· 6 min read · Features

Tis the season to be incentivising

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Once upon a time, all an HR director had to do was organise a hundred or so turkeys to be delivered to grateful staff in the days leading up to Christmas.

Nowadays, the topic of Christmas incentives begins to rear its free-range organic head in late summer, and by now many will be placing orders for this year's round-robin of 'thank-yous' for staff.

For many employers, 2012 was another year of financial uncertainty and flux. Some HR directors may even question whether or not it is appropriate to give staff Christmas gifts at all. If staff have gone through cutbacks or even redundancies, it may feel tactless to celebrate. And some even think the traditional season of giving is not the right time to reward staff. Andy Philpott, director of sales and marketing at employee benefits company Edenred, says Christmas incentives are simply a bad habit born out of "lack of thinking".

"People leave it too late to do anything differently and in some cases, particularly in smaller organisations, delegate responsibility to somebody who is only interested in getting the job done. A bottle of wine, chocolates or cash, which get lost in the Christmas melee, have very little impact."

Instead, Philpott argues, employers should think about how staff feel in January - broke, sick of food and wine, and looking at a long stretch until the January pay packet. "If you want to make an impact, think about splitting a reward between December and January," he advises. "You get double the impact for the same budget and when employees receive their reward in January they will value it more."

This radical approach may be a step too far for many HRDs. Christmas is the season to be jolly, so holding back until January may not go down so well with hardworking staff. "Generally, most of us are in festive spirits as we approach Christmas and as directors we like to acknowledge the contribution people make throughout the year. It feels fitting to reward the team," says Maria Rands, HR manager at design consultancy, PDD.

Even in years when cash is tight, Christmas incentives still have a place. Cary Cooper, professor of organisational psychology and health at Lancaster University Management School, says: "It is important to say thank you to staff at the end of the year - really, we are talking more about a thankyou than an incentive." From a strategy perspective, directors may wonder if staff feel gifts are appropriate if the business has undergone redundancies, but Cooper says staff will understand that a token gift at Christmas does not come in place of a colleague's salary - it is simply a gesture of thanks.

Whether or not Christmas gifts actually serve the purpose of motivating staff is up for debate. As Rands notes, employees may view a Christmas gift as an entitlement rather than an expectation.

Dan Andrews, HR manager at PR agency Allison+Partners, agrees: "While it is indeed expected, everyone understands that with the economy and business demands it may be negotiable."

The question of what to give staff remains as pertinent as ever. The days of a turkey in a box are long gone. Many employers still choose to reward staff with gifts along a food and drink theme, and Tracy Finn, head of corporate services at Harrods, says the company's luxury Christmas hampers remain as popular as ever. What does change, however, is the nature of the organisations purchasing them, depending upon how the economy has treated each sector.

"Three years ago during the property crisis, mortgage brokers weren't buying hampers," she says. "We see a cross-section of industries during our peak time from September to December." The Harrods offering is very much one of luxury and Finn says many smaller organisations choose to send staff a smaller gift, such as a bottle of champagne.

"It is affordable, but it still has the Harrods brand and a luxury feel," she says. The evergreen appeal of luxury hampers remains because they can offer staff something they can share with their families, and tick the box of a gift a person would not normally buy for him or herself.

In stark contrast to a luxury hamper, HRDs and incentive providers are reporting high demand from staff for vouchers and other money-saving incentives at Christmas. Cash bonuses, however, "just get swallowed up in the December pay packet," and therefore lose meaning, argues Jo Taylor, corporate sales manager at Asda Business Rewards.

Her view is backed up by Sian Bishop, head of HR at storage company Apex Linvar, who says one year she tested giving staff £20 from a sports and social club scheme usually used to heavily subsidise Christmas events. "The general feedback was they pay into a sports and social for events, not a savings scheme," she says.

Bishop reports strong interest in the Asda Business Rewards scheme, pointing out that the vouchers can either be used to top up the family food shop or to buy clothes or hardware, thanks to the diverse nature of the store. Vouchers and money-saving incentive schemes have held up during the recession as employers search for ways to reward staff that will have an impact upon their bottom line - as well as that of the organisation.

Kuljit Kaur, head of business development at Voucher Shop, says: "Giftcards and retail vouchers can and do attract a discount. This is encouraging corporate buyers to switch to a voucher or card-based gift rather than simply add to an employee's salary."

For HR directors, there is also the option of offering staff further time off, either over Christmas or in the form of an extra day's holiday the following year. Some employers consider closing the office from Christmas until New Year as part of their incentive programme. "We close our offices from Christmas Eve until January 2 and we feel this time is one of our most valued 'gifts'," says Andrews. "The gift of time goes a long way toward motivating staff."

For Cooper, the ideal Christmas gift for staff is share ownership and he points to the John Lewis Partnership as an example, but he acknowledges that this is not always feasible. Instead, he suggests polling staff or offering four or five options and letting them choose which they would prefer. While this again is not always feasible for very large companies, two in three individuals in the UK work for a SME, as Cooper points out.

He warns against the traditional Christmas party complete with silly hats, too much alcohol and recriminations the following day. "For many, there is an obligation to go, so it's not really an incentive." Enforced "fun" may not go down well with employees. "Ask them what they want instead," he urges. "It could be that all staff want is something as simple as a bit of flexibility in their jobs."

Those working in the creative industries are aware of an urban legend.

Tales circulate of the advertising agency boss who rewards his male staff at Christmas with handfuls of 'heavenly money', the official currency of 'gentleman's nightclub', Stringfellows.

This mythical figure has never been named, but all in the industry know somebody who knows somebody who has been on the receiving end of this 'benefit'.

As far as unusual or different Christmas incentives go, it is hard to top this potentially very tall tale.

But as HR directors search for ever more memorable and bespoke ways to reward staff, in the hope the organisation's gift will not simply become lost in the seasonal bombardment of food and booze, a definite pattern emerges.

"I heard of a company that took its entire staff to the Arctic Circle for Christmas," says Cary Cooper, professor of organisational psychology and health at Lancaster University Management School.

"I think they had done quite well that year and wanted to offer staff something unique."

HR directors, it seems, have been well and truly bitten by the travel bug. When it comes to finding bigger, better and different ways of rewarding staff, travel hits the spot every time. The results are not always successful. "A finance director at a media company organised a weekend away before Christmas on the Eurostar," recalls Maria Rands, head of HR at design consultancy, PDD.

"The weather turned out so bad they all got trapped and thrown out of their hotel and had to travel for miles to get home, two days late. Lesson learned!"

It is safe to say that, next year, the company went with a more traditional approach to perks.

The trend for offering staff travel shows no signs of abating, however, says Kuljit Kuar, business development director at online employee benefits site, Voucher Shop: "Comparing this year to 2011, we have seen a significant increase in demand for aspirational travel vouchers, such as those provided by Thomas Cook, suggesting that the annual break away is as important as ever in these tough times."

New providers have also entered the travel-based perks market. Airport lounge provider Servisair has launched a b2b offering of gift certificates enabling staff to access lounges at major airports across the UK, Europe and Canada. "For those employees going abroad, this is a real treat," says Shaun Weston, travel services director at Servisair.

Offering staff perks related to travel and destinations isn't only the preserve of well-off SMEs with smaller numbers of staff to reward. Simon White, business development director at travel incentives company Protravel, says: "A member of staff given a weekend break worth £300 is likely to associate the feelgood factor with their employer far more than if they were given £300 in cash. Leisure experiences can be purchased at a relatively low cost, but have a high perceived value - £20 is simply £20, but £20 spent to give a member of staff 30 minutes go-karting is personal and fun."