Four things to consider for noncash employee rewards

We’ve read your article pitching the value of noncash employee rewards. We agree with your advice, but the point is — how are we going to do it at the least possible cost? For one, can we outsource it to a third-party service provider? We’d like to find out the pertinent issues. Can you help us discover them? — Very Cautious.

Linus and Lucy of “Peanuts” cartoon fame were talking. Linus said in the first frame: “I’ve been thinking. Charlie Brown has really been a dedicated baseball manager. He’s devoted his whole life to the team. We should give him a testimonial dinner.” Lucy replied: “How about a testimonial snack?”

Many employers are a whole lot like Lucy. They’re thinking of the best possible way to recognize people, without emptying the company’s coffers. I’m not saying it’s bad, but we also have to take into consideration the value of recognition programs and the way we treat employees so much so that the “ceremony” will not appear cheap and insignificant.

I’m happy that you’ve accepted the approach of giving “noncash” rewards to deserving employees. While many people naturally give priority to receiving cash rather than noncash items, it is to the advantage of everyone to choose the second option.

For one, giving cash rewards to people would mean an additional tax burden for the employees receiving it. If not, and if the employer decides to shoulder the tax component, then that means additional burden as well to the organization. Imagine if you have more than several employees to recognize and you don’t want to commit any minor mistake that could overshadow the program itself.

Further, noncash awards offer a tangible, memory value for everyone. That means, the effect is longer lasting than cash. Many experts call it as having a “trophy value,” even if the award given is in the form of home appliances (flat screen TVs, refrigerators, etc.) that benefit the employee’s family for the longest time possible. I remember when I was in active corporate HR work that spouses of employees would come to us to complain that half of the cash reward was spent for giving unnecessary blowouts to other employees in beer gardens or elsewhere.

Now that we’re agreed on the value of noncash rewards, let’s explore some approaches for implementing such a system. Definitely, there’s value to engaging a service provider. Now, here are considerations that you may have to consider:

One, the reduction, if not the elimination of the administrative pain. This means freeing you and your department from the difficulties, if not the time-consuming effort to manage a similar scheme if you do not partner with a service provider. Imagine you have to give out home appliances (for instance) to deserving employees — how are you going to store and deliver them? Not to mention you need to keep watch over the items to ensure quality and avoid exposing them to scratches and “testing” by other employees if stored on company premises. On the other hand, displaying those products at the lobby makes the program more appealing to employees.

Two, the service provider must be flexible enough to consider your company as a partner. This includes choosing one with a wide variety of products to choose from. Also, this service provider must be willing to extend discounts and special services to your employees, by not charging for delivery to the employees’ residence. Of course, you can probably do this if you can make the service provider as an exclusive partner for your reward program, in exchange for that little logo placement in your internal announcement. You are only limited by your imagination, if only to get the best possible service to your employees.

Three, the noncash reward can be made possible by having a reward points system. This is similar to what they’re doing in the credit card industry. This means having a voucher or point system that can be redeemed anytime, against different products by employees who want choice. Aside from the variety of products to choose from, the beauty of this scheme is that employees are encouraged to produce more in anticipation of choosing the best noncash reward for his or her family.

Four, the noncash system must rationalize all employee rewards programs. It must apply to a perfect attendance award, quality circles, individual employee awards, team awards and many more, including giving those people the value they deserve because of their work performance. Management must keep a constant watch on the program as soon as the number of awardees is reduced to its barest minimum, or whether there are complaints against certain winners or the rules, or if fewer people are turning up to join the celebration.

You may be able to understand the success of your noncash program if the numbers reflect it in terms of high productivity, low absenteeism and tardiness, and of course, low turnover rate.

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