Human Resources | December 2011 | By Jordan Melnick

Stop Rewarding Your Crew with Cash

Branded debit cards may be the perfect incentive for employers looking to make their rewards count among employees.

Branded debit cards are better incentives to offer employees than cash.
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To an outsider, rewarding employees for a job well done seems to be simple. You could give them a cash bonus, buy them a gift card, or, if they’ve done really well, send them on a much-deserved vacation.

But operators are finding that these incentives aren’t so easy to leverage for the benefit of their brands. Instead, many are turning to branded debit cards as a way of saying “thanks” to their best employees.

The problem with straight cash, the experts say, is that it all looks the same. So there’s no way of ensuring that employees will even remember how they got the cash in their wallet—or, more importantly, why they got it—when they go to use it.

“I’m not a big fan of cash” as a reward, says Kevin Higar, a director at Chicago-based consulting firm Technomic, where he focuses on employee engagement programs. “It’s very impersonal, very nonspecific. Once I shove it in my pocket, I don’t know that $10 bill from any other $10 bill.”

If employees don’t think about what they did to earn a reward when they cash in on it, then there is little guarantee they will repeat their good performance, Higar says. For this reason, cash is a poor means of reinforcing desired employee behavior.

Gift cards present different issues. Sure, employees are likely to remember where they got the $50 gift card to Best Buy when they see it in their wallets. But they might not need, or want, anything from Best Buy. They can probably find something to buy in the store, but the fact that their boss helped them purchase it might get lost in transaction.

With gift cards, the biggest winner isn’t necessarily the employer or the employee, but rather the company whose logo is on the card. In fact, regarding both business and branding, gift cards are a coup for their issuers, says Dave Jones, CEO of Dallas-based CardLab Inc. Whether they also benefit the employers that are using them to reward workers is debatable.

“Think about it: In the past, Best Buy and Target were always very popular gift cards to give to employees as a reward,” Jones says. “But all you’re doing is marketing Best Buy and Target.”

Jones says “in the past” because, since 2007, his company has been offering branded incentive cards, which, he says, are the best way for employers to reward their employees.

The cards are Visa debit cards; they cost $3.25 apiece, can be designed with any brand’s logo, and can be loaded with as much as $2,500. (CardLab has chosen not to offer a reloadable card so as to limit the amount of sensitive information their customers have to divulge.)

“Best Buy and Target were always very popular gift cards to give to employees, but all you’re doing is marketing Best Buy and Target.”

CardLab has more than 5,700 clients, and its card volume grew by 100 percent year-to-date as of September. It also got the ultimate stamp of approval—Oprah—with its inclusion in the December 2008 O Magazine Holiday Gift Guide.

There are two major advantages of branded incentive cards like the ones CardLab offers, Jones says. First, as with cash, there are few usage limitations. Employees can use them almost anywhere to buy (or help buy) almost anything. The CardLab incentive card, for example, can be used anywhere Visa is accepted.

Second, Jones says, they feature the employer’s branding, which means employees will likely remember how and why they earned their reward whenever they open their wallets and certainly when they use the cards. This is a significant upgrade, Jones says, over previous popular incentives.

“In the past, giving out a generic gift card, even though the employee probably appreciated it very much, didn’t always help the [employer],” Jones says. “Now you can put your logo and your product message onto a card and give that to your employees, and it reinforces who they received it from, why they received it, and … whatever it was the [employer] wanted to motivate.

“In addition,” Jones says, “it gets your brand out there. Every time your employee hands it out to a waiter or a store clerk, that [person] is seeing your brand and potentially asking [about] the card. It starts conversations.”

CardLab could not give a precise number of how many restaurant customers it has, although a representative with the company says it has “many customers in the [restaurant] space.”

Mark Tepper, president of 1to1, a reloadable card affiliated with several major credit cards, says his company has only worked with “a handful of restaurant chains” since launching in 2003. Tepper, a former Red Lobster general manager, says the restaurant industry doesn’t “utilize [branded incentive cards] as much as they should.”

TJ Schier owns 11 Which Wich locations and is the president of the consulting firm Incentivize Solutions. He created his own card that he uses to reward employees at his various restaurants. While the card is branded, employees cannot actually use it to purchase anything directly. Instead, they collect the cards, each of which is worth 25 cents, and cash them in whenever they want in exchange for a gift card of their choice.

Schier’s system highlights how difficult it can be for employers to accomplish their goal when it comes to rewarding employees. Because debit cards like those offered by 1to1 and CardLab combine branding, flexibility, and behavior reinforcement, Schier says he would consider using them.

“A lot of companies struggle to figure out what incentives to have,” Schier says. “The cards we’re talking about, because they’re basically a debit card and the employee can use them for whatever they want, I think have the potential to be a very effective incentive.”

In the end, Schier says, a reward has to be, well, rewarding.

“The most effective employee incentive is the one the employee wants,” Schier says.