The Surprising Impact of Gift Cards to Employee Wellness

Employee wellness programs have become a popular business strategy for enhancing productivity and reducing healthcare costs. However, the effectiveness of these programs often hinges on employee motivation.

A new study from Brigham Young University challenges conventional thinking about incentive structures within such programs, suggesting that gift cards may be a more potent motivator for healthier outcomes than cash rewards.

Rethinking Incentive Structures

Previous research has indicated that employees typically prefer cash rewards when given a choice. However, the study led by Bill Heninger, Steve Smith, and David Wood suggests that cash incentives may not be the most effective option.

"You would presume that when people pick the reward type that is the most appealing to them, it would have the most motivational power," Smith said.

While cash remained a top choice as an employee incentive, the study showed gift cards to have the most significant impact on employees’ well-being. "But that wasn't the case. Employees choosing to be rewarded with gift cards actually reaped the greatest health benefits. So the way you are choosing to incentivize yourself may not hold the strongest motivational power," Smith explained.

The Power of Gift Cards

The research tracked an institution's wellness challenges, where participants could select their preferred reward upon completion: a cash bonus, a gift card, or a tangible item of equivalent value. While cash rewards were chosen more frequently (60%), participants who opted for gift cards were approximately 25% more likely to complete the wellness challenges, even after accounting for other relevant factors.

According to the authors, gift cards may offer a unique balance between hedonic value and fungibility, making them more motivating than cash rewards. Cash is fungible and can be used for any purpose, whereas tangible items may not hold as much hedonic value.

"A George Foreman Grill is not fungible, a gift card is not fungible, so from an economic perspective, it makes the most sense to choose cash," Smith said. Gift cards provide flexibility while offering a sense of enjoyment, placing them in an optimal "sweet spot" for motivation.

Wood explained the possible psychology behind this. "People keep mental accounts," he explained. "If you work and make $10, that's your work money. If you find 10 bucks on the ground, then that's free money. You might go out to lunch with the free money when you normally wouldn't with your work money."

However, the research does not yet suggest that organizations should exclude other incentives and only offer gift cards. Smith says, "At the very least, we can say that gift cards seem to help."

While further research is needed to understand the impact of gift card incentives fully, the study suggests that they can be a valuable tool for promoting healthier behaviors among employees, leading to potential cost savings for organizations.

"Our hope is that this is one of many studies that can help us find out how to make these wellness programs as successful as possible," Wood said. "If you can get your employees to be more healthy there are big, big cost savings. Giving employees a reward to help them stay healthy is absolutely worth it."

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