BACKGROUND AND HYPOTHESES DEVELOPMENT
Tangible rewards are non-cash incentives that have a monetary value, which can take a variety of forms, including trips, debit cards, gift cards or certificates, and merchandise They are distinct from other forms of recognition that have no (little) monetary value such as thank-you letters, plaques, or token gifts Incentive programs providing tangible rewards may be short-term in nature (e.g., a month) with different performance metrics used each program or long-term (e.g.,annual) with the same metric(s) used throughout. Tangible rewards are used in a variety ofื industries, for various functional areas (e.g., sales, production, and administration) and acrossseniority levels from junior employees to senior managers (Incentive Federation Inc. 2007; Peltier
et al. 2005).
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Firms providing tangible rewards often use points systems or gift cards in order to
give employees choice as to the rewards received (Jeffrey and Shaffer 2007). In points systems,
employees are given points as the reward, which can then be redeemed for tangible rewards, usually
from a catalog or website containing numerous choices (Alonzo 1996).
Recent surveys indicate tangible rewards are an important component of incentive schemes. An
Incentive Federation Inc. (2007) survey study indicates total annual tangible reward spending in
the U.S. of $46 billion. The same study reports that 34 percent of the 1,121 U.S. companies
surveyed use merchandise or travel rewards, with larger companies (revenue greater than $100
million) more likely to use them (57 percent). Similarly, Peltier et al. (2005) report that 57 percent
(65 percent) of their 235 survey respondents use merchandise (gift card) awards. Finally, the
merchandise reward amounts are often substantive portions of total compensation. Jeffrey et
al. (2011) report that among firms budgeting at least $250,000 for merchandise rewards, the reward
amounts range from 4.4 percent to 8.8 percent of employee annual salary.