Employee Recognition

Why Points-Based Recognition Programs Fall Short

For the last 10-15 years, points-based reward programs have been the gold standard in employee recognition. While these programs created the perception of "instant" recognition, many companies have discovered that in practice, the actual redemption process is anything but instant. The often extended time it takes to accumulate points, the lack of transparency into the value of points, and the limitations of product catalogs, all work together to undermine the value employees perceive in both the points and the program as a whole. A program employees see little value in is a program destined to fail at inspiring adoption and engagement. And a program that doesn’t engage your employees will also do little to improve engagement, retention, and your overall company culture.

 

Not meaningful enough

The time it takes to accumulate enough points for redemption is just one of several drawbacks to points-based programs. Even if an employee receives their points instantly, those points have no value until the employee has enough to redeem them for something meaningful, and that can often take a long time. “It takes too long to reach enough points to get just a $5 gift certificate1,” a points program user recently said, adding, “We need rewards that will continue to encourage and recognize us in a way that allows us to cash in rewards sooner rather than later.” Younger and short-term employees will often be gone before they’ve accumulated enough points to get a reward. The result is frustrated employees who find it difficult to understand the value of the points they receive. “Points have no inherent value and this makes me not care about accumulating them,” said one user.

 

No apparent retail value

There’s also an inherent lack of transparency into the purchasing power of points, particularly when that power can vary by item and with no apparent correlation to retail value. Points programs are often tied to specific product catalogs with huge markups. For example, a 10,000-point blender available at a local drug store for $20.00 will leave a sour taste in anyone’s mouth, especially when compared to a 15,000-point putter that retails for $150. As one employee recently said of their points, "You can receive a lot of points, but those points are worth far less “actual money” than you expect, so you feel like you’re being cheated - [it’s] insulting."

 

Limited choice

Product catalogs are often outdated, with product offerings that are less than current. Let’s face it, they can sometimes feel like a 2007 clearance catalog from a B-level department store. “Most of the prizes are either too outdated or not worth the number of points required,” a user recently said of their program’s product catalog. And that catalog of “carefully curated”, pre-selected items limits your employees’ choice, often alienating individuals with differing interests and tastes. This shortcoming is exacerbated when dealing with multi-generational workforces that may have different wants and needs. Not everyone wants golf clubs, just as not everyone wants a blender. 

 

Time delay

Accumulating enough points isn’t the only thing employees have to wait for to redeem their “instant” recognition points — ordering items from a catalog typically involves shipping time, shipping delays, and procurement issues, since the item is coming from a 3rd party, further distancing the reason for recognition from the reward. This compounded distance between recognition and reward effectively breaks the positive feedback loop.

 

So if points-based recognition programs have so many drawbacks, what are the alternatives? 

 

Cash

Well, there’s always cold, hard cash. But in spite of the fact that many employees will say, “Keep your points and just give us the money,” an extra line item on a pay stub is rarely even noticed. And the cash itself has very little emotional investment attached to it. Adding $100 to someone’s paycheck may end up covering a bill, or buying laundry detergent — which simply won’t make a memorable impact.

 

Prepaid credit cards

Prepaid credit cards can have the same disadvantages as cash, for the same reasons, and can feel impersonal if the person giving the reward doesn’t add some personal touches (e.g. a thank-you note, group presentation). But as an “added bonus”, they’re also bad for the environment, something you probably want to avoid whenever possible.

 

Traditional gift cards

Finally, there’s the option of traditional gift cards. They can be virtual, so the negative environmental impact can be avoided, in most cases, but they do lock recipients into a single vendor, which brings us back to alienating people with different needs and tastes. Traditional gift cards are also an administrative nightmare to purchase in bulk and track. Many finance teams do not permit their purchase because of the challenges surrounding tracking their tax implications and spending.

 

But there is a solution that addresses both the shortcomings of point-based programs, as well as the disadvantages of cash, prepaid credit cards, and traditional gift cards.

 

Guusto. 

Guusto is an employee recognition platform designed to quickly build impactful employee recognition programs, offering dollar-for-dollar value, with no confusing points and no markups. Your employees will easily understand and appreciate the value of their rewards. 

There are no product catalogs with Guusto. Recipients can choose from over 60,000 merchants to redeem their rewards. They can even split a single Guusto reward among multiple merchants, or combine multiple rewards to redeem for a single, higher-value item — anything from a Peloton, to a PS5, to dinner at a fancy restaurant. 

With Guusto, your employee rewards are delivered digitally, in most cases — that means delivery is instant and involves no plastic or paper, unless it’s absolutely required, so zero to minimal environmental impact.  

And Guusto’s reporting provides insight into every reward sent, your team's engagement, taxable benefits, and your teams performance against key behaviours (e.g.core values).

Book a demo or try Guusto for free today!

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1: From Capterra, G2 & Internal Customer Reviews

Learn more

Recognizing, celebrating and rewarding employees for hitting major milestones heightens their sense of pride for career accomplishments, and makes them feel appreciated for their efforts and contributions. This can help to boost their morale, engagement, performance, and ultimately productivity. Read our blog on 5 steps to modernize your milestone program to learn more. It will cover the following in detail:

  • Why Run a Milestone Program?

  • Pitfalls of Traditional Milestone Programs

  • 5 Steps to Modernize your Program

Have something you want to learn more about? Let me know in the comments below or connect with me on LinkedIn.

Muucho Guusto :)

Kevin

Kevin Fernando

Written by Kevin Fernando

Kevin is the Head of Growth Marketing at Guusto. He leads the Marketing Team, and loves helping HR leaders build better employee recognition and engagement programs.

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