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According to First Data research, store specific gift cards are more popular than credit card-branded gift cards for incentive programs.

The “Prepaid Business Incentive Report” showed that over 37% all incentive budgets are used for some type of gift card, a large percent considering the numbers of incentive categories there are.  It also mentioned many other types of incentives such as service award merchandise and travel only made up budget shares in the single digits.

This is truly surprising growth; less than twenty-five years ago gift cards didn’t even make up 1% of incentive budgets.  Traditional merchandise incentive suppliers have painstakingly attempted to quash this growth of gift cards with all manners of negative selling but to no avail.  For every 100 sales reps calling on American corporations trying to sell them incentives, there is only about one selling gift card systems.

The respondents of the survey were companies employing over 100 individuals and represented industries as disparate as manufacturing, government, retail and communications.   Of the 37% of budgets using cards, 20% were single merchant cards and 14% were network branded open loop cards such as Visa and American Express, and 3% was paper gift certificates.    The balance of the budgets was made up of 6% in merchandise, 4% to points based programs, 3% to travel, and 14% to plaques, pins and logoed apparel.  Cash and cash like awards made up the rest with approx. 36%.  At one time cash was in excess of 60% of all incentive budgets, maybe more.

The reason companies prefer closed loop merchant gift cards vs. bank credit cards was attributed to a variety of factors.  These include employee preference (38%) followed by physical proximity and past ordering history.  When purchasing large quantities of certain merchant gift cards, the company can receive a volume discount, but it is administratively and financially difficult to source several cards like this.  In addition they lose the advantage of having a gift card system that offers hundreds of different cards giving the employees a great choice.  One disadvantage of using open ended bank type gift cards is the fee.  As most gift card denominations used in these types of incentive programs are $25 and some $50, these fees can represent as much as 15-20 additional cost over the face amount of the card.

The most common reason for using gift cards as employee awards were employee recognition (which includes safety awards) at 48%; service anniversary awards at 36%; year-end holidays 32% and employee health and wellness goals at 12%.



According to an article in the PRNewswire, todays corporate recognition programs which mostly focus on the traditional years of service type programs are clearly failing.  This article shared information from a Bersin & Associates new research report, The State of Employee Recognition in 2012 that indicates recognition “plays a much more measurable role in business performance than previously believed.”   

This conclusion is echoed in several other recent studies on employee engagement that show a direct link between employee recognition programs and the success of a company. When a company has properly implemented recognition efforts, employee engagement improves and resultantly productivity and customer service increases. 

The problem is that most recognition programs (87% by this research) are designed to recognize years of service or tenure.  They recognize employees for just “being there” and have little if anything to do with your performance along the way.   Importantly, this study also indicated that only 17% of the employees who participated in the study said that their organizations offered a strong employee recognition effort based on the company’s overall performance management strategy that is designed to drive results. 

Obviously this leaves a tremendous opportunity to re-design the recognition practices to provide specific feedback to employees along with either intangible or tangible rewards.  And to do this so it is easy for the employees and management alike to participate.  Companies are responding to this challenge. 

“Many companies are responding to this need by leveraging social technologies that enable employees to give and receive positive feedback with others in the network…This finding is underscored by the fact that the top reason employees do not recognize each other is because there is no established way to provide recognition.” 

This study and others suggests that about 1% of payroll is devoted to these efforts, but “only 58 percent of employees believe their organizations have these programs.”  That’s billions of dollars being spent on programs where many employees don’t even know their programs exist, much less drive results. 

There are many ways to improve these programs.  Scores of articles have been written on the subject with every employee reward company anxiously awaiting a call to help you do it. However, there are some professional consultants in the industry who will assist you in putting together a program that will work the best for you.  One of the most qualified is Paul Hebert of I2I who will bring recommendations without the bias of awards, an important distinction. 

 When you start your efforts you will be better served to be able to control the awards that you provide to your employees.  Don’t get caught up in the fancy software point systems that offer all the bells and whistles yet only include the back end award malls of their choice. Consider using new technology combined with an easy to use award system that provides you with the #1 employee award in the industry, the Award of Choice.



Have gift cards as employee awards finally arrived?  While they’ve been the #1 employee recognition award for several years, the stalwarts of the traditional trophy type years of service awards companies have painstakingly sold against them for every ridiculous reason for years.  It seems that they are now condoning them as award options in recognition programs, which have become a significant part of this award industry.    

Believe it or not, OC Tanner, the accepted leader in years of service award programs since the beginning of last century actually recently published an article entitle “Recognizing the Great Work Your Employee Do” on the B2C site.  The article simply states… 

Many employees perform better if there is a reward at stake. Some employers may announce ahead of time that a cash incentive or gift card is at stake for an employee with the highest sales in a given period of time. The entire staff will work harder for the chance to be recognized as the top seller in an organization. Though one person will win the award, better performance throughout the organization is achieved through competition. Sometimes a small incentive is the impetus necessary to get people to sell more or perform better. Studies have shown that incentives work as motivators. Gift cards are a great way to show appreciation and also to develop partnerships with other companies…” 

While gift cards may have arrived and been embraced by O.C.Tanner, don’t expect them to be included into their base award offerings any time soon.  If you happen to be using a traditional years of service program we will be happy to recommend some ideas to show you how you can use the Award of Choice as a perfect option. 



From our perspective, the easy answer to both of these questions is, NO and NO!   

Possibly the most ridiculous employee recognition program today is the ubiquitous Service Anniversary program that awards employees who happen to stay with a company for usually a minimum of 5 years and as long after that as they possibly can.  Does that make any sense to anyone?  Reward them for just sticking around?  What about their performance along the way?  Should they be rewarded for that?   

How much sense does it make to implement a years of service award starting at five years when the median tenure of all employees today is 4.4 years.  And these median numbers haven’t changed much over the last several years.  So when you design your program it looks like you can delete half your employees from the equation right at the start! 

Studies have also shown that turnover in the first year of employment for younger employees are a whopping 67%!  SHRM, the society of Human Resource Management estimated that it costs $3500 to replace an $8.00 per hour employee when all costs – recruiting, interviewing, hiring, training, reduced productivity etc., were considered.  That estimate was the lowest of 17 nationally respected companies who calculate this cost!   Don’t you think that doing something in the first year of employment to keep your new hires employed would be important?  How about recognition for reaching milestones in the first year, would that make sense?  Or should we tell them to wait for the fifth year to get that coveted silver plated company logoed pen and pencil set? 

No Gold Watch! 

Tenure reports found at the Bureau of Labor Statistics show historically that most workers change jobs repeatedly during their working careers and all evidence would suggest that this trend will continue into the future.  A report from Stanford University states that typical worker today is holding a job which has lasted or will last about 8 years.  So, when you’re budgeting for Service Anniversary program you can wipe out at least half of the ten year award as well.  They won’t be there to get it! 

Some excellent articles have been written on this subject by one of the top consultants in the award industry, Paul Hebert at i2i.  Here are a few that we particularly enjoyed.

It’s Not Time It’s Change that Should Be Rewarded

Service Anniversary Awards Again 

Service Anniversary Awards Revisited 

Service Anniversary Awards – Here’s Your Sign



The old method of service awards is frankly so outdated, that giving survival awards for 10, 15, 20 years of service is a ridiculous waste of money.  If you want to give something to a one year employee (assume she/he is a good one) then let them know from the first day of hire that they are important to you.  For that matter you may even want to consider giving them something when they join the company.  That will go a long way to making sure they’ll be there a year from then.  
 On their first year anniversary, what you don’t want to do is give them some type of cheap communication award like a pin, pen, or key chain commemorating their first year achievement; it may do more harm than good.  These symbolic awards are frankly a horrible idea.   Unless you have some of the most knowledgeable and experienced managers in the world on how to give recognition and praise, a small meaningless trinket will come off as just that, a small meaningless trinket that says to the recipient,” this is what we think of you.”  Don’t think that your managers have the ability to communicate with their direct reports on a one on one basis and make this kind of anniversary appreciation event worthwhile, the vast majority don’t.  That’s why so many of these events come off as negative to the employee, not positive the way they were intended.    

We would definitely recommend that you do give the employee something substantial for being there a year, and they absolutely should have a choice.  There’s nothing worse than the arrogance of companies picking the awards for their people.  Let them have what they want, not what you think they want or what you want them to have. 

And, if you don’t want to give them anything, that’s ok too, because being sincere in your praise of the event will go a long way.  A nice added touch like a letter from the big boss telling them of their accomplishments in the first year and then taking them to lunch could be very meaningful.  

When you’re thinking about anniversary awards thank about the old method as a pyramid and then turn it upside down.  Take all that money and put a lot of it upfront where it will do more good than simply leaving it where it is recognizing longevity.  Get some mileage out of it. 

Good luck to all of you on recognizing employees for their one year anniversary.  And please don’t give them a pin, pen or keytag for that achievement.