Are Gift Cards Still the Best Employee Reward? Pros, Cons & Alternatives

The global gift card market is valued at over a trillion dollars. Most people have a favorable opinion of them, and they’re not going anywhere. 

You probably have a few in your wallet right this second. How many were given as a reward? 

Gift cards are the go-to tangible reward at work—but should they be? We won’t bury the lede. Top-performing organizations almost universally give gift cards, but they don’t over-rely on them. 

Let’s put the magnifying glass on gift cards as employee rewards. We’ll review why they’re still top dog and learn how to get around their disadvantages. Most importantly, we’ll share some alternative reward ideas to keep your recognition program from going stale. 

Why are gift cards so popular as employee rewards?

Imagine if your employer gave you a $50 cash bonus with your paycheck for going above and beyond at work. All of that additional effort and stress for maybe half of your monthly phone bill. Was it worth it? 

The point here isn’t to determine whether or not it was. Gift cards swoop in to help avoid raising this question in the first place. 

First, they come separate from our compensation. That alone tells us, this is something extra that has nothing to do with our working arrangement or personal finances. Second, they are often designated for use with a particular brand or service. You can DoorDash yourself some tacos tonight. Now we don’t have to wrestle with using our “extra” compensation responsibly. 

This helps us understand why employees choose them again, and again, and again. We talked about the psychology of gift cards here, if you’re interested. 

But practically speaking, organizations love them, too, mostly because: 

• Easy distribution. There’s no hassle associated with distributing gift cards to employees, regardless of their location. You can email it, text it, or slap it in a thank-you card and be done. As we’ll see in a moment, they can just happen on their own. The same can’t be said for potted plants and birthday cakes.
• Familiar to employees and admins alike. We all know and love gift cards. Our own loved ones buy them for us on holidays. We know how to use them, choose them, how to procure more of them, what to do if there’s an issue, et cetera. They hold possibilities, but aren’t mysterious.
• Often already integrated into HR platforms. Platform integration hasn’t just made distribution easy. It’s almost made it so that we never even consciously decide to implement gift cards as a reward. They’re right there, out of the box, with little more to strategize or configure.

Convenience always comes with a price. While awesome, automation does lead us closer to a conversation about why gift cards aren’t the final answer in employee rewards and recognition.

So, why shouldn’t we just give out gift cards?

They’ll always be part of an employee rewards lineup, but here’s why we should be more strategic about using gift cards.

1. It can feel transactional or impersonal.

There’s a fine line between “easy” and “low effort.” Gift cards aren’t perceived as very thoughtful, even if the recipient does appreciate them. 

2. They’re not very memorable. 

From a psychological/emotional perspective, gift cards don’t have much lasting power. And if they’re not personalized in any way, they can be forgotten before they’re even used.

3. They won’t build connections.

Offering employee rewards is a chance to build upon a company’s culture, strengthen belonging, or reinforce values. Most gift cards don’t do any of that.

4. It’s easy to overuse them.

It takes little time at all for gift cards to become expected, not appreciated. If you don’t mix it up, employees can start feeling entitled to or bored by them.

When gift cards DO work in an employee reward system

There’s a remedy for all of the drawbacks of gift cards. Here’s how to effectively incorporate them into recognition programs.

Save them for milestone rewards 

Performance or professional milestones like work anniversaries are some of the most important times to share thoughtful praise and appreciation. Adding a gift card to this ensures we’re leveraging both extrinsic and intrinsic motivation.

Paired with meaningful recognition

Even if we’re not celebrating a milestone, gift cards can still work as appreciation gifts. The key is making sure it’s the cherry on top of something meaningful. Pair it with a thoughtful, handwritten note, or pass it along while letting someone know they can have the afternoon off.

Personalize it 

The best employee gifts are selected based on the interests and preferences of the recipient. Choose gift cards that are relevant to their hobbies or are for their favorite stores and restaurants. This makes employees feel seen, not just rewarded.

For remote teams 

Remote teams require simple reward delivery. It makes sense for gift cards to remain a regular offering. Just be sure to add in those thoughtful appreciation messages and mix in some other unique experiential rewards for global teams.

What are the best alternatives to gift cards?

Signs of gift card fatigue include polite smiles, lack of participation in recognition programs, and a listless “thanks.” Here are some employee appreciation gifts, milestone rewards, and other perks that make recognition exciting again.

• Experiential rewards. Classes, activities, and team outings that make us laugh and cheer, challenge our skills, or give us time to unwind and socialize.
• Time-based rewards. In many cases, rewards like extra time off and shorter Fridays are what employees are actually hoping to get.
• Collaborative/team rewards. Sharing a table full of tacos or working toward a cause with Tacos for Charity? Either way, this is what being a team is all about.
• Value-based rewards. Order some swag tied to company values or culture, and you’re basically giving employees the gift of belonging. 
• Custom peer-nominated rewards. They’re fun, unique, and cost next to nothing. They also help normalize peer recognition. And who knows? Maybe it can become part of a tradition.

Recap: Gift cards as part of a successful employee rewards programs

You could recite best practices for employee recognition programs in your sleep. But super convenient tricks of the trade we all love to use can create blind spots. Gift cards are probably the best example of that. 

Takeaway #1: It’s practical to offer a reward that someone can use, that takes very little effort to distribute. However, rewards need to remain personal. Don’t forget to add notes with specific sentiments or deliver it with thoughtful praise. 

And although it seems obvious, double check that gift cards employees get or can choose from apply to things they like.

Takeaway #2: Recognize effort first and add rewards selectively. Pumping out a gift card every time someone does something right creates that transactional relationship to rewards that doesn’t do much for engagement or motivation. 

Takeaway #3: No organization starts a recognition program hoping to boost everyone’s boredom or entitlement levels. Always introduce something new to look forward to. Offer a mix of gift cards with experiential rewards, as well as collaborative goals everyone can team up on. 

When it comes to employee rewards, thoughtful always beats easy

Gift cards aren’t bad; they just shouldn’t be the only tool. Always focus on ways to add more meaning (not money) to employee rewards and recognition. And when in doubt, ask your team what feels meaningful to them.

Need more help? HeyTaco is always here with cool, customizable, and meaningful ideas for your Taco Shop. Try one alternative reward this month and see what resonates.