The Gift, the Award, and the Strategy Behind It

We often talk about employee gifts and employee recognition awards, and possibly view them interchangeably. Did you ever stop to think about the difference between ‘the gift’ and ‘the award’? The timing of end-of-year recognition and the traditional holiday giving season requires us to examine the concept of gift versus award more closely.

A recent study conducted by Human Capital magazine found that the majority of corporate respondents use holiday gifts solely as a way to mark the season and to express appreciation of all employees at year-end. The remaining 46%, however, choose to present performance-based bonuses or other awards or incentives during the holiday time-frame.

While the no-strings-attached employee gift and the performance-based award are both important forms of recognition, it is crucial to consider the timing and presentation of each. Clearly communicating the purpose and intent of the gift or award is key. If you choose to combine the two into a single gesture, they may each lose some of their significance to your employees, and negate the impact of your recognition program.

The Gift

The holiday season is inevitably stressful in both business and personal life. Even if your business isn’t directly impacted by seasonal sales spikes, there are certainly fourth-quarter deadlines and pressures that employees must manage. Adding to the stress-level, family and personal pressures invariably hit employees at the same time.

The holidays are likely the time that your employees are most in need of positive reinforcement, and a less-structured, company-wide gifting program is a great way to celebrate together with your employees. A well-chosen, personalized gift that everyone receives can give employees a shared sense of accomplishment and teamwork, and can dramatically impact loyalty and morale. As a company, a holiday gifting program give you the opportunity to lighten the mood and show your employees that you appreciate them as a team at a time when they are feeling the most individual anxiety.

The Award

The recognition award is much more formalized, and should be based on pre-established performance goals. Unlike a company-wide holiday gifting program, performance-based awards should be singled out and presented in front of the recipient's peers. A recognition award represents a very specific achievement. The employee was given a goal, it was met, and the way you recognize that achievement should be emphasized. On the other hand, a holiday gift is simply an end-of-year thank you from the company for help throughout the year. It is not as significant as a recognition award, so the two need to be separated.

Program Strategy

While there are many important factors to consider when creating a gift or incentive program, selecting the appropriate reward is vital to any program’s success. The goal in choosing a reward is to select items that will spark the participant’s interest or feelings, and support the program’s objectives. Effective rewards will both motivate short-term behavior and provide motivation over time.

Traditionally, end-of-year holiday gifts or performance awards have taken the form of cash bonuses that are simply tacked-on to an employees’ paycheck. The trouble with money or credit card gifts is that they lack the tangible or experiential memory benefit that other types of gifts provide. If an employer spends their bonus at Wal-Mart on groceries, where are the bragging rights in that? Where is the something special that allows the employee to spoil themselves or a loved one? In a recent study conducted by the Center for Concept Development, three of five respondents agree that a cash payment is perceived to be part of an employee’s total compensation package and not as part of an incentive program.

Reward programs and corporate gifts have also shifted away from more general merchandise offerings like ‘a color TV’., ‘a toaster’ or a ‘set of golf clubs’ to focus on brand names and where you can get them. Now a company is more likely to leverage a brand name like Sony, Black & Decker, or Calloway to evoke positive mental images among their recipients.

Branded gift cards are now the holy grail of rewards; coupling the powerful brand name of an employee’s favorite retailer with the thousands of brand name product options that the retailer provides. When the employee gets to choose the Calloway gift card and then buys that new Big Bertha driver they’ve been dreaming about, you have captured that person’s interest and leveraged the emotional impact of brand names.

Why Gift Cards?

Ask most recognition program managers, and they will tell you that the most important factor in selecting an award is giving what the recipients want. Here are just a few reasons that gift cards or certificates make an ideal employee gift or performance award:

• High perceived value. Unlike cash gifts, gift cards or certificates offer a very tangible trophy value, in that the recipient can use their gift to purchase a desired item, or enjoy a memorable experience such as dinner or travel with loved ones.
• One gift can fit all. In today’s diversified workplace, it is virtually impossible to select a single gift that will please all employees. Gift cards and certificates, particularly those that provide a wide-range of choices from a gift card mall, allow companies to give a single, flexible gift or award that is certain to provide options for even the most finicky employee.
  
• Ease of administration. Selecting, ordering, and maintaining a stock of merchandise awards can be a major administrative headache. Cash awards can have tax implications, and lack the trophy value of an item specially selected by the employee and purchased with a gift card. Plus, gift cards or certificates are simple to order, have a relatively fast turnaround time, and are easy to distribute.
  
• Gift cards are fun. People like to choose their own award, and gift cards or certificates allow recipients to have fun while shopping for exactly the award they want.

Tips for planning a successful holiday gift or performance award program:

1. Set clear and achievable goals. The first step in designing your program is to determine the objectives you hope to achieve by recognizing employees. With a simple company-wide holiday gifting program, the goal may be just to make employees feel appreciated. With performance-based awards, your program goals may be tied very specifically to revenue targets, employee participation, or other measurable metrics.
2. Build internal support. Whether you are planning a holiday gifting program that impacts all employees equally, or a more metrics-driven performance incentive, it is crucial to get buy-in from all levels within your organization. Your gift will have more perceived value if the program carries the support and active participation of management and employees alike.
3. Set a budget. Setting a realistic budget for your gift or award program can be a balancing act. There are negative implications for either extreme on the budget spectrum. If you spend too much, you run the risk of setting expectations that could be difficult or impossible to maintain in future years. If you spend too little, the perceived value of the gift or award may be diminished and have a negative impact on morale and performance.
4. Communicate the benefits. The success of any gift or incentive program depends on getting participants excited and keeping them involved. Frequently, companies launch an employee reward and recognition program by simply announcing it. This doesn’t help employees understand how the program and their resulting actions will enhance overall business goals, and why those actions are so critical for the improvement of the organization.
5. Track the results. As we’ve discussed, using gift cards is a great way to reduce administrative costs. But it is still important to track the success of the program as it proceeds. If you are conducting a performance-based award program, you will have built-in goals and metrics to measure against. With a less structured gifting program, consider conducting a company-wide survey or even just gather informal feedback through company managers to determine how your gift was received.
   

Choosing a Gift Card Vendor:

Gift cards and certificates are available through numerous channels, including directly from individual merchants. Other purchasing channels include incentive companies, marketing agencies, and promotional products vendors. To provide your employees with the greatest range of choice and flexibility, consider a vendor that provides a single all-purpose certificate that allows recipients to choose from a broad selection of branded merchant gift cards.

Here are some questions to ask when seeking a gift certificate or card provider.

1. Redemption options:
   • How can cards or certificates be redeemed: online, by phone, by fax, by mail, in person?
   • When do the certificates expire?
   • Does the vendor offer merchants that appeal to my recipients?
   • Do the merchants have locations in proximity to my employees?
2. Branding and customization:
   • Does the vendor offer different designs or packaging options?
   • Does the vendor offer branding with the company name and/or logo?
   • Can the recipient’s name be imprinted?
   • Can I include a specific gift message?
3. Distribution:
   • Can gift cards or certificates be sent to me in bulk to distribute? Can they be delivered directly to my employees?
   • Can they be sent by email or postal mail?
   • Can certificates be printed on demand?
4. Reporting:
   • Does the vendor offer reports to track how much I’ve spent?
   • Can I view data on activation and redemption? How often is data updated?
   • Can I access data on the merchants that are most popular with my recipients?
5. Fees and Discounts:
   • Are there setup fees for issuing certificates or cards?
   • Are there additional service fees beyond the face-value of the gift card or certificate?
   • Is there a discount for buying in bulk, or for limited redemption options such as Web-only?
   • Are there service or shipping fees for my recipients when they redeem?
6. Miscellaneous:
   • Are cards or certificates shipped “live,” or must they be validated on receipt?
   • If cards or lost or stolen, can they be replaced?
   • How are customer service issues handled?