Wellness Rewards: Prioritizing Employee Well-being
Gone are the days when the carrot and stick method proved to effectively motivate employees in their workplace. Lisa Lai, a business coach, once wrote in Harvard Business Review that motivation is less about employees doing great work and more about employees feeling great about their work.
When employees feel valued and rightfully appreciated, they contribute better to their company. Even while looking for jobs, people nowadays don’t just look only for bounty paychecks. They seek companies that help in:
- their personal growth
- provide a healthy work environment
- aid work-life balance
- look after their overall wellness.
Employees seek such aspects because there has been a debilitating shift in people’s health conditions after COVID. Over 30% of Americans reported symptoms of anxiety disorder or depressive disorder, according to the National Center for Health Statistics’ Household Pulse Survey.
The Great Resignation, too, highlighted the insufficiencies of the workplace culture. It strongly emphasized the immediate requirement of workplaces that prioritize employee wellness.
Suggested Read: Everything About the 9 Dimensions of Wellness at Work
The need for employee wellness in the workplace has never been more pronounced than it is now!
So, what if I tell you that you could amp up your employee wellness game and simultaneously ensure organizational success?
Want to find out more? Let us dive deep into the article.
Well-being and health are becoming substantial factors when analyzing workplace culture. According to a survey, nearly 90% of employers now recognize the role of well-being as part of their broader business strategy.
What are Wellness Rewards?
Wellness Rewards are incentives or benefits provided to employees who actively engage in activities that promote their overall well-being and health. Employers, Corporate Wellness Programs, and Health Insurance Providers often offer these rewards to encourage people to adopt a healthy lifestyle.
For instance, an employer offers a $50 gift card to any employee who walks for at least 15 minutes daily for one month straight. The gift card incentive motivates employees to establish a regular walking routine. On accomplishing the task, the employee can earn a gift card and redeem those points to buy things.
That way, the company not only gains a healthier and happier workforce, but the employees experience benefits as well. It’s a win-win situation for both.
Why Wellness Rewards?
Everyone knows about the benefits of having an active lifestyle. Just google the top 10 benefits of running every day, and you’ll be redirected to an ocean of web pages. But those thousands of search results still fail to motivate most individuals to take up running. Why is that so?
Now, try offering a tangible reward to that same individual for running 2 km 3 days a week. I am not saying that it would bring about drastic changes. But you’ll notice that the individual has started putting in little effort.
Little by little, he will walk far! And by walking far, he will not only reach his destination but also be rewarded with an enticing perk!
This little enticing perk is where the concept of Wellness Rewards comes into play!
The central idea behind wellness rewards is that positive reinforcement can lead to sustained behavior change. Even small incentives can give employees a nudge towards adopting a positive and healthy lifestyle. The rewards are designed to make healthier choices more appealing and motivate participation in wellness activities.
According to research, 27% of pregnant women quit smoking completely after receiving shopping vouchers as incentives.
Offering fitness rewards is an effective way of motivating employees to adopt healthier lifestyles. The rising popularity of tying meaningful incentives to participation in wellness activities stems from the multifaceted benefits these programs can provide.
Some of the amazing benefits of wellness rewards are:
1. Improved Employee Health
Wellness rewards can improve employee health by directly incentivizing healthy behaviors and lifestyle choices.
Providing rewards for activities like eating a nutritious diet, exercising regularly, and practicing mindfulness encourages employees to take action to improve their health.
By rewarding such behaviors, wellness incentives can help lower BMI, blood pressure, cholesterol levels, etc., over time.
2. Reduced Healthcare Costs
When employees go for regular screenings and make positive lifestyle changes, they tend to have fewer doctor visits, lower risk of chronic illness, and less frequent medical emergencies. Such measures lead to filing fewer medical insurance claims.
Insurance companies then recognize these positive outcomes and offer reduced premium rates.
3. Improved Employee Retention
Salary is undeniably a decisive factor when applying for a job. However, research suggests that 90% of employees are willing to work for lesser pay if they find their job meaningful.
Rewards make employees feel valued and invested, increasing overall job satisfaction. They enhance loyalty and lead to lower turnover rates.
A new research report says that amplifying employee wellness showed reduced levels of burnout, enhanced social well-being, a rise in workplace belongingness, and a heightened feeling of thriving.
4. Decreased Presenteeism and Absenteeism
Absenteeism refers to employees being absent from work. In contrast, presenteeism refers to employees who are physically present at work but are not able to be efficient and productive at work.
These could be due to many factors, such as health issues, workplace stress, sleep disorders, etc.
Wellness rewards recognize these major health concerns and offer a space for employees to improve their condition. On performing wellness tasks, employees benefit health-wise and earn incentives as a bonus.
Those incentives can then be redeemed for accessing various health plans through which their well-being concerns can be addressed and prevented.
Types of Wellness Rewards
There are typically two kinds of rewards that managers can use to increase motivation within their companies.
Intrinsic rewards are psychological and emotional rewards that employees get based on their effort and ability. Such rewards are like a sense of fulfillment employees experience while engaging in purposeful and well-performed work.
These rewards provide internal motivation through work that aligns with one’s values, interests, and desires for personal growth and purpose.
Gains: a sense of accomplishment, improved confidence, and learning skills.
For example, an employee signs up for a Digital Marketing Course because he wants to climb the corporate ladder. He doesn’t require any tangible rewards for that. His inner determination to become a better marketer itself serves as a source of motivation.
There can be many factors that could be intrinsically rewarding in the realm of wellness. They are as follows:
1. Sense of Achievement
Meeting wellness goals and earning rewards can provide an inherent sense of accomplishment. Not just that, when you see your name and wellness points on the leaderboard, that can amp up your fitness motivation by multifold levels.
2. Self-Image Upliftment
Progress toward health goals boosts self-confidence and self-esteem.
3. Recognition from Peers
A pat on the back from peers for doing well in workplace wellness challenges goes a long way!
Many wellness programs offer a lot of resources that aid wellness learning.
For instance, Vantage Fit offers a library feature with many articles, podcasts, and wellness-related videos. By accessing such resources, employees can gain valuable knowledge on health, fitness, nutrition, stress management, and other topics to help them live healthier, more balanced lifestyles.
Employees, when motivated intrinsically, are more likely to stick to their wellness behaviors and performances. It shows they don’t need an external factor to make them tick! They are performing well because they want to perform well and not because they are getting something out of it.
As a result, they are likely to be more persistent than those who lack this inner drive.
"Any company that can provide a sense of meaning, purpose and happiness will be able to attract great talent."
– Fred Kofman, Executive Coach, Economist, Author
Extrinsic rewards refer to external incentives given to employees that are tangible and visible. They typically have monetary value, such as cash bonuses, prize money, salary raises, and additional benefits. Here, the motivation is entirely external.
In simple terms, an employee gets externally rewarded for accomplishing a task. In this case, it is a wellness activity.
Some Extrinsic Reward ideas in the realm of wellness are as follows:
1. Cash Bonuses or Contributions to Paychecks
Extra monetary compensation is a simple and popular reward. Some programs tie the cash amount to specific goals or activities.
2. Paid Time Off
Employees can earn extra vacation or personal days off to participate in wellness activities. This reward ties into work-life balance.
3. Gift Cards
Cards with a set dollar value to popular retailers and restaurants motivate many employees. Gift cards for health-related stores can also be used.
Fitness gear, health gadgets, apparel, and other wellness-oriented merchandise make great rewards. Companies can brand items with their logo and provide them as incentives to their employees.
5. Discounts on Services
Gym memberships, fitness classes, nutrition counseling, and more can be offered at reduced rates or subsidized as reward options.
6. Social Rewards
Free or discounted office parties, team lunches, and other group events incentivize wellness while building camaraderie.
7. Preventive Health Care Services
Some companies offer free annual physical check-ups, flu shots, holistic health services, and more to reward employees for accomplishing wellness activities.
Tips for Choosing the Right Wellness Incentives
Several important factors must be considered when deciding on incentives to encourage employees to step up their wellness game. The following suggestions can help you choose suitable workplace wellness incentives for your employees:
1. Personalize Incentives
Understanding your employees and what motivates them individually is crucial. The more personalized the incentives are to their specific needs, the more motivated they will be to participate in the wellness challenges.
For example, An employee who has diabetes would seek an incentive that addresses his health condition. It could be a nutrition consultation with a registered dietitian specializing in diabetes management. By providing this specific incentive, you’re offering him choices that align with his health goals.
2. Set Clear Goals
The more precise the reward or prize, the higher the likelihood of motivating participation. When employees clearly understand what they are working towards, it enhances their determination to achieve the target.
For example, suppose you’re introducing a step-challenge activity in your company. Instead of just telling your employees to “walk more,” you set a specific goal that says: “ Walk 4,000 steps 4 days this week and earn 200 redeemable points”. It helps employees quantify and simplify their fitness goals and make them seem achievable.
3. Offer Variety
Spice up your wellness incentives by offering a mix of rewards. Give small rewards for accomplishing small tasks and bigger rewards for hitting major milestones.
For example, consider giving rewards like reusable water bottles or pedometers to employees who complete daily fitness activities. You can also offer fitness badges to uplift their sense of achievement.
But you could offer activity trackers or even a paid day off for those achieving bigger goals. This range of rewards caters to different levels of achievement and keeps everyone engaged.
4. Keep it Flexible
When introducing a new wellness initiative, it’s imperative to keep an open mind regarding the incentives you offer. You don’t have to stick to a rigid plan from the beginning.
Instead, assess how employees respond to various rewards by taking consistent feedback. In response to this feedback, pivot your incentive strategies and make changes accordingly.
In short, Stay adaptable, so you can refine the program as you go along.
Implementing a Successful Wellness Rewards Program
“ We are embedding health and well-being at the heart of our business strategy because our people are our greatest asset, and we recognize that a healthy, happy, and committed workforce is vital to our business success.”
– Alex Gourlay, the former Co- chief operating officer of Walgreens Boots Alliance, Inc
Wellness Rewards Programs refer to win-win incentive-based programs employers implement in their companies. The basic goal of such a program is to encourage employees to maintain a good work-life balance.
There are a wide variety of platforms incorporated into wellness programs. In these platforms, employees are incentivized to partake in various well-being activities to uplift their health.
Activities include taking a push-up challenge, practicing mindfulness, eating a nutritious diet, and many more. After accomplishing such activities, employees collect points or rewards, which can be redeemed for various benefits.
Gift cards, insurance premiums, and discounts on health checkups are some of the exciting benefits that such wellness programs offer.
Suggested Read: Top 10 Benefits Of An Employee Wellness Program
Implementing and executing a high-impact rewards program demands a lot of proven strategies. Some of the best practices include the following:
1. Register in the Program
Start by opening up registrations. Provide your employees with a platform to register. The platform can ask for health details such as BMI, blood pressure, etc.
You can also ask them to define a long-term wellness goal. This goal can help them assess their calorie intake, nutrition levels, and many other aspects.
2. Communicate Program Details Clearly
Clearly explain the program’s structure, eligibility criteria, challenges, and how employees can earn rewards. Transparent communication aids them in understanding the program’s purpose and encourages engagement.
3. Conduct Wellness Challenges
Encourage your employees to engage in various wellness-related activities. You can host wellness challenges like walkathons, hydration challenges, mindfulness sessions, etc.
You can also introduce weekly challenges. These can help them get an overview of their overall fitness performance.
4. Offer a Variety of Reward Choices
Provide a diverse range of rewards to accommodate different preferences and interests. By offering options like gift cards, health check-up discounts, or wellness-related products, employees are more likely to find rewards that resonate with their health goals.
For instance, Vantage Fit, our in-house wellness program, provides many rewards. It offers wellness badges to employees when they hit milestones in categories such as daily steps, marathons, and runs.
It also provides gift cards from diverse domains such as well-being, food and dining, health, etc.
5. Make the Rewards Achievable yet Meaningful
Ensure that the rewards you offer are attainable and significant to the employees. This ensures they can realistically strive for the rewards while feeling motivated to achieve them.
For example: Instead of setting an unrealistic goal like losing 75 pounds in a month, set a more achievable goal of walking 10,000 steps daily. Such practical goal-setting encourages consistent effort while making progress tangible.
6. Make the Program Engaging
Employees can stay engaged by tracking progress and exploring challenges. The more exciting programs you introduce, the more engagement it generates.
Introducing a social feed, various peer challenges, and meal-logging features can enhance engagement. Another engaging factor is accessing gift cards and cashback offers through point redemption.
Suggested Read: How Fitness Points Can Boost Your Corporate Wellness Program?
7. Set Health Goals that Align to Rewards
Define health-related goals that directly correlate to the rewards being offered. This ensures that participants engage in behaviors that contribute to their well-being while working towards earning meaningful incentives.
For example: If the goal is to encourage water-drinking habits, set a goal for participants to drink a certain amount of water daily. Upon achieving this, they can earn the allotted redeemable points.
Suggested Read: Water Challenge: A Step towards a Healthy Lifestyle
8. Track Participation and Metrics
Monitor and track participants’ engagement and progress toward their goals. This enables you to evaluate the program’s effectiveness and make informed decisions for improvement.
Make your wellness platform wearable-device friendly. Employees are more likely to complete a walking challenge with accurate step-tracking platforms. Such data can help them check their progress on their wellness journey.
9. Prioritize Privacy and Security
Safeguard employees’ personal health information and data collected during the program. This way, they can confidently share their data without worrying about privacy breaches.
10. Make Participation Voluntary
Keep participation in the rewards program optional. This respects individual preferences and allows employees to engage based on their willingness to commit to wellness.
11. Provide Support
Your wellness program should offer continuous support with health coaches, wellness workshops, and more. It should offer a space where the users can address their various issues and expect expert advice.
Such transparency between the users and the program's creators enhances its engagement factor. The users then experience a sense of trust and reliability on the wellness platform.
Nearly 54% of Gen-Zs and 58% of millennials consider wellness rewards programs important when applying for a job.
How to Choose the Right Wellness Rewards Program for Your Company?
Introducing a new wellness rewards program in your company is always great. However, introducing a program that works effectively for a long time requires much research.
Be at ease, as we’ve conducted thorough research on your behalf, ensuring that you make an informed decision for your company’s success.
Here are a few things that you can keep in mind:
1. Check your employees’ needs
To assess your employees' needs, understand their demographics, health concerns, and wellness goals. Get employee data through surveys, interactions, and discussions with the insight team. Focusing on health concerns like cholesterol levels, obesity, and sleep deprivation, is vital.
You can create online surveys using tools like Google Forms or SurveyMonkey to gather employee wellness data. Make the questions clear, concise, and relevant to their health concerns and wellness goals. Ensure anonymity in the surveys to encourage employees to provide honest feedback.
The data collected from those surveys can then be used to compare the employees’ needs with the program resources. This is to ensure that the needs align with the resources provided.
Health camps can also be organized to ensure employees’ health data accuracy.
2. Take Financial Factors and the Business Size into Account
When it comes to wellness programs, it is vital to consider the size and budget of the business. Smaller businesses may not afford expensive wellness services, whereas larger businesses might. Yet, even inexpensive or free programs can impact work culture with an innovative approach.
3. Ensure User-Friendly Interface
Choose a platform with an interface that ensures easy navigation and offers a good user experience for all devices.
4. Consider Incentivization
Fostering a wellness-oriented culture in the workplace entails offering incentives. Incentives can include fitness service discounts, reduced health insurance premiums, etc.
Vantage Fit, the Corporate Wellness Platform, rewards fitness points for completing weekly challenges. You can redeem your fitness points for gift cards on different shopping platforms.
Suggested Read: 7 Wellness Incentive Ideas To Boost Your Corporate Programs
5. Take Constant Feedback
As an employer, you should seek constant feedback from your employees.
Are employees experiencing improved overall health from the challenges? Has the program helped them discover new strengths or areas of personal growth? Have they experienced a reduction in their stress levels after doing those mindfulness sessions?
Seek such inputs on the ongoing wellness program every week. Those inputs will then provide valuable insights into what’s working for them and what can be improved.
For instance, Vantage Pulse is an online employee survey tool that lets you collect, analyze, and act on real-time employee feedback. This tool offers pre-built survey templates that are easily customizable. To gain in-depth insights into employee experience, this platform conducts eNPS-based surveys. It also has a conversation feature through which the HRs can follow up on employee feedback.
Reward Redemption and Availability
Reward redemption is a key aspect of wellness rewards programs. It refers to the process of employees utilizing their earned rewards. These rewards are typically points accrued for accomplishing wellness-oriented activities.
Companies offer flexible redemption options, enabling employees to choose when and how to redeem their points. Easy-to-use reward redemption is crucial for enhancing program engagement. Some of the redemption models include:
1. Instant Redemption
Offer rewards to employees like gift cards or cash bonuses that can be redeemed instantly after completing a goal/activity. Such speedy redemptive options provide instant gratification, which leads to higher engagement.
2. Deferred Redemption
Employees must accumulate points or credits over time before accessing and redeeming earned rewards. The points accrue in the employee’s reward account up to a preset redemption threshold.
This model drives long-term engagement as employees work towards redemption eligibility over a long period.
3. On-Demand Redemption
This model allows employees to redeem their earned rewards anytime they want. There are no pre-set redemption thresholds or cycles.
4. Limited-Time Redemption
This has a fixed timeframe setting during which earned rewards are available for redemption. If the timeframe passes, any unredeemed points may either expire or rollover. It instills a sense of redeeming urgency amongst the users.
This model best suits programs offering high-value rewards or those with annual budgets to control.
5. Seamless Redemption
This approach refers to a simple, convenient, and easy reward redemption process for employees. It includes flexible payout options, real-time rewards tracking, reward customization options, etc.
For instance, Vantage Fit, our in-house wellness product, offers a “seamless” experience when it comes to redeeming fitness points.
By tapping your wallet money icon (located at the top right of the app), you instantly get redirected to your points statement page.
There you can see your points log, i.e., your balance points: debit and credit.
Suggested Read: Wellness Wallet: The Piggy Bank For Your Fitness
When you tap “Redeem Points,” you land on a page offering you various gift cards from various categories. The categories include gift, well-being, travel and leisure, health, grocery, etc.
Wrapping up, I recommend a mix of instant, deferred, and seamless redemption. These will ensure both short and long-term engagement. By getting instant gratifications through instant redemption, employees will be encouraged to wait for reward redemption that requires long-term waiting.
Tip: Always maintain transparency and clarity while communicating the intricacies of reward redemption. This could include explaining redemption instructions, deadlines, and various other processes. A stick in time always saves nine!
Measuring Rewards Program Engagement
Driving high participation is critical for any successful rewards program. Companies must have the right analytics approach to monitor and assess key engagement metrics. This indicates how well the program is capturing employee interest.
A few things to keep in mind to ensure program success are:
1. Participation Rates
This refers to the percentage of employees registering or enrolling in the wellness rewards program. A high participation rate is a key goal.
High participation suggests employees find the program appealing and see value in registering to participate in wellness activities and gain incentives.
Companies can calculate the participation rate by dividing the total program registrants by the total population of participants. For example, 7,000 enrolled out of 10,000 total employees = 70% participation rate.
2. Program Activation
Program activation rate refers to the percentage of enrolled participants who begin participating in activities and engaging with the program after signing up.
It represents the conversion rate from simple sign-ups to activated participants pursuing incentives. High activation is key for the program’s optimal success.
To calculate, take active users who start participating divided by the total participants enrolled. For example, 3,000 active users out of 7,000 enrolled = 42% activation rate.
3. Activity Completion
The activity completion rate measures the percentage of participants who fully complete wellness activities tied to earning wellness rewards.
A high completion rate shows employees are not just starting activities but following from start to finish and earning the rewards.
To calculate, divide the completed activities by the total activities started. For example, if 600 activities are completed out of 1000 started, the rate is 60%.
4. Reward Redemption Rates
The reward redemption rate refers to the percentage of participants who redeem or utilize rewards after earning them through program activities and accomplishments.
A high redemption rate shows the rewards motivate employees to take steps to claim them. Low redemption can signal issues like difficult or confusing redemption processes, unexciting reward options, etc.
To calculate, divide the total rewards redeemed by the rewards earned or the number of participants eligible to redeem. For example, if 300 people redeem out of 500 eligible, the redemption rate is 60%.
5. Repeat Participation Rates
The repeat participation rate refers to the percentage of participants who continue actively engaging with the wellness rewards program over multiple periods.
A high repeat rate shows employees are developing an ongoing habit of participation, not just trying it once. Low repeat signals a failure to drive lasting behavior change, with users losing interest after initial participation.
To calculate, assess what percentage of participants from a previous cycle take part again in the current cycle. For example, if 600 of 1000 users from July participate again in November, the repeat rate is 60%.
6. Participant Feedback Scores
Participant feedback scores refer to satisfaction and experience ratings provided by program participants via surveys, focus groups, or other direct feedback channels.
Collecting feedback allows employers to quantify subjective perspectives on how easy, enjoyable, and valuable participants find the rewards program experience.
7. Health Impact Data
This refers to aggregate health indicators used to quantify the participant population's health risk factors and status changes.
Metrics can include:
- Percentage of participants losing 5% body weight
- Average decreases in BMI across participants
- Percentage of smokers who quit
- Average decrease in blood pressure levels
- Increase in daily physical activity
Monitoring health metrics enables companies to identify risks and inform program adjustments to improve outcomes.
8. ROI Metrics
ROI metrics compare program costs to the healthcare expenditure savings and productivity gains generated to quantify the overall financial return.
Key data points include:
- Program costs
- Health savings
- Productivity gains
- Employee retention savings
Positive ROI is the goal - where health and productivity savings outpace program operational costs.
Vantage Fit, our in-house wellness app, allows for easy tracking of these metrics through dashboards and automated reporting
Companies should regularly review participation metrics and survey feedback to identify opportunities and improvement areas. Timely assessment and response keep programs aligned with evolving employee needs and interests.
Taxability of Wellness Program Rewards
One question that often arises with wellness program rewards is whether the rewards and incentives offered to employees are taxable. The answer, like many tax issues, is that it depends.
Generally, any reward or incentive not considered medical care is taxable income for employees. So, gift cards, gym memberships, and other non-medical incentives must be included in taxable income and are subject to payroll taxes.
However, the tax code does allow certain types of “fringe benefits” to be exempted from income.
The two main tax exclusions that apply to wellness rewards are the exclusions for medical care under Internal Revenue Code Segments 105 and 106 and employee fringe benefits under Code Segment 132.
Fringe benefits are a form of extra compensation employers provide separate from taxable income. Offering wellness rewards as fringe benefits allows companies to motivate at no additional cost to employees.
Fringe benefits that make ideal incentives include:
1. De Minis Fringe Benefits
A de minis fringe benefit is something with such a low value that it would be unreasonable for the employer to account for. Small branded gifts like t-shirts, water bottles, or healthy snacks fall under this category.
2. Use of On-Site Athletic Facilities
If an employer offers free use of an office gym or athletic facility, and employees and family mostly use it, this can be a tax-free perk.
3. Insurance Premium Reductions
Lower health insurance costs or reduced deductibles provided through a wellness program are not taxed.
4. HSA/FSA Contributions
Employer contributions to a Health Savings Account (HSA) or Flexible Spending Account (FSA) are also tax-free. An HSA and FSA are tax-advantaged accounts that let employees set aside pre-tax dollars to pay for qualified medical expenditures.
The bottom line is that while wellness programs don’t automatically make rewards tax-free, some common incentives can qualify as fringe benefits. But others, like cash and gift cards, will always be taxable income. Considering the tax implications is a pivotal aspect of designing wellness rewards.
Key Factors that affect Taxability of Wellness Rewards
Beneath the appeal of such enticing incentives lies a crucial consideration: the tax treatment that they entail. Understanding the factors determining the taxability of wellness rewards isn’t just for the experts! It’s a must-know for anyone entering the realm of employee benefits.
Here are a few factors to keep in mind:
1. All Staff vs. Exclusive Perks
Wellness rewards made available to all employees equally may qualify for tax-free status. But those exclusively limited only to a select few (such as executives or star performers) may be taxable.
2. Reward Types
The taxability differs based on the types of wellness rewards offered. For instance, if employees pay for a reward on a pre-tax basis, the IRS may consider it tax-free. However, other monetary rewards, such as cash and gift cards, are generally taxable.
3. Employee Location
Employees may be dispersed across many tax jurisdictions in today's remote-work era. This means wellness reward taxes will vary based on the employee’s location.
For professional help, consult tax experts to better understand local laws governing wellness rewards. They can help determine proper tax statements.
Common Tax Blunders
Employers often commit tax-related mistakes when dealing with wellness program rewards. Some of them might be:
Mistakenly presuming that if the wellness program is tax-free for the employees, the incentives are also tax-free.
Mistakenly presuming that since wellness program incentives are typically of small value, they are automatically exempt from taxation.
Failing to check state taxes. While wellness rewards are federally taxable, some states provide exemptions. Checking one’s state tax laws regarding wellness rewards is crucial.
Neglecting to communicate the tax rules of incentives to employees effectively. It might lead to disappointment among employees.
Wellness Rewards: Points vs. Cash
Choosing the right reward structure is essential for successful incentive programs. Companies often debate between points systems versus cash rewards.
Let’s review the lists of benefits of both contenders and come to a thought-out conclusion.
Benefits of using Points
1. Flexible Redemption
Points can be redeemed for a variety of wellness rewards. These can include gift cards, merchandise, travel vouchers, and more. Employees have a lot of options. There’s also no set time frame. They can be redeemed whenever they want.
2. Taxability Advantages
Points don’t come under taxable income. This benefit raises the value of points in manifold ways. Employees have a lot of options. There’s also no set time frame. They can be redeemed whenever they want.
3. Higher Perceived Value
Research claims that many employees find points more motivating than cash rewards. For them, a cash reward is just more salary, whereas points/non-cash rewards are viewed as distinct from salary.
4. Efficient Motivator
Earning extra cash is always great. But imagine an art enthusiast getting art museum tickets and a golden opportunity to immerse oneself in Van Gogh’s beautiful paintings. Doesn’t that sound wonderful?
Cash can get lost in mundane transactions. But such meaningful experiences as these leave indelible impressions on employees' minds.
5. Paid Time Off
Rather than providing cash rewards, a point-based system can also aid employees in saving up for their desired paid time off.
For instance, earning 500 points can be equivalent to a paid leave day. The employee could redeem this at their convenience.
6. Gives an Added Push
Spending money on a desired item is a completely voluntary action. And sometimes, it can induce guilt because of our mindless spending habits!
But points foray you into a land of enticing perks. And those are not voluntarily decided by you. Rather, those are given to you as options because you performed well in your wellness tasks. There’s a sense of pride and accomplishment attached to it.
Benefits of Using Cash
Cash is universally valuable across all goods and services. Points only apply to exclusive redemption options.
Points systems require investment in technology to track point accruals and balances. In contrast, cash rewards can rely on just payroll processes. They also require less administrative overhead.
3. Simplicity and Clarity
Cash rewards are simple to understand and communicate. There’s no involvement in a complex point accrual system.
Moreover, currency values in every country are known by all its citizens. As for the U.S., 1 dollar equals 1 dollar, and for India, 1 rupee equals 1 rupee. People are aware of the cash’s worth.
When it comes to points, that appeal is lost. We don’t know how much a point is worth and dread that “conditions apply” sign. We instantly assume that points are not as beneficial as they seem. Such chronic skepticism pesters us to choose cash over points.
4. Cash is King
And yet again, I will say that money is money. An employee won’t really look for gift cards if he has bills to pay. Remember Maslow's Theory? Yeah, it applies here. If employees have unmet basic needs, they will hardly think of their self-actualization needs.
This is where Cash is the hero. Cash lets you pay for all the mandatory bills you ought to pay. And it's not limited to just a few outlets.
What do we recommend?
Given the benefits of both cash and points systems, the best approach may be a hybrid model. Points can help drive participation through fun redemptions and challenges, while cash provides a clear, valuable incentive.
This allows companies to motivate participation through direct cash rewards while also leveraging the flexibility and perceived value of points for additional engagement. Ultimately, the combination maximizes engagement and ROI while accommodating budget limitations.
Moreover, points anyway foray employees into a land of monetary opportunities. Even if they are not termed as cash rewards, they still let employees buy stuff with huge discounts. Recently, I purchased a book without spending a single penny. And it was all possible because of the blessing of points.
Both of the options are viable. If a company is small and wants to include a wellness plan, they can always go for points. But as they grow, they can use both points and cash rewards.
Cash is king, but points can administer corporate kingdoms too. Both go hand in hand.
Legal Consideration for Offering Wellness Rewards
Companies offering wellness incentives must structure programs and rewards in a compliant manner that looks after multiple important aspects.
The Health Insurance Portability and Accountability Act (HIPAA) protects the privacy of employee health information. Wellness Rewards Programs must obtain employee consent before gathering health data and keep it confidential.
The Americans with Disabilities Act (ADA) requires wellness programs to be accessible to employees with disabling conditions and provide reasonable accommodations. Rewards must embrace inclusivity and dispense discrimination.
The Genetic Information Nondiscrimination Act (GINA) prohibits wellness rewards from being contingent on providing genetic information like family medical records.
The Equal Employment Opportunity Commission (EEOC) provides rules that wellness rewards cannot be coercive or penalize employees for not participating. Taking part in wellness programs must be treated as a choice.
As the link between employee health, well-being, and business performance gains global recognition, wellness rewards are emerging as a best practice embraced by leading organizations worldwide.
Employees look for companies that treat them as valuable assets and not just soulless work robots.
Offering wellness benefits like gym memberships, meditation classes, or nutrition workshops shows genuine care for employees' health and well-being.
The key is showing employees their health and happiness matters through comprehensive and innovative programming. This level of investment in their well-being makes employees feel valued as human beings.
Thus, concluding the article with a profound quote, that says:
“If you just pay (workers), you’re going to get the minimum discretionary effort; they’ll just work for the pay, but if you want them to pour their hearts and souls, you need to give them more.”
– Fred Kofman, Executive Coach, Economist, Author
Frequently Asked Questions
1. What does a wellness rewards program offer?
A wellness program offers rewards to employees who engage in health-promoting activities. Those rewards can include discounts on wellness programs, gift cards on various platforms, etc.
2. What are the components of a wellness program?
Wellness programs generally include registration, challenges, progress tracking, offering rewards, and providing support.
3. What are the benefits of a wellness rewards program?
The benefits include increased productivity, reduced absenteeism, and enhanced company culture. It promotes healthy lifestyles, reduces healthcare costs, enhances employee retention, etc.
4. How do I choose the right wellness program for my company?
When selecting the right program, consider employees' needs and financial factors. Look for a simple interface, attractive rewards, and a constant feedback feature.
5. What types of activities are included in a wellness rewards program?
The activities vary widely depending on the program, but they often include fitness challenges, nutrition counseling, stress management seminars, health screenings, and more.
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