All recognition programs use points, right?
For the last 10-15 years, points-based reward programs have been the gold standard in employee recognition. And although they can work for some companies, others find them falling short of expectations.
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, can 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.
In this blog, we’ll take a look at why employee recognition programs fail because of points systems, and what alternatives HR professionals can look at if points don’t work for them.
While Guusto isn’t a point recognition program, we do understand why some companies see the value of them. They can make it easy to distribute your budget among all of your employees, and to keep your rewards spend under control. Employees might be excited too, initially, and early adoption of these programs can be good.
Unfortunately, the flaws in points programs can often show over time. Once the hype wears off, employees become disillusioned with the system, and you’ll start seeing them use it less and less. Here’s why.
The time it takes to accumulate enough points for redemption is just one of several drawbacks to points-based recognition 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.
There’s also an inherent lack of transparency into the purchasing power of recognition 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."
The points recognition catalogs most of these systems use 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.
Accumulating enough points isn’t the only thing employees have to wait for to redeem their “instant” recognition points. Since the reward is coming from a 3rd party, ordering items from a catalog typically involves shipping time, shipping delays, and procurement issues, further distancing the reason for recognition from the reward. This compounded distance between recognition and reward effectively breaks the positive feedback loop.
One of the biggest problems with points-based recognition program providers is that they tend to take a ‘one-size-fits-all’ approach, with very little room to customize your program to your needs.
You’ll have to load every employee into the system to use it, and likely pay a subscription fee for each member. This is fine if you’re ready to launch a full-on budgeted peer-to-peer program right out of the gate, but a lot of companies need to crawl or walk before they can run.
You might want to run pilot programs with small groups and test what works before you roll it out to your entire organization, or start by giving budgets to managers and seeing how that goes, but this isn’t possible on most systems. It’s like they’re selling you a Cadillac when all you really need is a bicycle.
On that subject, in most point recognition programs you need to pay a subscription fee for absolutely every single employee and give them a budget, or they can’t participate. Even if you’re keeping budgets small, this is going to add up fast, especially for big companies.
If you want your team to get rewards that have any real value, it’s going to cost you a pretty penny.
Points-based recognition systems just aren’t inclusive by design. They’re closed loop software systems that you need the right technology to access.
You can’t print out points, so if you have employees who aren’t tech-savvy, don’t have company emails, or just don’t work at a desk, they’re going to find it hard to meaningfully participate in a points program. For a lot of companies, this is a fairly sizable chunk of their workforce.
When you factor all of these problems together, points-based recognition systems actually have the opposite of their intended effect. They devalue recognition. Your employees receive recognition with rewards that have no value, that take forever to redeem, in a system that isn’t tailored to your company's needs or inclusive of all of your employees.
The result is a program that your employees don’t enjoy, that isn’t having any meaningful impact on your culture, and that’s costing your company way too much money.
So if points-based recognition programs have so many drawbacks, what are the alternatives? Here are a couple of different options we’ve seen companies try, each of which have their own advantages and disadvantages.
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, public recognition).
However, they can be a good option if you want the recipient to have a variety of choices to reward themselves.
Finally, there’s the option of traditional gift cards. While they also provide some flexibility to employees, 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. Physical gift cards are bad for the environment, too, and leave a carbon footprint of as much as 24 million kilograms a year in the US alone.
Guusto is an employee recognition platform that offers dollar-for-dollar value, with no confusing points and no markups. Your employees will easily understand and appreciate the value of our rewards, which can be redeemed at over 60,000 merchants worldwide, with the option to also create custom rewards unique to your team.
Employees 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 team's performance against key behaviours (e.g.core values).
Whether you’re using Guusto, a point-based recognition program, or building something in-house, the Ultimate Employee Recognition Playbook contains everything you need to know to design, implement, and track a successful program at your organization. This free eBook covers:
Fill out the form below to download your free copy today.
*Editor's note: This blog was originally published in June 2021 but has been updated with additional insights.
1: From Capterra, G2 & Internal Customer Reviews