Annual Gifts for all Employees

I had a HR head of a mid size company call me recently asking me to refer a few good merchandise suppliers for their annual gifting program. Essentially, the company gives out an annual gift to all employees on a particular day - the gift is typically a laptop bag, a nice pen set or equivalent (value around 500-2000 bucks).

From a recognition perspective, I have seen this practice to be unsustainable and invariably it gets dropped at some point of time in the company’s evolution - either because of size, budget cuts in a bad year or someone senior enough simply asking the question "Why are we doing this?".

Before spending the money on this, you need to ask the questions – what business value do I get by spending money on an annual award? How meaningful is the award for my employees? Are there better ways to use the same budget and do something more meaningful and more value adding for the business and for my employees? My idea is not to discourage companies from doing annual gifts, but to share some perspective I have on this.

If you really want to do an annual gift that will serve a purpose, give them something that most individuals as consumers will not buy (or see value in buying), but is very desirable – e.g. Bose headphones, a Hidesign bag, a Mont Blanc pen etc. This way, they get something they would normally not buy on their own, but have an aspiration for - so they feel really good about the gift. This means that they would tend to talk about this to other people and help build your employer brand etc. Again such aspirational gifts tend to be expensive and may not fit within your budgets. For simple branded utility stuff, such as laptop bags, pen sets etc., a better idea may be to set up an online branded company store and allow employees to buy stuff at discounted prices. Many merchandisers offer a simple online platform for this now - free if you negotiate hard enough and don't need too much customization.

The most well known example in India of the "Annual Gifting" practice was Cognizant, where all employees would get an annual gift every year. In the last few years, before they discontinued this practice, employees literally had to go to a merchandise warehouse in a remote industrial area to collect their gift. Guess, someone at Cognizant asked the question "Why" and they scrapped this program last year.