Imagine two scenarios – one, you get a Rs.1000 cash award credited to your salary (after tax); two, you get a Rs 1000 worth of goodies as award. Which one are you likely to remember more?
The goodies obviously! One big reason why non-cash awards seem to work better – cash awards seem to disappear somewhere in your pay slip, which most of us rarely bother to check unless there is a major upside or downside.
Add to this the fact that taxes will take a big bite out of your cash award, whereas non-cash awards have a built-in tax shelter (within Rs.5000 limit per year).
Festival gifting to employees is a big event for organizations. Given the importance of these festivals in India, it is a good opportunity to appreciate employees and to reach out to their families. Traditionally gift hampers or dinnerware have been popular choices. However, the execution is a nightmare for the HR/ Admin – from decision-making, procurement to actual distribution of these products. It takes quite a bit of administrative effort in executing these programs, especially coordinating with external vendors and the internal distribution. The complexity only increases with the number of locations and headcount. All of this results in delay in getting the gifts to the employees – even then the employees might have preferred something else!
HR teams across organizations end up spending a lot of time on deciding the ‘right’ reward items. There are a few usual suspects – iPods, Shopper’s Stop, Lifestyle or Landmark vouchers, laptop backpacks or high-end pens, depending on the budget and the occasion. These are time-tested formulae what seem to work like Bollywood masala movies!
Wrong! Ask the employees – they are really tired of getting these same products over and over again. Not everyone needs an iPod or cares about owning an expensive pen! They would probably be happier if they get to chose what they want – could be something they need immediately for their day-to-day needs like a rice cooker or a mixer grinder or something they want to gift to their parents like a mobile phone or a DTH connection. Giving employees the freedom of choice for deciding their own rewards might be one of the best ways to unlock the full potential of a rewards program!
Organizations often initiate various rewards and gifting programs with a great deal of excitement and fanfare. These could be like celebrating employee birthdays, service anniversaries or simply spot awards. The programs get the necessary executive and budgetary approvals and are launched to the employees.
The execution of these programs is typically operations intensive – requires collation of data, followup with multiple internal teams and third parties and day-to-day management. The onus of execution most often lies with the HR. With all the other critical activities on the plate of the HR Team such as appraisals, compensation reviews and talent planning, these reward programs end up being put on the backburner. As a result, a lot of well-intentioned reward programs tend to fail. Backlog of rewards to be distributed pile up and the program soon meets the fate of a lot of other flavour-of-the-season corporate initiatives.
In my opinion, the critical missing piece in the design of such rewards programs is the execution plan – how does one minimize the operational hassles and the administrative overheads while executing the program on a day-to-day basis so that they are sustainable and produce the desired returns?