizing a cash equivalent instead of tangible merchandise, this “easy” solution can make what should be a rewarding experience much less pleasurable to incentive program participants. Just say “No” to cash and gift cards as your employee rewards in 2012!

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