The Incentive Research Foundation (IRF) has published a study regarding the use of non-cash rewards in recognition programs. The study shares what program designers prioritize when structuring employee reward, recognition and incentive programs.
- Program designers often use a mix of reward vehicles, depending on the structure of the program and the program audience. For instance, gift cards are used when it’s important for the reward to be given immediately and when ease of administration is a priority. Merchandise is used when it’s important to generate excitement, when the company wants to provide a reward experience that will be remembered and when the rewards or brand of rewards can be tied to the company brand or marketing messaging. Travel is more expensive and may be more difficult to administer but can offer an experience.
- The reward experience is almost as important as the reward vehicle. Public celebrations that reward both teams and individuals are an important part of the process.
- Program designers are intentionally structuring the programs to achieve both “hard” (ROI; factors that are easily measured such as productivity and sales results) and “soft” (harder to measure but still meaningful, such as improved morale, culture shifts and teamwork) results.
- Program designers are now understanding the difference between cash and non-cash rewards. Cash rewards are easily confused with compensation. Non-cash or tangible rewards are more likely to be remembered. When cash or like-cash rewards are used, it’s often in the form of cash or gift cards for necessities like gas, groceries, etc. that are meaningful to an audience of lower-income level employees.
- While measuring success is critically important, it’s the most often overlooked by program designers. Starting with reliable information and measuring program effectiveness will help to inform program revisions in the future and will provide Return on Investment figures that are so important to top management.
U.S. Regulations Regarding Non-Cash Employee Rewards
Most of the program owners interviewed in the IRF study were not aware of the deep experience and expertise that is available within the incentive marketplace. When they used an outside partner, it was to source rewards or manage the program platform rather than engage in program strategy or design. Partnering with an experienced professional is critical, especially given the findings from another IRF Study on U. S. Regulations regarding the use of non-cash rewards.
The IRF reports that although 67% of program owners know that there are regulations for these programs, only 38% consider themselves knowledgeable about the regulations and tax considerations. Further, less than 2/3 of the survey respondents have systems and structures in place to ensure that their programs comply to the regulations.
An experienced Incentive Professional can ensure that your program is designed effectively. They can share the latest research, advise on trends, ensure that your program complies with regulations and that you’re aware of all tax implications to your company and to the program participants. Contact us today to get started!