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Reward-based incentives key to retention as employees seek ways to save

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Research shows nearly one in three (28%) of UK employees would be more loyal to a business that offered modest rewards or incentives, such as a £50 gift card, as people continue to seek ways to reduce the impact of the cost of living crisis.

The survey of more than 1,000 UK adults, commissioned by the Gift Card and Voucher Association (GCVA), found that just under half of households are worse off than they were this time last year, with 12% experiencing a significant impact on their personal finances. As a result, employees are looking for more ways to save.

Whilst rewards and incentives are effective in a broad range of scenarios, the impact of rising food prices, energy bills and mortgages mean that they are particularly valued by employees looking to their employer for support.

However, despite opportunities to reward and support staff, as well as aid talent retention, the majority of employers have not taken any action to help ease the impact of rising costs. Less than one in six (15%) employees have received support from their employer, with the most popular method of doing so being an increase in salary (55%). Some staff have also been given a one-off bonus (9%).

Whilst pay increases and bonuses will offer some support to employees facing increasing costs across the board, these methods are unlikely to be sustainable as businesses too face increasing cost pressures. Some employers are utilising other means to give staff a boost, for example, over a quarter (26%) of employees said that they were given gift cards as a form of bonus or reward and a further 18% received a gift card specifically to pay for essentials.

Employers also have an opportunity to support local businesses struggling with reduced trade and higher costs. Gifting employees with a local gift card could boost shopper demand and encourage people to spend with smaller businesses.

Gail Cohen, director general of the Gift Card and Voucher Association (GCVA) said: “There’s a real opportunity for businesses to utilise gift cards to increase loyalty and retention. Whether it be in the form of offering a reward to employees or an incentive to shoppers, our research shows that the impact of gift cards used in this way remains strong.

“Despite this, employers would be able to better support, reward and incentivise employees if the tax-free allowance for trivial benefits was increased from £50. With inflation fueling high prices, people are able to get considerably less for £50 than they would have previously. As a result, there is a case to be made for increasing allowances to encourage more businesses to provide tangible support and boost morale in challenging times.”

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