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Points Based Recognition Programs Exposed

April 26, 2011 by  

The “traditional” way to recognize employees is through service awards, commemorating a milestone anniversary for years of service with a company…5 years, 10 years, and so on. In recent years there has been a push towards incentive recognition. In this article, I will expel some of the claims you may have heard and enlighten you to the truths about incentive awards, performance based recognition, and points programs. I’ll admit, in doing research I found it difficult to find information disputing some of the claims of the incentive industry. When you “Google”, you will come up with mostly positive articles extolling results. My caution to offer as you read…note the majority of these articles are written or the study funded by companies that are in the incentive industry…they have service and product they want to convince you on and sell. The money for the research comes from the companies that want to sell the service…my discerning mind warns me to be somewhat wary and read with a critical eye.  The truths and myths about incentive recognition are exposed.

What most incentive companies promote are points based gift redemption programs. The performance based rewards they promote are in the form of gifts that are redeemed by accumulated points that employees earn based on performance standards. These companies want to sell you gifts…that is how they make their money. If anything, they want to expand income from a client by expanding their involvement with a company from traditional years of service awards to also selling them on the idea of further business in supplying gifts for a points based program.

In reading white papers and studies, I’ve noticed that many imply that “traditional service awards” for years of service recognition are meant to motivate employees. This is misleading. I have never asserted that a service award program is to motivate employees. Instead, we feel a service award program works in tandem with an over-all effort made by the company to create a culture of belonging, investment, and “family” in an organization. Traditional service awards are one component of an over-all strategy. They have never been sold as a “motivator”. These published incentive articles use this assertion to weaken their competition (a service award provider) and steer you to their service and ultimately the expanded gift business they can promote.

In research, you will find studies about performance incentives. Be careful when reading data or assertions. There is much study on the effects of incentive performance “pay” (cash)…basically more income for more output. It is easy to study the return on investment in behavior. You will find though that the incentive industry begins to blur their references of “performance based” recognition and adopt the results of “inventive performance pay (cash)” to sell their ideas. In my opinion, this really is an “apples and oranges” situation and not a valid extrapolation. Cash performance rewards and gift performance rewards will not give the same results…the studies show cash yielding double the response of a gift.

Jerry Pounds has an interesting perspective which he writes about in his eBook, titled Incentive Programs:  Manipulative Quick-Fixes That Destroy Employ Engagment.  He talks of how companies endeavor to build “team” in their workforce.  In some ways, performance based rewards can actually work against the “team” goal.  Is the performance reward elevating the individual above the team?

I feel that there certainly are some areas where performance based rewards are applicable.  I feel these are situations when the performance of the individual is tantamount and the team has less importance…such as, health and wellness program that promotes individual weight loss, or a safety program when the need is to promote vigilance within the individual.

Another thing to be aware of in points based incentive performance programs…the employee earns points based upon performance parameters the company establishes.  The provider keeps the “bank” of the points accumulated by the individual employees.  The company also develops a gift selection catalog that can be accessed by the employee to cash in their accumulated points for gifts of varying “point” value redemption.  A provider will want to sell you “points” as the point is earned rather than when the points are redeemed.  They know that points based gift redemption programs are structured to incent people to earn points.  The high quality gifts are not attainable until you earn many points.  Rarely will a provider wait to earn their income until your employee redeems their points for a gift.  This would create a cash-flow dry period for them.  They cannot provide you services without income.  The implications of this for you is that you as a company have now expended money for not yet received product.  It becomes difficult for you to suspend or end the program any time down the road if you no longer can afford or feel it lacks merit.  At that time, your employees who still have “banked” points would be forced to cash in for “less than” gifts or will not even exercise their privilege.

Lastly, I believe the number 1 reason an employee leaves a company or there is poor performance in a team is because of the inadequacy of their immediate supervisor.  I feel that before a company embarks on a performance based reward program, they should first compute the cost.  Once a cost has been calculated, now instead consider how that allocation could be applied to supporting, training, and affirming the front line supervisory personnel…concern for their well-being both physically, mentally, and emotionally.  If your front line supervisors are happy and healthy…you will have a super engaged workforce!

Are Gift Cards Tax Exempt?

April 21, 2011 by  

I’ve been asked the following question many times; are gift cards tax exempt?  I figured I’d do a little research and see what I might find.

There are certain gift cards that fall under the IRS code for tax exempt treatment. As long as the gift card can not be used for cash, paying bills, etc., and are part of a defined benefit plan for gift selections, such as, an award program, they are non-taxable. The code states: according to Prop Regs 1.274-8, the exemption for employee acheivement award applied to “tangible personal property” that is transferred to an employee by reason of the employee’s length of service of safety achievement. Also, the exemption is limited to $400 or $1600 depending on the qualification of the award plan.

“Tangible personal property” does not include cash or a certificate (other than a nonnegotiable certificate conferring only the right to receive tangible personal property). If the certificate entitles an employee to receive a reduction of the balance due on his account with the issuer of the certificate, the certificate is a negotiable certificate and is not tangible personal property for purposes of this section. Other items that will not be considered to be items of tangible personal property include vacations, meals, lodging, tickets to theater or sporting events, and stocks, bonds, and other securities.

Also, the employee awards must not be disguised compensation.

Therefore, if the certificates or VISA cards are nonnegotiable certificates to receive tangible personal property, subject to the dollar limitations, no taxable wages to the employee exits.

I do not want to take a position on whether a VISA card is taxable or not, it is still best to consult with your own tax advisors, but this is what research I found.

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April 18, 2011 by  

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Welcome Spring!

April 5, 2011 by  

Spring and “springtime” refer to the season, and broadly to ideas of rebirth, renewal and regrowth.  It is a time of change welcomed by the end of a cold winter.  Spring to me is a time to be optimistic about the new year.  In with the new; out with the old mentality.  With that comes change in both my personal and professional life.

I had the opportunity to pick up one of our (Award Concepts‘) owners, Bob at the airport here in Atlanta last month.  We stopped by my house and I gave him the tour of the “Southeastern office”.  He was in town because his sister Judy was performing in a play just north of my residence in Commerce, GA.  Five years ago, when I lived in Chicago and worked at the corporate office, Judy worked at AC as a customer care representative.  That being said, I thought it’d be nice to accompany Bob and see Judy and her husband Al.  Prior to the play we sat out on the patio and as is the case when I’m around Bob, we got to talking business.  The most puzzling thing to an owner of a company and to a salesman of that company is why isn’t everyone a client…I mean…we sure feel like we are the best in our industry.  We searched for the answer and concentrated on this question for awhile.

I presented the idea that recognition programs are like cable television.  During the course of the year you receive promotions from many cable providers, but unless you’ve experienced problems with your current service you’re likely to not even think twice about switching providers.  When was the last time that I “shopped” cable providers in my area?  In the four years I’ve lived at my house I have had the same cable provider and I’ve never looked at any others.  Wow, I finally found myself in the shoes of the people that I call upon.  Being a salesman is tough and requires persistence…y’all as administrators of your recognition program seldom look at what other options are available and rarely change providers.  When was the last time you seriously gave another company a look?  When was the last time you changed providers?  It has probably been awhile hasn’t it?  I understand, heck…I can relate.  It is important for you to know a lot has changed in the recognition industry in the past 1-3 years as there is a big push towards providing Software as a Service (SaaS) solutions in addition to common service award programs.

Cable television isn’t really a big deal in the scheme of things.  This is where my analogy gets a little weak.  Recognition is most likely not your primary job function, but unlike cable television, it is a big deal.  Recognition when done right becomes a way of life.  It can transform a workplace and create engaged workers who are appreciated and feel that their work is of value.  We here at Award Concepts, are advocates for creating a culture of recognition.  We realize that no two organizations are the same and that is why each program we craft is unique to each organization.  We take a different approach to recognition, serving as consultants we lean forward when we listen and the end result is a program that has your name stamped on it…not the stamp of some other company.  Award Concepts does not sell recognition programs, we sell the service of crafting custom recognition programs.

You might be wondering if I did anything about my cable.  The answer is yes.  Upon this epiphany  I came home and contacted the providers in my area to see what was available.  I changed providers.  One company (like Award Concepts), had significantly greater value added benefits in the form of SaaS solutions.  Services that I had no idea even existed.  Go figure!

  • Control my cable and recordings from my iPhone
  • Watch television and my DVR from my iPhone
  • Watch ALL Chicago sports (my previous company did not offer a NBA package)  Go Bulls!!!  Derrick Rose for MVP!
  • More channels
  • A reduced bill

The above are some of the new benefits that I enjoy.  There are others, but these are what stood out to me.  Everyone has there triggers.  I’m still searching for a cable company that lets me tell them exactly what I want and craft a subscription package accordingly.  Lucky for you, when it comes to your recognition program you do have options and one of those is Award Concepts and they will listen and craft a program specific to you.  Start a conversation today!

Spring is a time for change.  Below are some images from the 1st quarter of this year and what has changed in my life.  Enjoy!  (Click on “View with PicLens” to see image captions)