Why gift cards shouldn’t be a part of your employee recognition strategy
Employee Engagement is all about getting to know your employees, rewarding their efforts, and creating an environment that is somewhat akin to family. The key to all of this is in the first sentence: “getting to know your employees.” In today’s new work culture, employees can no longer simply be numbers, they need to have a direct connection with their immediate supervisors, CEOs, and peers.
While many people view retail gift cards as the simple solution to finding gifts for people without having to really get to know them first, gift cards, and their inherently impersonal nature are actually the problem. Appreciation takes more than a nominal effort from people to get it right, not much more, but a little.
Multiple conclusive studies have clearly demonstrated why gift cards have proven ineffective when compared to tangible gifts. Here’s the science behind it all:
The Science of Gifting
Choosing to offer your employees gift cards as a reward or incentive, while it may make practical sense -they’re relatively inexpensive and easy to procure taking little to no prior knowledge of the person who the gift card is being purchased for- causes a type of cognitive dissonance in the receiver’s mind.
For example, what was the last gift you received by redeeming a gift card? Do you remember who gave you that gift card? How did it make you feel that day? You likely don’t recall any of those things and it would absolutely normal. The point here is that there exists an obvious and evident disassociation between tangible goods and the actual retail gift cards used to purchase them.
In fact, the pleasure center of our brain simply referred to as the “reward circuit”, is driven by the release of dopamine, wired through a range of neurotransmitters, related to the brain’s reward system. It’s essentially what makes us feel good when we receive something as a reward (or gift), those emotions, are almost all completely lost with gift cards. This wouldn’t be so terrible, if only Dopamine wasn’t responsible for telling our brains when to expect something rewarding, modulated how rewarding it will actually feel and ultimately helped us all to continue to seek rewards. Given the context, one can quickly surmise that gift cards, in effect, act as Dopamine inhibitors, rather than a catalyst for pleasure.
In a workplace environment, where you want to make an employee feel valued, rewarded, and loyal, showing appreciation by offering gift cards as a perk, does little to support an organization’s overall employee engagement strategy.
Consider for a moment the employee experience and how it can benefit from a personal, desired employee rewards system. A system which actively enhances employee happiness, and loyalty, and comes with maximum recall value. That’s what tangible gifts do. It’s the physical manifestation of the desired items that gift cards so impersonally represent. It is these items which contain all of the intrinsic value associated with the reward.
The 6 Immutable Laws Related to the Reward Circuit
Peer-supported acknowledgment boosts the influence of the program.
Recognition from peers and other human factors can extend the reach and perceived value of the reward by way of socio-professional interaction. That is to say, tangible gifts provide a “water cooler moment” where employees express their approval and admiration toward the reward recipient effectively reinforcing both the program and the company which hosts it. This phenomenon is referred to as a reward “trophy value”.
Emotional connections drive perceived value.
People are inherently emotional thinkers. Feelings of emotion are actually states of cognition brought on by interpretive factors that are specific to an individual. Brands such as Apple understand this all too well and expertly support the concept of fostering a strong connection between its products and their customers. Affective reactions increase perceived value by capitalizing on emotional triggers which cause a vivid response from the reward recipient thus also increasing the “utility value” of the award.
Desire to attain higher socio-professional status drives program engagement.
With tangible, branded goods as part of your Rewards Marketplace, your program can drive strong engagement by fostering a sense of desire in its participants that cash rewards systems simply cannot achieve.
Non-cash based rewards marketplace offering only top-branded items that are in-line with your Organization’s goals and values will make the reward feel unique and the recognition it was predicated on more personal and ultimately more valuable, or “special”. Feelings of aspiration have also been known to increase employee satisfaction as well as overall affinity to the company they work for.
Items not usually considered due to various factors become “justifiable”.
Oftentimes people would never consider buying an item they’ve redeemed due to various reasons. Whether because of its high cost or simply because it’s considered a frivolous expenditure – the fact remains that we love receiving gifts we sometimes would never buy for ourselves, even when we possess a strong desire to do so.
Unlike the cognitive dissonance caused by the issue of having to meet the criteria for purchase “justifiability”, an item that is redeemed through a rewards marketplace naturally projects inherent qualities much like the ones associated to receiving a gift from a friend – the cost of the gift is wholly disassociated to the actual perceived value of the gift.
Effort and achievement increase perceived value.
Studies demonstrate that one’s individual effort in pursuit of a goal correlates positively to the perceived value of the reward once the goal has been attained. This cognitive dynamic is known as “expected utility” and describes the emotional “payoff” between the reward itself and the energy and effort exerted in achieving it.
The more energy and effort one needs to expend -the greater the expected reward needs to be to meet its “utility quotient”. Thus, aligning program participant success criteria to the points attribution practices you undertake ultimately raises the accomplishments’ value, but the redeemed rewards’ perceived value along with it. Non-cash rewards are known to have a greater “utility value” than their cash counterparts.
Perceived value increases when cash value is de-emphasized.
Many people are left to feel somewhat uneasy with monetary-based reward systems since bragging about cash to their colleagues may, in fact, encourage unwanted sentiments of quiet discomfort in the workplace. By providing your rewards participants with a more socially acceptable, non-cash-based platform, through programs such as Applauz Recognition, participants are more likely to discuss their reward and engage in trophy value activities which boost its perceived value and reach.
What Makes Gift Cards so Dirty
Gift cards are equivalent to cash rewards. While they may have a dollar amount which could be significant to the employer, from an employee perspective, the exact dollar figure doesn’t correlate to actual value. In other words, the value added from giving a sports aficionado a piece of equipment to accomplish a particular activity he or she may love, vs simply giving them the cash equivalent is not the same. Over time, an Employee will increasingly find it difficult to associate the cash amount they received, in the form of a gift card, as a reward. It’s just how our brains work.
In effect, gift cards can be called “dirty” simply because their end result isn’t clear and often times, their effects are also ambiguous. Not only do 30% of gift cards get lost, but there is no recall value and no true emotional significance associated with the abstraction of a gift to its representative form.
The best advice anyone can give someone who’s looking to improve their business’ employee experience is to take the time to learn the personal tastes and desires of the people within your organization who make the difference. When it’s time to celebrate their individual achievements, show them you not only appreciate their hard work and contribution, but you also know and appreciate them on a human level. Thoughtfulness and timeliness when coupled together just right can work like magic on an employee’s individual job satisfaction scale.