In the wake of the ongoing cost of living crisis, a new study underscores the significance of reward-based incentives in cultivating employee loyalty and retention.
The study, commissioned by the Gift Card and Voucher Association (GCVA) and conducted among over 1,000 UK adults, reveals that nearly 28 percent of employees in the UK express a heightened inclination towards companies that offer modest rewards or incentives, such as a £50 gift card.
These findings come as individuals continue to explore avenues to mitigate the impact of the mounting cost of living.
Amidst an economic landscape marked by escalating food prices, surging energy bills, and rising mortgages, incentives and rewards have emerged as potent tools for employee support and engagement.
The survey unveiled that approximately half of households find themselves in a more financially vulnerable position compared to the previous year, with 12 percent grappling with a substantial blow to their personal finances. In light of these challenges, employees are actively seeking opportunities to economise.
Employees are seeking assistance
While the efficacy of rewards and incentives extends across various contexts, their significance has become pronounced in the current scenario where employees seek assistance from their employers to counter the mounting costs.
However, the study reveals a disconcerting gap between employee needs and employer actions. A mere 15 percent of employees have benefited from employer-initiated measures to alleviate the financial burden, with the most prevalent approach being salary increases (55%). A smaller percentage of staff members have received one-time bonuses (9%).
Are pay rises enough?
While pay raises and bonuses serve as commendable avenues for supporting employees grappling with amplified costs across multiple fronts, their sustainability comes under scrutiny as businesses themselves face mounting financial pressures. In response, some employers are embracing alternative strategies to buoy their workforce. An impressive 26 percent of employees report receiving gift cards as a form of bonus or reward, while an additional 18 percent have been presented with gift cards designed specifically to cover essential expenses.
Furthermore, employers are presented with a unique chance to contribute to the revival of local businesses grappling with diminished foot traffic and soaring expenditures. The distribution of local gift cards to employees could potentially stimulate consumer demand and encourage individuals to redirect their spending towards smaller enterprises.
The potential of gift cards
Gail Cohen, Director General of the Gift Card and Voucher Association (GCVA), highlights the untapped potential of gift cards in bolstering loyalty and retention. Cohen emphasises, “There’s a real opportunity for businesses to utilise gift cards to increase loyalty and retention. Whether it be in the form of offering a reward to employees or an incentive to shoppers, our research shows that the impact of gift cards used in this way remains strong.”
Cohen further advocates for an expansion of the tax-free allowance for trivial benefits from £50, underscoring that the existing threshold holds less value in the face of inflation-driven price surges. Cohen asserts that increasing these allowances could motivate more businesses to provide tangible support, thereby uplifting employee morale during these testing times.
As economic challenges persist and employee expectations evolve, the role of rewards and incentives gains prominence as a multifaceted solution that not only bolsters staff loyalty but also contributes to the broader economic ecosystem.
Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at the University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.