Choosing between electronic and paper motivation vouchers

Employee Benefits - Motivation supplement cover September 2007When deciding whether to use paper or electronic motivation vouchers employers must consider a host of issues including discounts, public recognition and theft, says Nick Golding

There is no question that use of electronic motivation vouchers by employers has become more widespread. Although electronic formats still lag some way behind traditional paper-based schemes, the likelihood is that technology could overtake paper in the future.

Andrew Johnson, director general at voucher trade body, The VA, says: “Many more retailers now offer [electronic] gift cards, which has helped build the market, but paper-based reward still accounts for about 70% of the market.”

Employers that wish to offer an electronic scheme can choose from pre-paid cards where cash is loaded on to a credit card for staff, electronic gift cards which can be bought from retailers with a selected amount pre-loaded for employees to spend, or online point systems where staff are awarded points that they can then redeem at various online outlets

One advantage of using electronic voucher schemes to motivate staff is that they entail less administration on the part of employers. When using an online points system or pre-paid credit card, it is possible for employers to reward staff at the click of a button, so saving the need to order vouchers and either send or present them to employees. “The key advantage of the electronic vouchers is that they are easy to administer because you just send an email,” says Johnson.

Some employers, however, prefer to stick with the more traditional paper-based vouchers offered by retailers. Lloyds TSB, for example, has chosen to do so because it believes that this is the most financially-viable way to offer retail vouchers to staff. Liz Yates, manager, compensation and benefits, explains: “With paper-based vouchers we can negotiate greater discounts because the retailer knows how much we are going to spend with them.”

Retailer discounts
Retailers are often likely to offer discounts on the amount of vouchers employers buy because they know ultimately that the money will be spent in their stores. The practice also bodes well for repeat business from employers.

“When we looked in the past at [online points and pre-paid cards] we could only get a 4% discount with stores, but paper-based vouchers offered 9% savings,” says Yates

In recent years, retailers have taken steps to keep pace with technology by offering electronic gift cards which can be bought by employers pre-loaded with cash. Industry experts say that retailers are now applying similar discounts to their electronic gift cards as their paper vouchers.

However, electronic schemes using a wide selection of retailers have not always been so generous. Some providers of electronic schemes have begun to cotton on to this and are now starting to offer the option of pre-paid cards that can only be used in a selected number of retailers. As these cards operate electronically, the money loaded onto them could previously often be spent across a wide range of retailers, however, employers can now limit the number of stores it can be spent at, placing them in a stronger position to negotiate a deal with the selected retailers.

But no matter what the size of the award, employers should consider how to present it to staff. This is important as employees’ levels of motivation can be affected by the manner in which the award is presented.

Organisations that offer electronic voucher schemes to motivate staff may be tempted to overlook this issue and opt for a quick email to notify employees of their winnings. However, recognising employees’ achievements in front of colleagues can be highly motivating for individuals, and according to some providers, may be behind some organisations’ resistance to switch to electronic voucher schemes. “There is a perception that the vouchers have a higher trophy value, because if I give you £100 of vouchers you feel like you have more in your hands than if I hand you a piece of plastic,” says Johnson.

Although a public presentation in front of other employees may have a positive effect on the individual being rewarded, employers should consider the implications on the rest of the workforce, particularly when trying to motivate just one employee or a small group.

Neil Conway, senior lecturer in organisational psychology at Birkbeck College, explains: “Past research has tended to find that making a public presentation and singling out an individual for a reward can possibly motivate the individual but, in fact, lowers the motivation for the group. It creates jealousy, and forces people to wonder why one person is getting a reward when they are not.”

Other motivation experts, however, say that if the reasons for the award are made clear to the workforce then the presentation could help motivate them to copy the behaviour of their colleague.

When making the decision about whether to opt for electronic or paper voucher schemes, employers may also want to consider security issues. Those that have moved over to electronic schemes, for example, may find that the system is more secure than using paper vouchers which can be subject to theft. This is important when dealing with large amounts of money.

Paper voucher theft
Electronic cards can have locks on them so that they can only be activated with the employer’s say so, wile pre-paid cards will require pin numbers, and online points systems have secure pass codes to ensure that access is restricted to the intended user.†

By way of comparison, employers may need to keep paper vouchers in a safe if large amounts are kept in the workplace and if they are sent to an employee’s home address there is the risk of money being lost in the post. Andy Lister, head of employee rewards and benefits at Grass Roots, says: “If the paper vouchers are stolen they can be used [by anybody] because they are transferable.”

To prevent large amounts of cash being stolen or lost in the post, Lloyds TSB requests that vouchers worth above a certain amount are sent to employees by recorded delivery. “We don’t have a big problem with vouchers going missing, but if an employee receives more than £600 in vouchers we have them sent by recorded delivery,” says Yates.

It is obvious that there are pros and cons for either type of product, so employers must identify which is best suited to their particular organisation. Johnson believes that it really depends on the employer’s approach to rewarding their employees.

“For some, [electronic vouchers] work quite well, for instance [for] an employer that offers its sales team a reward every month, but an organisation that rewards large amounts [of employees] every quarter, may want to make more of a spectacle with paper vouchers,” he says.

Vouchers: Electronic Vs paper

  • Electronic vouchers can help to reduce the amount of administration that employers undertake, because they can be awarded at the click of a button via email or an online points system.†
  • Paper vouchers can be more motivational if presented in the right way. An employee that is awarded a wad of vouchers in front of his or her colleagues will find this far more motivational than if they are simply notified by email of their award.
  • Employers may find that electronic vouchers are far more secure than paper versions which are transferable. Paper vouchers can be the subject of fraud or easily lost. However, pass codes and pin numbers can help to make electronic versions more secure.
  • Organisations may find it easier to secure discounts with retailers using paper vouchers because these can often only be spent at one store, compared to pre-paid cards where employers load money onto a credit card that can typically be spent at a number of stores.

Case study: BDO Stoy Hayward
BDO Stoy Hayward currently offers its employees paper-based motivation vouchers, but is in the process of looking at moving across to an electronic scheme.†

One particular issue prompting this shift away from the paper format is the problem of the vouchers going missing when sent to employees’ home addresses.†

Jane Richards, HR reward manager at the accountancy firm, explains: “We have had some problems with vouchers getting lost, so this year we are allowing employees to opt for recorded delivery.”
But even recorded delivery is not without its problems as employees still have to sign for the package which is not always convenient for them, adds Richards.

She thinks staff are used to using cards in everyday life, so pre-paid cards would be a suitable alternative.†

Richards also believes that employees wouldn’t necessarily feel that paper vouchers hold more value.†

“My feeling is that employees are technologically savvy and are used to having plastic in their wallets [so] are happy to pay for things like that,” says Richards.

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