The Right Way to Reward: Avoiding Common Mistakes When Giving Employee Gift Cards

Gift cards have become a staple in employee recognition programs, offering flexibility, convenience, and a personal touch that traditional rewards often lack. But while gift cards can be a powerful tool for boosting morale and showing appreciation, there are several pitfalls organizations frequently encounter. Missteps can lead to compliance issues, diminished impact, or even negative employee experiences.

In this article, we’ll explore the most common mistakes companies make when giving gift cards to employees—and how to avoid them. Plus, we’ll introduce Assembly’s new, free-to-signup gift card program, designed to make employee gifting simple and straightforward.

Why Gift Cards Are a Popular Choice

Gift cards are popular for a reason: they’re easy to distribute, let employees choose what they want, and can be tailored to fit any occasion—from birthdays and anniversaries to thank-yous and retirements. However, the simplicity of gift cards can be deceptive. Without careful planning, your well-intentioned gesture could backfire.

Common Mistakes When Giving Gift Cards to Employees

Ignoring Tax Implications

One of the most overlooked aspects of employee gift cards is taxation. In most countries, including the U.S., gift cards are considered taxable income and must be reported on employees’ tax documents. Failing to report them properly can lead to compliance headaches for both the company and the employee. Always consult with your payroll or HR department to ensure you’re following the law, and communicate any tax implications to your team.

Lack of Personalization

A generic gift card can feel impersonal, especially if it’s for a store or service the recipient doesn’t use. Personalization is key. Consider surveying employees about their preferences or offering a selection of gift cards. Assembly’s platform, for example, allows you to send money that can be used across a wide catalog or for specific curated rewards, ensuring your gift is meaningful.

Overlooking Company Policy or Budget

Gift card programs should align with your company’s recognition policies and budget. Inconsistent or ad-hoc gifting can lead to perceptions of favoritism or unfairness. Establish clear guidelines for when and how gift cards are given, and stick to them.

Choosing Inconvenient or Restrictive Cards

Some gift cards come with hidden fees, short expiration dates, or limited usability. These restrictions can frustrate employees and diminish the value of your gift. Opt for cards that are widely accepted, have no fees, and offer digital delivery options. Assembly’s catalog includes a variety of flexible options, from e-cards to curated rewards.

Failing to Communicate Clearly

A gift card should never arrive out of the blue with no explanation. Always include a personal note or message explaining the reason for the gift. Assembly’s e-card feature lets you create a kudo board or use customizable templates, making it easy to add a heartfelt message and even let others sign the card.

Neglecting Cultural Sensitivity

Be mindful of your employees’ diverse backgrounds and preferences. Some gift cards may not be appropriate for all cultures or lifestyles. Offering a range of options or letting employees choose their reward can help avoid unintentional offense.

Value and Equity Issues

Ensure that the value of gift cards is consistent and based on transparent criteria. Disparities can lead to resentment or perceptions of unfairness. Automated gifting solutions, like those offered by Assembly, can help standardize the process and ensure equity.

Administrative Oversights

Tracking who received what, when, and for what reason is essential for both compliance and program effectiveness. Assembly’s platform provides robust tracking and reporting features, so you never lose sight of your recognition efforts.

Best Practices for Effective Gift Card Programs

• Ensure Compliance: Always check tax laws and company policies before distributing gift cards.
• Personalize the Experience: Use platforms like Assembly to tailor your gifts and messages.
• Choose Flexible Options: Select cards or rewards that offer maximum choice and convenience.
• Communicate Thoughtfully: Pair every gift with a personal note or group message.
• Standardize and Track: Use automated tools to ensure consistency and maintain records.

Introducing Assembly’s New Gift Card Program

Assembly’s will soon launch its new gift card program that is designed to make employee gifting easy to personalize. Here’s what you get:

• Free to Sign Up: The first tier is free and included in all paid Assembly plans.
• Self-Service Gifting:
  
  • 1:1 gift and card (free)
  • 1-to-many gift and card, with group signing (free)
  • Automated company-wide gifting (contact sales)
• E-Cards and Kudo Boards: Create customizable, animated e-cards for any occasion—thank you, retirement, birthday, anniversary, congratulations, marriage, and more.
• Flexible Gifting Ideas:
  
  • Send money for use across the entire catalog
  • Restrict funds to specific categories or curated rewards
  • Send gift cards or company swag
• Delightful Receiving Experience:
  
  • Delivery via text or email
  • Animated moments of delight
  • Option for recipients to send a thank-you back

Assembly’s platform takes the guesswork out of employee gifting, ensuring every recognition moment is meaningful, memorable, and easy to manage.

Ready to Transform Your Employee Recognition?

Don’t let common mistakes undermine your employee recognition efforts. Schedule a demo with Assembly today and discover how our new gift card program can help you create moments of delight, ensure compliance, and make every employee feel valued.

FAQs

Are gift cards to employees taxable?

Yes, in most cases, gift cards given to employees are considered taxable income and must be reported on their W-2. Always consult your payroll or HR department for compliance.

What are the best practices for giving gift cards to employees?

Personalize the gift, ensure tax compliance, choose flexible and widely accepted cards, communicate the reason for the gift, and track all distributions.

How can I make employee gift cards more meaningful?

Use platforms like Assembly to personalize messages, offer a choice of rewards, and create group e-cards or kudo boards for special occasions.

What should I avoid when giving gift cards to employees?

Avoid ignoring tax rules, giving impersonal or restrictive cards, inconsistent gifting, and failing to communicate the reason for the gift.