Thursday, July 30, 2009

Employee Engagement 2010: Part 2

Why Not Gift Cards?

Low denomination gift cards work well for 'on the spot' recognition of above and beyond organizational contributions.

However, It is important to consider the following issues with gift cards for employee rewards:
* Upfront process costs
* Taxation
* Breakage

As a manager at a former company I bought 25 gift cards for my team. These $20 gift cards came with a $2 processing fee each. Employee were taxed back through payroll processing compliance, they paid tax every time they used the card and they ALL left the cards on their desks because the remaining .78 did not buy anything at Starbucks.

You do the math:
* Card cost - $22
* Tax charged to employee pay check - 10%
* Tax charged to every transaction (average 4 per card) - additional 10%
* Breakage (money left on card) - average $1
* Paying $2 in advance, $2 pay check charge back, and $2 at the counter tax while leaving $1 on the card for 4 cups of coffee - PRICEY!

I once got a Walmart gift card for winning a company contest. I bought diapers with the card. Unfortunately, I was not able to hang the dirty diapers on my desk to celebrate my achievement.

Employees need a memento of achievement!
It's always nice have a few extra dollars in your pocket, a week's worth of free coffee or complimentary diapers for a week...but supplemental cost control does not enhance Employee Engagement!

A simple gift transcends it's dollar value. Think about your most cherished possessions...chances are they are not of high retail value but hold sentimental significance. It is not the MP3 player that matters but the blood, sweat and tears it took to achieve it.

My proudest memento of professional achievement is a crappy watch that I was afforded through my team's gratitude for my efforts. I was not promoted, given extra compensation or honored by our CEO that year. But, the extension of my teammates genuine appreciation for my effort (not formally recognized) kept me at that company for an additional 2 years.

How to make Gift Cards Work....
You need to maximize the value of gift cards. If you buy a $25 gift card, you should pay $25 for it and there should be a memento of achievement rewarded in connection. These cards need to be:
* Redeemable online
* Tax/Shipping Inclusive (avoids charge backs to employees)
* Accessible to a wide variety of gifts
* Supported by a meaningful recognition process

Want to know why Peer recognition can mean more than a note from the CEO? Visit this blog next week for a overview of Meaningful Nomination Programs.

Don't Forget to Remember!

- Dave



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