After a difficult year, the festive season offers an ideal opportunity for employers to reward their workforce, says Nicola Sullivan
After a year spent battling the effects of recession, it would be understandable if employers’ attitudes towards rewarding staff at Christmas had more in common with Ebenezer Scrooge than Father Christmas.
But employers that fall into the ‘bah, humbug’ camp and have already crossed the Christmas party and staff gifts off this year’s entertainment budget could be missing a trick by ignoring the festive season. For instance, staff who get nothing but a Christmas card bought at last year’s closing down sale at Woolworths might not give their employer much thought when it comes to making new year resolutions.
Steve Baker, director of sales and marketing at Projectlink Motivation, says: “For quite a modest sum of money, an employer can put out a very positive message to their workforce, thanking them for what they have done in very difficult times.
“Employees will probably have had to work harder, with minimal or no pay rises this year. Doing something for Christmas is a good way of appreciating staff and it also gives quite a positive message for the new year, when the business will still be looking to move forward and work to build its future.”
Francis Goss, head of commercial operations at Grass Roots, says organisations that incentivise their staff during the Christmas period are likely to increase their retention levels and stand out from competitors. “If employers want to drive up staff loyalty and provide a good service for customers, they need a workforce that is motivated and inspired to work for the organisation.”
But employers should beware of going too far. Baker sounds a note of caution for organisations that are lucky enough to be able to flash the cash this Christmas and are planning all sorts of things, short of sending the firm’s chief executive down the chimney of a staff member’s house armed with a bottle of champagne and tickets for a luxury trip to Greenland. He says high-impact rewards can be a waste of money if employers fail to grasp what an employee actually wants or will value.
“Giving an incentive that is wacky and fun makes great headlines,” says Baker. “But there is the chance that the individual receiving the gift will turn round and say ‘to be honest, I am struggling to pay for my Christmas dinner and I would have liked to have chosen something a bit more practical’.”
Another important consideration for employers wanting to splash out this Christmas is the way money spent on staff entertainment is taxed. The first £150 a year for each employee is free from tax and national insurance (NI). However, if this limit is exceeded for even one employee, the employer will be liable for tax and NI on the total amount spent.
This means employers must be careful that Christmas parties, which can quickly spiral into elaborate events if left unchecked, do not blow their entertainment budget out of the water. “The areas that might be at greater risk of cost-cutting are very expensive parties,” says Grass Roots’ Goss.
To control the cost, employers could either ask staff to foot part of the bill or simplify the arrangements. However, it is important to make sure employees are aware of the code of conduct for such occasions, or employers could face more pressing matters than simply picking up the tab.
Mark Childs, director of consultancy Total Reward Solutions, says: “Employees should be reminded they are still in their place of employment. There are cases every year of employees getting dismissed at Christmas parties because they behave inappropriately towards other employees. People can confuse private social or leisure events with something that is not to do with their employment. The same terms of convention and how employees relate to people in the workplace should remain.”
Employers that are not in a financial position to stage a glitzy bash for staff might prefer to treat their workers to an experience day. A balloon ride, a spa treatment or rally car racing, a meal out, a cultural day trip or a cookery course are just some of the ways in which employers can reward their staff during the festive season. Prices start at about £25 for this kind of benefit, so it will suit most budgets.
Gifts and vouchers can also be a versatile and cost-effective way of rewarding staff. These are designed to cover all lifestyles, genders, ages and tastes, so are even suitable for employees of other faiths who do not celebrate Christmas. This is an issue employers must bear in mind to avoid falling foul of equality legislation, for example by presenting bottles of champagne to employees who do not drink on religious grounds.
Helen Jones, marketing manager at the Society of London Theatre, which runs a tokens scheme, says: “Christmas gift buying is a difficult process at the best of times. Deciding on how much to spend, what the person might like, and showing that due care and consideration has been given can become a mammoth and time-consuming task.”
Some employers choose to use electronic voucher cards instead of traditional paper gift vouchers. These can be pre-loaded with cash to spend or with points that can be redeemed by employees at single or multiple retail outlets.
Providers are increasingly offering vouchers that can be redeemed at several retailers rather than just one or two. This trend accelerated following the exit of Kingfisher Vouchers from the market last year in the fall-out from Woolworths going into administration. As a result, retailers Comet and B&Q stopped accepting Kingfisher gift vouchers, issued by Flogistics, a whollyowned subsidiary of the Woolworths Group.
Many providers offer gift vouchers that can be redeemed at thousands of outlets in the UK, not just retailers but also restaurants, theatres and travel agents.
“The voucher product is still a very strong offer, both for reward and recognition,” says Goss. “This is true in both the consumer and business-to-business environment.”
Scratch cards are another popular option, with employees uncovering the value of their prize, which can be used to acquire vouchers for a selection of retailers.
When it comes to choosing gifts for staff, employers also have a number of options. At the cheaper end of the scale, those on a tight budget could offer something as simple as a pen engraved with the employee’s name. Such gifts, which can also incorporate company branding, typically cost between £1 and £5 per pen. Bottles of wine, nibbles in the office or a box of chocolates are other good gift options for cost-conscious employers.
Melissa Chevin, marketing manager at pen manufacturer Senator, says: “Organisations with tight budgets and little time can still offer exceptional, high-quality Christmas gifts that will make the right impression on the recipient.”
To make the most of their festive motivation and recognition schemes, employers could also consider continuing them into the new year. Andy Philpott, marketing director of Capital Incentives and Motivation, says: “The trick is to divide the qualifying period for endof- year rewards into two, for December and January. That creates the opportunity to keep staff motivated and rewarded right up to the end of the year and to generate momentum for a good start to 2010.”
It just goes to show – if employers can motivate staff successfully, festive goodwill will last far beyond the Christmas period into the coming year
- Motivating employees during the Christmas period is a good way of boosting morale after what is likely to have been a difficult year.
- Employers will be liable for tax and national insurance on money spent on entertainment functions for their entire workforce if they spend more than £150 on even one employee.
- Organisations should structure reward programmes so they motivate staff until the end of this year and at the beginning of next.
- Experience days, retail vouchers and cards, gifts and Christmas parties are all ways of rewarding staff in the festive period.
Case study: Northern Rail perks on track
Northern Rail will not be reducing Christmas perks for its 4,800-strong workforce this year.
As it did last year, the company will distribute a retail voucher worth £25 to each member of staff in December to reward them for their hard work throughout the year.
The vouchers, provided by Grass Roots, can be put towards items from several retailers, including Read more on motivation at: www.employeebenefits.co.uk/benefits/staff-motivation.html Sainsbury’s, River Island, Marks and Spencer, and Wallis. In addition, Northern Rail foots a portion of the bill for festive outings for staff, which are organised by line managers.
Jane Lawrence, internal communications manager at Northern Rail, says: “We have had a great year because we have had a high number of trains arriving on time.
“We have a process of rewarding people and this is a way of giving something back at Christmas when everyone wants to have a good time. It is a thank-you for all the hard work through the year.”
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