Offering traditional benefits as an extension of salary: The merits

Here, Jacqui Glenn looks at why employees are increasingly looking for traditional benefits as an extension of their salary.

Historically, employee benefits have been seen as a ‘compensation’ of sorts, given in addition to a regular salary.

In recent years this viewpoint has evolved and the employer focus has shifted when it comes to employee benefits. In the past, employee benefits may have consisted of occupational sick pay, health insurance and workplace pensions, but these types of benefits are now often seen as an extension of a salary and the ‘perks’ are now considered to be the benefit.

Attractive non-contractual packages may help to encourage an employee to join a company in the first instance, but that initial feeling of satisfaction doesn’t always last. Businesses have learnt that keeping employees motivated and engaged is key to improving sales, productivity, morale and that it can even change behaviour in terms of improving discretionary effort and time keeping, while reducing absenteeism.

Cash bonuses have long been a popular choice of staff benefit, and are still well received by employees. However, the true impact has been brought into question over time, as employees have begun to expect a bonus and consider it a part of their remuneration package. But when a bonus is paid directly into an employee’s bank account it is also easier for them to spend on everyday expenses instead of a genuine reward.

This is backed up by the UK Gift Card and Voucher Association’s (UKGCVA) research which found that many employees would use cash bonuses to pay bills, rather than seeing the benefit of it in the long-term by being able to treat themselves to an individual gift that will stay with them.

However, for some businesses cash related incentives aren’t viable, such as pay reviews and bonuses. Therefore, employers have increasingly begun to look for new ways to implement rewards and motivate employees more effectively to ensure maximum return on investment.

The choice of incentive is very important, however. It also pays to remember that one-size fits all approach is ineffective, as what might work for one employee, may not for another. That being said, it would be a logistical nightmare to tailor incentives to each individual employee, especially in larger companies.

Thought must also be given to the value of incentive offered. Businesses will offer incentives for a number of reasons; sales, performance, long service, attendance, recognition. The same value should not be attributed to all; a lower value would be suitable for instant impact, but a higher value is more effective where a change in behaviour is required, as it will give employees something to aspire to. The practicality then of sourcing incentives of different values is another consideration.

With so many forms of reward and recognition available, choosing the best approach to suit the needs of employees, whilst addressing the aims of the business, can be a difficult task.

With all this in mind, employer viewpoint and focus on employee benefits has shifted in recent years, with gift cards receiving greater favour. Gift cards have long proved an effective tool for motivating and incentivising staff, whilst offering the flexibility and versatility necessary to keep employees engaged within their roles in the long-term.

At Argos for Business, we have witnessed this need for choice and flexibility first hand, with our survey of Britain’s workforce revealing that out of 7,000 workers, almost two fifths (39.5 per cent) would choose to receive shopping vouchers over a physical gift from their employer if given the option.

Factors to consider when offering gift cards as rewards

The choice of incentive is very important and although gift cards are becoming an increasingly popular tool for rewarding staff, there are certain issues to consider.

Providing employees with the freedom to choose their type of reward is essential. It’s worth considering employees’ varied needs and lifestyles and the ways in which to motivate and drive staff behavior can vary from person to person. It’s critical then to understand and get to know your employees and offer them the best choice possible.

Indeed, gift cards may not be personal enough for some employees and as such, tangible gifts can be a more effective method of reward in such a case. Giving a physical gift is deemed as a more personal touch by some employers and provides an instant impact. Although it may mean spending more time selecting gifts, the employee can enjoy their reward immediately and receive a more personalised gift from their employer. However, as previously stated, it would be an administrative nightmare to tailor incentives to each individual employee, particularly in larger companies.

The use of small and frequent rewards through gift card distribution can help to drive performance and boost morale but when looking to change behaviour, it may be more effective to give employees something to work towards by building up to a bigger reward over time. For instance, do you want to boost morale, increase sales, improve productivity or is staff retention, absenteeism or time keeping the issue? Thinking about whether a long or short-term approach is required is essential when considering the use of gift cards.

Gift cards on the table

Ultimately, motivated employees should be at the heart of every business. Rewarding good work helps employees feel more valued and thanked for a job well done, over and above that of their salary. An engaged and driven workforce is more efficient, producing better results not only for the individual but also collectively for the better good of the company.

Increasingly employers are looking for cost effective, yet successful solutions to motivate and retain employees, whilst ensuring maximum return on investment. The many benefits of gift cards truly stack up and their growing popularity is evident in the industry’s worth, which currently stands at around £5 billion per year (source: UKGVA) and is only set to increase.

Thanks to their extensive benefits, gift cards are increasingly becoming a preferred motivator. They offer flexibility, convenience, ease and cost effectiveness to the employer, whilst providing employees with the power of choice – the freedom to choose the reward that’s most meaningful to them individually, and ultimately driving change to meet the overarching needs of the business.

Jacqui Glenn is director of Argos for Business.

Further reading on employee benefits

Ben Lobel

Ben Lobel

Ben Lobel was the editor of from 2010 to 2018. He specialises in writing for start-up and scale-up companies in the areas of finance, marketing and HR.

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