Reviewing your employee reward programmes can be overwhelming if you decide on implementing a new platform. Mid-sized firms spend on average £360,000 per year on employee rewards, whilst Fortune 500 companies spend over £720,000. With more and more companies looking to invest in employee recognition and reward, it’s essential to have the right questions to hand to evaluate your options.
Reward platforms can offer a wealth of ways to boost motivation amongst your workforce, but there are many things to consider to ensure you choose a flexible platform that can work for your organisation. We’ve outlined five top considerations to keep in mind when speaking to potential vendors.
1. Understand the reward distribution process
Reward platforms vendors approach the reward purchasing process in various ways, so it’s crucial to clarify how it might work for your organisation. Chances are, you’ll set aside an annual budget for reward spend. Some organisations will set a budget based on a total figure (e.g. £20,000 per year), or some may finalise a figure by selecting spend per head (e.g. £10 per head, per year).
The first thing to consider will be how to distribute the reward across your business and through the hierarchy. For example, will you provide all managers with a small pot of money to share amongst their teams, or only empower senior managers or department heads? Once the budget holder distributes the reward to the receiver, how will they spend it? Most reward platforms will offer vouchers – usually digital – in a catalogue that the user can browse through. If your organisation has a global presence, what voucher brands are available in countries outside the UK?
You may want to offer more than digital vouchers, so consider if the vendor can provide merchandise or bespoke rewards (such as an afternoon off work).
At the end of the reward distribution process, consider what reporting is available. How will you know when reward budgets are running out and need topping up? You’ll also need to be able to report on reward distribution for tax purposes.
And when reward budgets do need boosting, will the additional money be taken from a float or will the vendor invoice your organisation as required?
2. Enquire about issuance versus redemption
One big difference between different reward platform vendors is how they charge you. Some vendors will charge on “reward issuance”, meaning you will be invoiced and charged as soon as the reward gets sent to an employee. The risk of this method is that the employee may not redeem their reward, yet you will have already paid out.
In comparison, some vendors will invoice you on “reward redemption”, meaning you will only be invoiced once the employee has redeemed their reward. This method ensures that you can recoup any unspent employee reward, which is more common than you might first think. Recouping unspent rewards means you can reinvest it back into your employees or other forms of recognition and reward.
3. Ask about breakage and expiration
Another vital area linked to reward redemption is expiry date and breakage. Think about what might happen if you get invoiced on issuance for a £100 reward voucher, and the rewarded employee decides not to spend the voucher. Will you still get invoiced for it, or will the points expire, and you’ll get the money back to spend elsewhere?
Some vendors fail to set expiry dates on their rewards and charge on issuance, meaning you’ll never get your money back for unredeemed rewards. Be wary of vendors who get you to commit to a specific expenditure on points, which means you’re locked into the platform until you use them up.
Setting an expiry date for rewards is useful. Your employees won’t experience the full benefit of recognition and reward unless they redeem their reward for something positive and meaningful. The expected expiry date tends to be 12 months, but ask your vendor if dates are flexible.
Breakage refers to the unspent ‘points’ or ‘rewards’ left in the platform when your employees don’t spend them. Some vendors are structured to make money from breakage, so check how it will work for your organisation.
4. Be wary of added fees
Reward platforms offering free or low-cost access tend to make up their money by adding margins to rewards. This approach could mean that the end-user of your platform (your employees) may not see the full value of the money you’re investing in as a business. Reduced value can often be the case for merchandise catalogues, where some users quote seeing products marked up 30-50% versus direct from the retailer. These marked-up prices mean it can often be more effective to purchase a digital voucher/gift card, such as Amazon, to purchase the product you’d like online.
There tends to be two pricing models for employee reward programmes – the ‘marketplace’ model or the ‘per employee per month’ model. The first model means the employer pays a percentage of their reward spend on the platform, and the software licence is often free. For example, an organisation with 1,000 employees and £300,000 annual reward spend could have a 10% fee, meaning you’d pay £30,000 per year.
The second model works best for large organisations that are doing more than just rewards and engage employees frequently. For example, an organisation with 1,000 employees may pay £2.00 per employee, per month, equating to £24,000 per year.
For both of these models, be sure to enquire about potential implementation or setup fees to get you up and running on the platform.
5. Think about currency and value
If your entire organisation is based in the UK, you can skip this point. But if you’re an organisation with employees based in different countries, then reward currency and value should be a priority consideration when choosing a reward platform vendor.
Ask your vendor how it will work when you distribute £10 of reward in the UK and £10 to another country, such as India. Will the value be the same, or would the employee in India receive more value due to the cost of living variance?
Your vendor should make allowances in the reward platform to ensure that all of your employees are rewarded fairly and consistently. Vendors can use cost of living databases such as Numbeo to determine how reward should vary, ensuring you get the best value from your investment.
Finally, are the reward options varied enough to cover different geographies? Rippl uses WeGift as its leading voucher supplier, offering over 700 brands globally to our customers. This partnership ensures there is a sufficient amount of options available to employees.
Are you looking for more guidance on choosing a reward and recognition platform? Download our “Ultimate Guide to Recognition and Reward” for a handy pull-out guide of questions and the latest industry stats. Request a demo here if you’d like to see how we approach employee reward in the Rippl Incentives, Recognition and Reward platform.