I once worked at a company that gave every employee a gift basket for Christmas. Sure, the company could have spent the same amount on giving us all a small cash bonus—but somehow, receiving a physical Christmas present felt far more meaningful. As I unpacked a bottle of sparkling wine, a jumbo box of chocolates, deli meats, and delicious cheeses, I felt nothing but fondness for my employer. This was many years ago now, but I’ll never forget the feeling when my first gift basket arrived out of the blue.
And that’s the secret of tangible rewards. If done right, they can be deeply meaningful and motivating for employees. Rewarding your employees for their loyalty, hard work, or specific achievements can be a powerful way to enhance your company culture and boost productivity.
But the key is to get them right. You don’t want to invest in tangible rewards, only to find you’ve accidentally demotivated, or even offended, your team. In this article, we’ll break down how to optimize your tangible reward scheme to get the best return on your investment.
What Are Tangible Rewards?
Tangible rewards are rewards that can be seen and quantified—such as vouchers, cash bonuses, a pay rise, company merchandise, or gift cards. By contrast, intangible rewards are those that are invisible but also meaningful—for instance, public praise from a manager, an extra day off, or a thank you note.
Tangible and intangible rewards are both important for creating a motivating and productive company culture. Employees appreciate receiving recognition for their efforts and loyalty, both in the form of specific praise and feedback and in real monetary terms.
Why Do Employees Prefer Tangible Rewards to Cash?
While cash bonuses and salary increases are forms of tangible rewards, we usually use the term to refer to non-financial perks, like gift cards, meal vouchers, or merchandise.
As it turns out, while we might expect employees to be as (or more) motivated by cash, research by the University of Pittsburgh confirms that tangible rewards pack a lot more punch when it comes to boosting employee motivation. Why?
According to the research, there are three major factors at play that make tangible rewards so much more motivating:
1. Tangible Rewards Are Considered Separate from Salary
Heidi Brockman, the Chief Human Resources Officer at the House Buyer Network, believes the issue is employees already expect to be paid a certain amount of money in exchange for their labor. When employers try to boost motivation with more money, it isn’t long before employees simply mentally lump the bonus and the salary together:
“Although pay raises and bonuses are tangible rewards, as a business we consider them a standard. Tangible rewards [by contrast] are motivational gifts, so to speak.”
The research supports Brockman’s experience. Willie Choi and Adam Presslee, the experts behind the research conducted at the University of Pittsburgh, refer to this as a joint versus separate mental frame. Whereas tangible rewards tend to be thought of as distinct from an employees’ usual compensation, cash incentives quickly come to be regarded as an extension of it and, consequently, feel less exciting.
In other words, our bonuses quickly become a “hygiene factor,” not a “motivation factor”—something that we take for granted. That’s not to say employees won’t appreciate a cash incentive. It’s just that, in terms of boosting employee motivation, tangible rewards simply drive a bigger impact.
2. Tangible Rewards Meet Wants, Not Needs
Whereas cash incentives are typically used to cover pragmatic purchases (as an employee’s salary might be), tangible rewards are more likely to be spent indulgently. They’re motivating because they say to the employee: “Go ahead, splurge a little — you earned it!”
Employees are more likely to look back fondly on the home espresso maker they purchased with their rewards points (or that surprise Christmas gift basket!) than to cherish the memory of the electricity bill they paid off with their bonus. Thus, tangible rewards deliver a more salient emotional impact.
3. Tangible Rewards Are Unexpected
Tangible rewards typically come as a surprise. Whereas cash bonuses are often promised and worked towards, tangible rewards tend to be delivered spontaneously—and we tend to be more motivated by unexpected rewards than expected ones.
For instance, Choi and Presslee conducted an experiment in which some participants received unexpected tangible rewards, while others were incentivized with planned cash prizes. Those in the unexpected condition showed significantly higher goal attainment than their counterparts.
Choi and Presslee’s findings are consistent with an idea long endorsed by behavioral psychologists: variable rewards yield better, more consistent performance than rewards delivered on a fixed schedule. The unexpected nature of a reward appears to be key to unlocking motivation.
4. Tangible Rewards are Timely
For Anthony Martin, the CEO of Choice Mutual, tangible rewards are even more effective motivators than cash incentives because they are delivered directly after the employee has done something to excel. He remarks: “Most people need to know that they are doing a great job right ‘in the moment.’”
Martin has also found that tangible rewards can also pack a bigger punch than cash because they incentivize both the employee and their peers. Whereas an employee may be discreet about receiving a bonus, companies can use tangible rewards to publicly acknowledge outstanding performance: “Employees get something specific for a job well done, and their peers see them receiving praise.”
Benefits of Tangible Rewards and Incentives
A thoughtfully designed tangible rewards scheme can make an outsized positive impact on your business. Specific benefits of tangible rewards include:
1. Improved job satisfaction and retention rates
Sarah Jameson, the Marketing Director of Green Building Elements, has found that tangible rewards increase employee job satisfaction and retention by showing employees that their performance is recognized and appreciated. She explains:
“A viable rewards and recognition program signals to employees they are not treated as mere statistics to be exploited for the company’s benefit. By providing these incentives, we demonstrate that our company culture is founded on the well-being of our employees and that the company is committed to addressing all aspects of an employee’s life, both work-related and personal.
When employees believe they are making a difference, they become more invested in their jobs and experience incredible pride and happiness in their achievements. All these factors will increase employee retention, reducing the likelihood of employees leaving our organization while making employees feel more excited and engaged at work.”
2. Increased productivity and performance
Reward and recognition have a proven impact on employee engagement rates, which in turn drives overall productivity and performance. For instance, the Harvard Business Review reports that companies with highly engaged workforces maximize their profits and improve productivity. This doesn’t only come down to hard work—engaged employees are also more creative and collaborative, resulting in the kind of innovative thinking that drives business growth.
3. Enhanced company culture
Linda Shaffer, the Chief People Operations Officer at Checkr, has found that tangible rewards “have a positive effect on a company culture by creating an environment of recognition and appreciation.” Shaffer elaborated:
“When employees feel appreciated and rewarded for their hard work, it reinforces the importance of achieving their goals and promotes collaboration among colleagues. This can help create loyalty, positivity, and open communication within the organization as well as increase overall job satisfaction.”
Types of Tangible Rewards: Tangible Rewards Examples
One of the easiest ways for employers to manage tangible rewards in their workforce is to use a rewards and recognition platform that distributes and tracks points that can be redeemed in exchange for physical merchandise, experiences, or other items. Rewards catalogs may include everything from jewelry, apparel, sports equipment, concert tickets, electronics, charitable donations, custom company swag—the list is really endless. At Fond, we’ve partnered with Amazon Business to bring thousands of rewards options to our catalog.
Here are 40 examples of tangible rewards for all budgets:
- Amazon gift cards (an employee favorite!)
- Gym membership
- Food baskets
- Wine or beer tasting selection
- Cheese or charcuterie tasting
- Spa gift cards
- Donation in your name to a charity
- Gift cards for online training courses
- Travel gift cards
- Company swag
- Gift cards for food delivery companies (great for new parents!)
- Gift cards for a laundry or home cleaning service
- Branded technology (such as wireless headphones or speakers)
- Personalized gifts (such as initialed leather goods or towels)
- Healthy snack boxes
- Tickets to a local sporting event or a show
- Uber gift cards
- Custom phone cases
- Standing desks
- Restaurant gift cards
- Wall plaques
- Gift cards for an online meditation or yoga program
- A journal (such as a gratitude journal or one-line journal) or day planner
- A subscription to Audible, Spotify, or YouTube
- A FitBit or Garmin watch
- Golf lessons
- Hot air balloon rides
- Cover their phone, electricity, or gas bill for a month
- Custom backpacks
- A subscription to a business journal (The Economist, Harvard Business Review, Fortune Magazine)
- Car wash gift cards
- An e-reader
- Kitchenware, such as a blender or air fryer
- A plant to keep in the office (or the home office)
- Desk accessories
- A massage gun
- Movie tickets
How To Provide Tangible Rewards Effectively
Just as important as deciding what rewards to use, you need to plan how (and when) to reward your employees. Here are the experts’ top 5 tips for using tangible rewards to motivate employees:
1. Communicate the reasoning behind the reward
“Be sure to supplement tangible rewards with recognition, appreciation and autonomy in order for them to be effective,” suggests Shaffer.
Instead of simply rewarding the employee with points, take a moment to write a note detailing all the things you appreciate about them and their work. When you attach words of recognition to tangible rewards, suddenly it means a lot more.
Now, not only is the employee receiving a physical token of appreciation for their hard work, they’re also receiving a message with highly personalized praise. This fulfills internal needs like the desire to feel competent, seen, and appreciated and thus, praise can transform an external motivator into an internal motivator, too.
2. Provide rewards in a timely manner
Research shows that rewards that are delivered immediately after an accomplishment are more effective at motivating employees. In a study by Cornell University, people were asked to complete a somewhat tedious, repetitive series of tasks (spotting the difference between two images). Some people expected to receive an immediate reward after they finished each task, whereas others expected to receive the same reward in a month. 20% more people in the “immediate rewards” category stuck at the tasks until they were all complete, even after the reward was removed.
In other words, tangible rewards are more motivating if the employee can make an immediate and direct connection between their behavior and the reward.
3. Think carefully about what you reward
Anton Konopliov, the founder of PR agency Redline Digital reminds us to be mindful about what behaviors we reward:
“Tangible rewards increase the risk that employees will compromise on tasks that are less likely to result in rewards in favor of those that will. Hence, selectively and sparingly using tangible rewards is the best strategy. Be deliberate and thoughtful to avoid reducing the rewards’ impact, narrowing your employees’ focus, and adversely affecting ROI.”
4. Customize your rewards
Martin advises HR teams to think carefully about what rewards to offer. A well-designed reward scheme will be personalized to your unique workforce, their demographics and preferences:
“The best practice in using tangible rewards is to customize them. You may find that your employees prefer a tangible reward seen as a status symbol by their peers. And these status symbols can often be predicted by demographics. For example, baby boomers may prefer watches, while millennials want electronics.
It makes the best sense to let your employees choose their own reward by giving them options. The best tangible rewards combine recognition, choice, and quality brands. Investing in this strategy will help you get a much more positive return on your investment.”
5. Use them as part of a comprehensive reward and recognition scheme
Tangible rewards can be highly motivating, but only if they form part of a broader culture of appreciation and recognition, says Jameson:
“In my opinion, the best way to use tangible rewards to motivate employees is to incorporate them into a more extensive employee incentive program. This program will comprehensively outline cash, tangible, and intangible rewards and privileges that employees can attain once they hit or exceed predetermined sales numbers, productivity, or other performance-based standards as determined by employers or managers. Once communicated clearly and implemented consistently, this employee incentive program will significantly impact employee morale, boosting employee retention and enhancing job performance in the workplace.”
Tangible rewards can transform employee motivation
Creating an effective rewards program based on tangible rewards can demonstrate your appreciation for your employee’s hard work and loyalty, creating a more positive and productive company culture. Getting them right requires the tools and strategy to offer customized rewards, in a timely manner, as part of a well-designed recognition and rewards program.
At Fond, we specialize in helping businesses design recognition and rewards programs that are genuinely meaningful to employees. If you’d like to learn more about how we could help you level up your company culture, check out our website or click here to request a demo.