Gift cards are becoming more visible in today’s society; by checkout lanes in gas stations, as holiday gifts from family members and frequently even as employee recognition awards. Many companies may have tried using a gift card or a cash award as a stand-in for a more traditional gift, but something is lost when employee recognition programs are based on these methods. An employee recognition award should recognize the value that the company places on its employees – a value that cannot always be given in a cold, hard, monetary denomination.
An article published by The Incentive Research Foundation reports that our brains perceive gift cards and cash as less valuable than tangible gifts and examines the “cheapening” effect an employee may experience when a definite monetary value is placed on the recognition. Researchers identified four significant benefits that tangible gifts have over cash and gift cards: evaluability; separability; justifiability and social reinforcement.
The first benefit of a non-cash reward is the award’s evaluability. As the article explains, when an employee receives a tangible, merchandise based gift, the gift’s value is ambiguous. Because of this, most recipients tend to inflate its perceived value beyond the item’s actual monetary price. However, if an employee receives cash or a gift card the actual dollar amount is known and there is no ambiguity. Rather than focusing on a value they have given the gift, the employee will focus on its actual dollar amount. As a result, when you allow the recipient to evaluate the value of the gift, you allow them place more value on the gift. Even if an employer must remain within a given budget, a merchandise-based employee recognition award will be perceived as having a greater value.
The second benefit of a tangible reward the separability of recognition and compensation. Many companies give out year-end bonuses to employees in an effort to recognize the contribution that each individual made throughout the year. However, as time goes on, the motive behind the reward is lost as employees begin to expect and even budget for the annual addition to their check. Gift cards and cash bonuses are closely tied to the employee’s regular compensation and do not provide any personalized recognition. In order to make an employee recognition award unique and ensure it stands out as separate from regular compensation, companies should invest in tangible awards that create a memorable experience each time they are used. Supervisors often choose to hand out gifts at a formal ceremony or an award dinner and employees will appreciate the attention and recognition that they receive that these types of events. The memory of these events and the recognition given serve as further reminders of the rewarding experience they have had throughout the rest of the year.
Justifiability is another important aspect to the motivation provided with tangible employee recognition awards. When employees are awarded with cash or gift cards it is common for the award to be spent on necessities such as buying groceries, getting an oil change or paying off the Visa bill. A company that awards employees with their choice of tangible merchandise awards ensures that the gift selected will be something that is wanted and appreciated rather than simply needed. Since employees don’t have the option to spend their award on their everyday needs they don’t have to feel guilty about selecting something special for themselves that they might not otherwise be able to justify purchasing. The tangible gift becomes as an appreciated luxury and generates positive memories each time it is used instead of being forgotten as soon as the cash or gift card is spent.
A final, overarching benefit provided to recipients of non-cash awards is social reinforcement and the “bragging rights” that go along with receiving quality, name brand merchandise awards. Tangible gifts acknowledge the link between the award and the company that gave the gift. Employee recognition awards that utilize lifestyle merchandise have a trophy value that simply escapes cash and gift cards. Employees are proud to use the gift that they have earned and are reminded of their employer’s personal touch every time the gift is used. The memories and pride generated by a non-cash award is one of the most common reasons given by new clients of mine for switching from year-end bonuses or gift cards to merchandise based employee recognition programs.
These four benefits are significant reasons why we perceive tangible gifts as better than cash or gift cards and why they make more effective and rewarding employee recognition awards. As many of my new clients have experienced, workers will respond better and be more motivated by tangible merchandise as opposed to cash rewards and research has shown that people’s attitudes are different when they receive a gift that is more personal and memorable.
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