What are the latest trends in Christmas incentives?

Employees no longer appreciate traditional Christmas rewards, such as food and wine. Research shows they like to be offered a choice of benefits and feel motivated by personalised and technological items.

Christmas lights

If you read nothing else, read this…

  • Giving employees choice in their Christmas reward can be very effective.
  • The popularity of traditional incentives, such as hampers and wine, is declining.
  • Personalised, memorable and technology-based benefits can motivate employees.

Failure by employers to effectively plan and deliver end-of-year recognition leads to around a third (34%) of Christmas rewards being wasted, according to Edenred’s report, Reward and Recognition at Christmas 2014: How to Give an Impactful End of Year ‘Thank You’ to Employees, published in December 2014. This emphasises just how important it is to get Christmas incentives right. So what are the latest trends in Yuletide reward?

Clare Rutherford, marketing manager at House of Fraser for Business, says: “Mindsets are changing. Organisations are more in tune with the fact that staff need reward and [they] have to invest in employees with regard to more than just pay.

“For the retail industry in particular, Christmas is the busiest time of year, so [employers] need to give employees something to get the best output from them.”

Choice is important

Presenting employees with a gift voucher places the choice of incentive in their hands, but it also opens up a wide range of choice as to which retailer or service provider the employer will decide to offer to staff. This means employees will not be pigeonholed, says Andrew Johnson, director general of the UK Gift Card and Voucher Association. “There’s an increasing trend towards gift vouchers that give even more choice, such as supermarkets, department stores, multiple stores or even experiential vouchers. Traditionally, gifts such as turkeys, Christmas puddings and hampers were once really popular,” he explains.

Involving employees in the choice of Christmas reward can reinforce the incentive. Bill Alexander, chief executive officer of Red Letter Days, says: “Incentives such as hampers and wine are declining, and the new trend is to give staff something with more flexibility to choose what they really want.”

However, rather than giving staff multi-choice gift cards, selecting one store for a member of staff is more effective. Adam Hobbs, head of sales at New Look Business Solutions, says: “More personal gift vouchers for one store show you’ve taken the time to choose a gift for an employee. Employers need to ensure the team feels valued.”

Use of technology

Employers can tap into digital resources to incentivise staff at Christmas and use technology that is readily available. Eleanor Williamson, client solutions manager at Personal Group, says: “Incentives that are web-based are great because people are more into buying things digitally these days.”

For example, the provider has offered an employee benefits-themed advent calendar for the past two years, with offers and vouchers to open via email each day. Williamson says: “Earlier in December, the offers were focused on presents that employees could buy for other people. We also gave out supermarket vouchers, and dinner at the Shard for two for £30. This kind of experience offer is particularly popular around Christmas.”

The use of technology is also becoming more prevalent within incentive schemes. “The market was very much paper voucher-orientated five to 10 years ago, but now the e-gift and e-code have popped up to reflect a similar solution to how people like to shop,” says Hobbs.

However, Alexander believes that emails or e-vouchers are not as effective as employers may believe. He says: “E-vouchers are not as impactful as one might think; a lot of the time they’re just another email. But something like a handwritten note or Christmas card can really make a difference.”

Holiday incentive

Giving employees the gift of time has become a popular way of rewarding staff at Christmas with a number of employers giving a day or half-day as holiday to staff, so they can spend it with friends or family, or even to prepare for their Christmas dinner. Jamie Mackenzie, marketing director at Sodexo, says: “Team outings or activities with lots of social interaction can be really effective as well.

”Whatever the workforce demographic, age range or religions, Christmas is about getting together and celebrating. [Employers] need to adapt around their employee demographic and recognise what they want. There is no one-size-fits-all answer.”

Alexander also believes that no employee incentive comes close to a unique experience when it comes to motivating employees at Christmas. “I have yet to find an incentive that’s as impactful and memorable as a weekend break,” he says. ”And anything to do with food, such as afternoon tea at the Shard and dinner at the Savoy restaurant, is very effective.”

Festive finances

Cash still remains a valid way to incentivise staff during the Christmas period, says Alexander: “Cash is still going to be king, but it misses a trick as it can get lost when being given straight through payroll, plus it’s going to be taxed that way. Employers need to be giving their workers something that’s a little bit more of a memorable treat.”

Some employers are still keen to treat their staff to the traditional Christmas party or meal out: if the cost is kept below £150 per employee, the benefit is tax exempt. A Christmas party doesn’t have to break the budget: small-scale events can be just as motivating for staff and could be held on a departmental basis, rather than an all-employee event. 

However, the popularity of the seasonal soirée is waning among staff: 96% of employees would rather receive a cash bonus at Christmas than have a party, according to research by Harris Poll on behalf of jobs website Career Builder, published in December 2014.

Personal service

However, an employer does not always have the resources to offer bonuses or gifts at Christmas. In this instance, it is important to keep up communications to help dispel any assumptions employees might have. Mackenzie says: “If a member of staff is banking on something at Christmas, it can be really detrimental to them if that reward never comes, [so] definitely keep employees in the loop.”

Sometimes, just the personal touch can help to boost motivation levels during the holiday period. Alexander adds: “Anything given face-to-face to an employee is a really powerful thank-you. And a thank-you is the most powerful message [employers] can give someone.”

While Christmas is a time of giving, for many employers it can also be the busiest time of the year and, ultimately, the time when motivation and incentive benefits are most needed to help give staff a boost.

Christmas improvement strategies

Kim Stephenson: Digital incentives hold most value

Kim Stephenson

A bonus should create engagement with a feeling that the employer is genuinely interested in employees. That sounds similar to the choices available when giving personal gifts to family and friends, but there’s a difference. 

With family and friends, one can give vouchers, money, or returnable gifts, or items that offer flexibility. The receiver can get what they really want, and not have to say ‘thank you, it’s lovely’ for a gift that hits the charity shop before the New Year.

However, if those gifts are impersonal, there’s a potential message of: ‘I can’t be bothered to find out what you want; I’ll take the easier option, ensure you don’t hate it and risk you feeling let down by my not taking more trouble.’

With a corporate bonus, the context is different. Except in small organisations (which may be figuratively and literally a family), it’s unlikely there’s either the expectation or even the possibility of giving a really personal gift.

So the trend of digitalised incentives looks to be valuable, since it’s also a trend towards more flexibility. 

A hamper, wine or similar specifics may appeal, but they may not  – and they may, depending on personal preference and religious or cultural taboo, actually have a negative impact. Even a voucher for a specific store may not work. In the same way that our favourite films are personal, so are our shopping habits, and it’s not often that you’ll find a large group who all like the same store.

By contrast, a multi-store voucher or something like a spending limit on experience days, is flexible enough to be enjoyed widely.

It can also be worth looking for suggestions for a list of digital incentives, as they maintain flexibility while helping to keep bonus items of personal relevance, and they also provide involvement and a sense of ownership.

Kim Stephenson is a business psychologist and member of the Association for Business Psychology

Case study: Adactus Housing Group says thank you at Christmas time

Adactus housing

During the 2014 holiday period, Adactus Housing Group sent its staff Christmas cards along with their payslips and details of the organisation’s voluntary benefits scheme, which is provided by Reward Gateway. The cards were delivered to employees’ home addresses or at their desk if they were based at its head office.

Adactus also provided all 530 staff with an afternoon Christmas party, with no obligation to stay until late in the evening. To tie in with the party, at which staff were given a three-course meal and wine, they were also given the morning off work to do as they pleased.

Additionally, the organisation offers its workers a small Christmas bonus – a goodwill payment, which is calculated based on the number of hours an employee works per week, and how long they have worked for Adactus.

Michelle Grundy, human resources manager at Adactus Housing Group, says: “Christmas is one of the times of year when [employers] can really make an impact and thank staff for what they do day in, day out. Our employees are so important to us.”

She adds that when it comes to Christmas incentives, giving employees options can be really effective. “Our voluntary discount scheme, for example, can be used by employees online or in store, and lets the employee pick a store,” she explains.