At a glance
By Emma Foster
Selecting the right gift for employees can be a bit like navigating a maze. Considerations like how much to spend, tax implications and how to choose something suitable can complicate matters.
A thoughtful choice can be the difference between a morale-boosting gift and one that goes straight to the regifting pile.
A 2019 study from the Advertising Specialty Institute in the US found that 78 per cent of corporate gifts are either thrown out or given away.
Similarly, according to the Snappy Gifts’ Employee Happiness Survey, 40 per cent of people who have received a corporate gift have either regifted it or thrown it away.
Yet corporate gifts are not without value. The Employee Happiness Survey also revealed that 45 per cent of employees believe their value at a company is reflected by the gift they receive. However, one in three say they have never received a corporate gift.
Behavioural economist Max Reisner says that, with a bit of thought, “the right staff gift, given the right way” can positively influence how people feel about their workplace.
“There’s a positive correlation between feeling appreciated at work – where gifting plays a big role – and the impact on your motivation and productivity,” says Reisner.
Studies back this up. For instance, a 2022 Gallup–Workhuman study found that workers in organisations that prioritise employee appreciation are up to four times more likely to be engaged.
Research firm McKinsey found that up to 55 per cent of employee engagement is driven by non-financial recognition.
1. Consider personalised gifts
Reisner believes that personalisation of gifts is key. Although many believe being across the hobbies and interests of every team member is too difficult, it need not be.
“I remember receiving a random email from the company where I worked with a simple two- or three-question survey – like what’s your favourite colour and favourite drink?” Reisner recalls.
“A week later, a package arrived with a water bottle in my favourite colour and a pre-made margarita, my favourite cocktail. That’s how easy it can be to make a potentially generic present quite personal, making the employee feel there’s effort and thought.”
Recruitment and HR expert Kathryn MacMillan adds that discussions with employees around end-of-year gifting can have positive outcomes beyond eliciting their gift preferences.
“It’s not just an opportunity to draw out your team’s preferences,” says MacMillan, the managing director of CIRCLE Recruitment & HR.
“It’s also a chance to get to know them, and every moment you engage with your team is a bonus in building your culture.”
2. Use a “suitability lens”
MacMillan says that “gift gaffes” generally occur when an employer hasn’t used a “suitability lens”.
“A bottle of alcohol, for example, is not suitable for all cultures or people who don’t drink,” she explains.
“Similarly, ‘gag’ gifts can often backfire as what one person thinks might be funny could actually be quite discriminatory to another.
“Also, remember that not everyone celebrates Christmas,” she adds.
“Some staff may prefer a donation made on their behalf to the company’s charity of choice, or a gift card to spend how they like – but it’s also sometimes lovely to receive a little surprise.”
3. Decide how much to spend
How much to spend can be another sticking point.
While there is no rule of thumb, the amount spent should be at a sustainable level for the business and at an equal value for each team member, MacMillan says.
4. Investigate the tax implications
Less often considered are the fringe benefits tax (FBT) implications of a gift to employees. This can be a common trap, because it can sometimes double the gift’s cost, says Elizabeth Lucas CPA, partner at global accounting firm Grant Thornton.
For Lucas, the main consideration is whether the gift falls within the minor benefit exemption from an FBT perspective.
“To be exempt [in Australia], it needs to cost less than A$300. You also need to satisfy yourself that the type of gift you’re giving is not something you’d provide regularly or frequently to that employee across the course of the FBT year,” Lucas says.
If the gift is not exempt, it is likely to be reportable on the employee’s annual income statement at its grossed-up value – which is typically nearly double its cost.
“For some people, that may affect any means-tested levies and allowances, such as family assistance or HECS debt,” she explains.
5. Look at the pros and cons of a cash gift
Rather than a tangible gift, some employers opt for a cash bonus or pre-loaded debit card. These may incur PAYG tax that is less expensive than FBT, Lucas says.
While a cash gift will generally be welcomed by employees, Reisner says it runs the risk of being too transactional.
“Research tells us the power of intrinsic motivators like appreciation and recognition actually sticks with people longer, while that of extrinsic motivators – like money – fades more quickly,” he says.
To achieve a longer-lasting impression, a generic gift like cash or a gift card can be given more meaning by how it is delivered, he says. For instance, the organisation could gather the team together and give a 30-second appreciation speech tailored to each person along with a thoughtful card.
6. Consider the potential emotional response
Shareable gifts such as food hampers or experiences, Reisner says, can be a powerful way to make employees “feel like heroes” to family or friends by demonstrating how they’re appreciated at work.
Giving employees gifts is a great opportunity for an employer, Reisner says.
“The emotional response is very similar to when you receive a gift from a friend or your partner.”
