New Research: If Your Organization Primarily Uses Rewards to Show Appreciation, You’re Wasting a LOT of Money

February 5, 2024 9:00 am Published by

For more than a decade, research with hundreds of thousands of employees has consistently found that giving tangible rewards to employees to show appreciation and increase employee engagement is a huge waste of money.

Fact #1: In spite of companies and organizations, spending billions of dollars annually over the past decades ($16 billion in 2022 alone),1 Gallup reports employee engagement has actually decreased during the same time period to its lowest level in nine years.2

Fact #2: Research with hundreds of thousands of employees has repeatedly and consistently shown that receiving tangible gifts is the least desired way employees say they want to be appreciated. First published in 2017,3 the results have been replicated:

  • across generations,4
  • with both onsite and remote employees,5
  • across work settings,6 and now most recently
  • across cultures.7

Fact #3: Leading experts in the field of work-based gifts advise that to be impactful, gifts must be from person-to-person, involve time and effort invested by the giver, and specifically relevant to the recipient (not points earned within a system, to be used to choose an item from a catalog).8

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New Research Findings:

We have just analyzed data from the seven non-English versions of our Motivating By Appreciation Inventory — Chinese, Danish, French (Canadian), Portuguese, Spanish, Thai, Turkish. And I’m so excited about the results, I want to give you a sneak peek of just one small (but important) finding from the research:

            Tangible Gifts is the least preferred way employees want to be shown appreciation in every language studied and by a significant amount.

This chart shows the percentage of employees that choose Tangible Gifts as the primary way they want appreciation to be communicated to them.

Then Why Are Rewards Such a Focus of Recognition Programs?

If employees repeatedly report they want to be appreciated in ways than other than gifts, and gifts cost money, why do employers continue to spend billions of dollars on giving things – especially when the gifts aren’t having the positive impact hoped for?

The reasons are multifaceted:

  • From a simplistic point of view, the foundational principles of behavioral psychology would appear to support recognition and reward programs: identify desired behaviors à monitor and track them à reward the behaviors when observed. Problem: Behavior modification isn’t that simple. I do applaud their inclusion of both tangible rewards (gifts) and social rewards(recognition). But not everyone likes to be recognized publicly, and the use of points earned toward the purchase of a gift (later) seriously undermines the power of the reward.
  • Recognition and rewards programs were initially invented to be used directly to reward immediately observable behaviors or results (number of widgets produced/week; number of sales calls/day; amount of sales at the end of the month). They worked well with easily monitored actions or quantitative results – hence, their growth and popularity. Productivity went up and sales increased. But these methods do not work as well (if at all) with more intellectual and creative products and in making individuals feel valued (except as a producer). And leaders appear to be committed to a process that worked in the past (for a different goal) rather than pay attention to the current lack of results.
  • Change is difficult. Recognition and rewards for productivity have been around for decades and the principles are taught in business schools. As a result, they have become entrenched structures within organizations resulting in repetition of existing habits, even though the habits don’t produce the desired results. Plus, it takes energy to postulate new systems, try them out, and evaluate their results. It is easier to stick with what you’ve been doing.
  • Profit-motives and identity-issues by some members of the system. Let’s be honest: if $16 billion is spent on rewards annually, somebody is making money somewhere (and they are not stupid for doing so). Additionally, there are thousands of employees (including some HR professionals) whose careers – and professional identities – are intertwined with recognition and reward programs. Big-time pushback should be expected when attempting to mess with these powerful forces.

What to Do?

Here are some ideas:

  • Share your views and experience.  Employers (at one level) are more likely to take reports seriously from people they know – that you would feel more valued by hearing a compliment in front of your colleagues or getting some help when your workload is temporarily heavy, than by receiving points to turn in for a gift card.
  • Share the facts. Some employers tend to discount individual reports, and place more value on research (rightly or wrongly). Let them know they could save a bunch of money spent on things that aren’t that impactful and put their time and effort into more personal ways of showing appreciation.

To find out how to show appreciation (and encouragement) in the ways most meaningful to your team members, have them take the MBA Inventory. Click here to see the various versions available.

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  3. White, Paul. “How do employees want to be shown appreciation? Results from 100,000 employees.” Strategic HR Review 16, no. 4 (2017): 197-199. ↩︎
  4. White, Paul, and Gene George. “How preferences for types of appreciation differ across employee age groups.” Strategic HR Review 21, no. 1 (2022): 25-30. ↩︎
  5. White, Paul. “Do remote employees prefer different types of appreciation than employees in face-to-face settings?.” Strategic HR Review 17, no. 3 (2018): 137-142. ↩︎
  6. White, Paul. “Differences in preferences for appreciation across various work settings.” Strategic HR Review 22, no. 1 (2023): 17-21. ↩︎
  7. White, Paul. “Preferences for Appreciation Across Cultures.” In process (2024). ↩︎
  8. Ruhlin, John. Giftology: The art and science of using gifts to cut through the noise, increase referrals, and strengthen retention. (2016). ↩︎

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Published by
February 5, 2024 9:00 am

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