interview with someone who works in the corporate gifts industry

In the comment section on a recent letter from someone whose coworkers were upset about her work anniversary gift, there was a lot of discussion about corporate gift programs. I heard from a reader who works for one of the larger companies that organizes these programs, and they generously offered to answer questions about it. Here’s our interview.

To start, what are these programs all about, and how do rewards and recognition companies like yours fit in?

Rewards and recognition falls under the bigger HR tech umbrella. Other things under the umbrella include incentives, promotional items, wellness programs, payroll, benefits, and HRIS that does pretty much everything. Some companies manage all this stuff in-house with programs they’ve cobbled together, but there are software providers for all of them.

Rewards and recognition (when done well!) helps companies build better cultures, decrease attrition, and improve employee engagement. The idea is, if you appreciate employees for their work regularly, they will be happier, more loyal, and more productive. Some vendor names you might find surprising: Tiffany’s used to offer service awards, Hallmark offered recognition before that part of the business was bought, Jostens owns a recognition company. Rolex used to be a very popular service award or retirement award, but a few years ago, they stopped doing B2B sales (it was diluting their brand). No recognition vendors can now offer Rolexes — and some companies find that very upsetting.

The rewards and recognition industry tries to relieve the burden of administration from HR and automates the program flow, so its easy for employees to use. Rewards and recognition software generally has two components (and companies might do one or both):

A. Performance recognition. This is focused on publicly recognizing employees for good work. A user can write up a note thanking a coworker for something (things like “thanks for covering while I was out” or “good job on that presentation”), attach an amount of points to that note, and then send it off. The note is then published on a feed so other coworkers can see it, like it, and comment on it. The points go into a bank, so users can save them up and redeem them from a catalog of items.

B. Service awards. This recognizes employees for how long they have been with the company, usually starting at five years and every five years after. One of the easiest/most common approaches is a points deposit. Say you are celebrating five years at your company. On your anniversary, you would get an email that says something like, “Congrats on five years! Here’s to another five!” and a notification that 500 points have been deposited into your points bank. This could be a specific bank that now has 500 points for you to redeem in the catalog, or the points could be deposited into your recognition bank, so you can use your service award and recognition points together to redeem for something bigger.

What challenges do you see companies run into most often with corporate gifts and rewards/recognition programs?

I think the biggest challenge is a lack of commitment. There are all sorts of proven benefits to these types of programs (lowered attrition, improved business outcomes, etc.) and some companies think they can get those benefits by just purchasing a software. They don’t want to spend the time or money on creating a comprehensive strategy — and since every company culture is so different, you really need to make a strategy that focuses on what’s right for your specific organization.

So instead, they end up wasting money on a platform that doesn’t get used, because no one knows it exists or how to use it. And because they’re not getting the ROI they want, they get mad and fire their vendor, move onto another one, and have the same issues because they won’t commit, all while losing money on the software shift and confusing any users who where engaging.

Executive buy-in is also a big issue. I can’t tell you how many times a CHRO has been ready to sign a contract when the CEO comes in and shuts everything down. Along with that is making sure they stay bought-in. A lot of larger organizations with long-standing programs have started questioning the value of recognition programs. When the economy gets rough, this is usually one of the first things to get cut, as it seems extraneous. But companies who kept up with recognition during the pandemic saw improved morale and increased employee loyalty.

What do you think are some of the “secrets of success” of the companies that do it well?

1. Communicating to employees not only that this program is available, but also offering info on the best way to use it. This might be paper guides, email reminders, formal training — whatever is best for that company’s culture.

2. Having a reasonable budget. Being stingy will make employees feel less appreciated than if there had been no recognition program at all! Healthcare is notorious for having tiny budgets. Imagine working endless shifts saving people’s lives and being thanked with nothing more than a branded pen.

3. Celebrating a variety of events. Not everyone will end up being recognized for everything, but celebrating different things with different types of rewards (company milestones, service awards, promotions, personal life events, department wins, company challenges, etc.) will give each employee more chances to feel appreciated.

4. Letting everyone send recognition. Some companies set their programs up so only managers can give recognition and/or points. So if your manager doesn’t see or hear about something great you did, you will never receive recognition for it. If peers can instead recognize each other, then the volume of recognition greatly increases. And so does employee goodwill!

5. Ensuring recognition doesn’t feel transactional. We all know the feeling when you receive a birthday card and it’s a bunch of signatures vs. receiving one with actual, thoughtful notes. Companies with expectations of how recognition should be done have more sincere interactions. For example, if their policy is to mail someone a plaque for the 10th anniversary, the item becomes just another thing to set on the shelf and forget about. But if they instead present the plaque in person to the celebrant, maybe along with a handwritten card from the manager or by sharing some achievements with the team (if the person enjoys being recognized publicly), then that plaque feels a lot more significant.

Essentially, throw enough money at it that it makes an impact, but throw that money strategically.

One thing that comes up over and over on Ask a Manager is that there’s no one gift that everyone will like (except for more money and time off!). As soon as one person mentions a gift that sounds amazing to them, someone else will be ready to let them know they’d hate it. How can companies navigate that thoughtfully?

Offering a variety of options is the best way to do this. Let’s say the company is celebrating their hundred year anniversary. Rather than giving everyone the same branded jacket, the company could instead offer a few different types of jackets, maybe a vest and pullover, and then other things that could be branded, like a cooler, a Bluetooth speaker, a suitcase, an expensive blanket, etc. and throw in some things that aren’t branded at all! (I personally love a branded item, but I know many, many people hate it.)

What’s something that’s surprised you about working in this field? And/or something that you think would surprise people outside of it to learn about?

Receiving recognition points counts as reportable income, so you get taxed on it. Seeing that on your paystub without knowing why its there can be kind of upsetting (one of those things that I don’t think companies tell their employees about). It’s especially upsetting if it ends up being a burden on you, rather than your employer. That’s why R+R providers recommend organizations “gross up,” i.e. if you are awarded $100 of points, the company actually pays something like $140 for those points, so the employee receives the full $100 and the $40 goes to covering the income tax portion.

Service/milestone awards have their own tax situations. In the U.S. and Canada, if a milestone award meets certain requirements, there is no income tax on it.

Also, this industry is cutthroat, which is funny for an industry ostensibly focused on helping create positive employee experiences. The R+R industry is not super large and there’s maybe five really big players. Lots of employees move between these different companies, so plenty of company secrets get passed around.

It is always funny when the executive of one company goes on LinkedIn and writes a rant about another company being mean to them, or stealing their idea, or spreading rumors. It happens more than you would expect!

When you say companies run into trouble because they don’t commit to a good strategy, what does that look like in reality (when it’s done well and when it’s done badly)?

First, most important thing: recognition cannot be used as a substitute for a living wage, raises, bonuses, or benefits. You have to first make sure you are adequately providing those things, or else spending money on recognition (especially when your employees are paycheck to paycheck) is only going to breed resentment.

Signs a company has a good strategy in place:

• Users know how to access the software and use it regularly
• Can find worthwhile items to redeem for in the catalog
• Career anniversary gifts/trophies become a point of pride, rather than a useless tchotchke
• Employee satisfaction scores usually increase

Signs a company has a bad/no strategy in place:

• Users don’t know about the software or can’t access it easily
• Limited users can send recognition
• Budgets are so low that recognition points are quickly spent
• Point values or gift options are so low that it is offensive
• There is no company culture around recognition, so people feel disappointed when their work is not recognized or their anniversary goes by without comment
• Career anniversaries are non-existent or don’t start for a long time, like year 10
• There are no regular notifications nudging employees to take action, such as giving recognition, approving recognition, or redeeming points (companies like to turn these off)
• Holidays, employee appreciation day, and company milestones are not celebrated

Example of bad strategy: My sister was at her job for three years before realizing she’d received hundreds of points she could redeem. There was no communication on the software (that it existed, how to access it, or how to use it). Giving recognition is limited to managers and above. Since she works different hours from her manager, they rarely saw her work and thus could not recognize it in person. For her first anniversary, she received a tiny bonus and doesn’t know what people receive on other anniversaries.

The company is spending money on this software, but probably receiving very little ROI. In this case, they’d probably have better ROI if they forewent the software and gave that money directly to employees via raises, increased PTO, or better benefits.

You mentioned stingy gifts, and I hear about this all the time (like a hospital that gave its doctors hospital socks for Christmas or a company that gave everyone “cheaply-printed gratitude journals” during Covid). Any insight into what these companies are thinking?! It seems like it should be obvious that really cheap gifts are going to harm morale more than if they did nothing at all.

I think this is the same mindset that leads to giving overworked employees a pizza party rather than rewarding them with bonuses. It’s that paternalistic “They should be grateful for anything I give them” sort of feeling. The people making these decisions can be very out of touch about what actually matters to employees.

How to fix that? When coming up with the recognition strategy, companies should involve employee feedback (surveys, focus groups, town halls, etc). They should also keep doing this (some vendors have features to help with this) throughout the program and adjusting as needed.

You recommended letting peers send recognition. Do companies worry that if they set it up that way, people will abuse it? Does that ever happen in reality?

Yes, they worry about abuse, and no, it doesn’t really happen that often. There’s ways to flag if recognition looks suspicious; you can put checks in place like all recognition has to be approved by a manager, and you can put caps on how much recognition people can give and/or receive.

I think this worry comes from that same mentality that leads to sick leave policies requiring a doctor’s note; some employers think their employees are unruly children that need to be managed with a firm hand rather than responsible adults you can trust.

Does your company do amazing employee gifts for you and your coworkers? I feel like the expectations must be very high!

My company loves doing gifts. There are some events that have the same gift every year, but they go all in for big milestone events. There was a large anniversary a few years before I started and people still talk about the items they got. One person uses the collapsible wagon they ordered all the time, and I am jealous whenever they wheel it into the office.

They really commit for service awards, and I’ve never heard anyone complain about their experience.

They also do gifts for Employee Appreciation Day, and sometimes they miss the mark, but the gesture is always appreciated. I have received more water bottles than anyone could possibly need, but they’re always high-quality, so I can always find a friend or family member who would like one.

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