Why Employee Rewards Matter (And The Top Rewards Redeemed in 2026)

The global employee rewards industry just hit an all-time high. A 2026 Rewards Benchmark Report (7 million+ redemptions analyzed) shows double-digit year-over-year growth in redemptions, with more people redeeming more often for higher-value rewards.

The Incentive Research Foundation (IRF) also reports that 93% of North American organizations maintained or grew their merchandise (swag) and gift card programs in 2025 — an all-time high. European programs grew by more than 50% year-over-year. APAC matched that pace.

The global signal is clear: employee rewards programs are growing.  

But there’s a gap: meaning to recognize someone and making them feel recognized. This is what employee rewards programs are supposed to close.  

But most programs aren't closing it.  

The ones that are? They're connecting the right rewards to meaningful recognition.

Recognition and Rewards Aren't the Same Thing (But They're Better Together)

Recognition is the moment you tell someone: what you did mattered, and I noticed. It's specific, it's human, and ideally, it's timely.  

Rewards are how you make that moment tangible — something the person can hold, use, and return to.

"Recognition creates that emotional connection. But rewards add something tangible to the experience. They show employees the company isn't just saying thank you, they're willing to invest in their people " shares Alex Bushko, Client Success Manager, Rewards Operations at Kudos.

Recognition says: We appreciate you.

Recognition + reward says: We're willing to put something behind that appreciation.

This is how Kudos works: recognition and rewards aren't separate tracks — they're built to work together. For most clients, when someone sends recognition inside Kudos, the message and the reward are all part of the same moment.  

When you combine the two, the impact is much stronger than either one on its own. That's the differentiator that separates programs that feel meaningful from programs that feel administrative.

Why Your Manual Employee Rewards Program Isn’t Working

There's a moment most managers know well: someone on your team just pulled off something significant, and you want to recognize it. You want them to know you care and their work was seen.

You pick up a gift card, expense it, and give it to the person with a note. It feels scrappy in a good way. It’s intentional, traditional and human.  

The problem is that it doesn't scale. And it costs more to recognize and reward that way than anyone realizes.

When rewards are managed manually, the burden falls entirely on the people who already have the least bandwidth: your managers and your HR team.  

Someone must source the reward, track who got what, make sure it's equitable across teams, document it for tax purposes, and do it all over again next month. There's no visibility into whether recognition is happening consistently or at all. There's no data to point to. There's no way to know if your investment is working.

And when the reward process begins to spiral due to lack of support, that’s when shadow spending happens: managers bypass formal programs and start buying gift cards out of pocket that never get logged anywhere.  

And manual reward programs don’t just hurt the budget. They create a recognition experience that varies depending on which manager someone reports to. One team feels celebrated. Another team barely hears anything. That inconsistency is exactly the kind of thing that erodes culture quietly — not all at once, but over time.

This is where employee recognition and rewards software changes the equation entirely.

A dedicated platform puts every recognition and reward inside a single system. Which means:

• ✅ Full visibility for HR and leadership

• ✅ Consistent budgets across teams

• ✅ A record of every moment someone was recognized

• ✅ Managers don't have to figure out logistics

• ✅ Employees don't have to wonder if their contribution was noticed

The Rewards People Actually Want

Here’s what CarltonOne’s data from over $1 billion in real redemptions across 190 countries reveals:

• Prepaid cards redemptions (like Visa and Mastercard) declined 17% in North America and 16% in Europe in the past year

• Brand-specific gift cards now dominate redemptions at 80% adoption across North American programs

• Merchandise redemptions (physical, tangible items) grew by more than 30%

Kudos Rewards’ data supports this too: Gift cards make up 77% of all total redemptions, 14% for prepaid cards, and merchandise making up the difference.  

"Prepaid cards are flexible, which people definitely appreciate, but they're also really easy to blend into everyday spending. Merchandise tends to create a more memorable experience. People choose something they want, look forward to getting it, and then enjoy it when it arrives,” says Alex.

The people at Kudos are living proof of this:

Since working at Kudos, I've received two Star Awards (an award given to those for outstanding work and comes with 10,000 Kudos points, equivalent to $1000). My husband and I had just purchased our first home right around the time I got my first Star Award — so I used my points towards a new couch! The second time I got a Star Award, my husband and I were planning a trip to Montreal, so I used those points to book our flights.

In between those Star Awards though, I'm using my Kudos points to redeem a quick Amazon gift card so I can finally get everything sitting in my cart. Or sometimes I'll save them for Christmas gift shopping or for something special at the end of the year.

The travel, those memories, the new furniture, the little “treat yourself” items — are all because of recognition. And with inflation and the price ofgas groceries, and everything rising, even just a $30 Amazon gift card truly makes a difference. This is why I show up to work. Why I continue to do my best. Why recognition and rewards matter. - Taryn Hart, Kudos Employee

Choice Is the Biggest Driver of Rewards Engagement

Programs with broad, personalized catalogs consistently outperform limited-option alternatives. Every time.

This holds across regions, program types, and industry categories. When the choice is genuinely yours, the reward lands differently.

"The reality is that a workforce isn't one audience. It's hundreds or thousands of people with different interests, lifestyles, and priorities," Alex says. "When employees can choose something that's actually meaningful to them, the perceived value of the reward goes way up. It feels more personal, even if the company isn't spending any more money."

That last part is worth sitting with. You can increase the perceived value of your rewards program without increasing your budget — simply by expanding what people can choose from. That's not a small thing. For HR teams trying to prove culture has ROI, it's exactly the kind of lever worth pulling.

Timing is also a driver and matters more than you think

The data shows predictable seasonal spikes:

1. October to December surge with holiday preparation and year-end recognition

2. January brings a fresh-start wave

3. March closes strong as fiscal year-end (and Employee Appreciation Day falls that month)

But seasonal patterns aren't a strategy.

The programs that perform best don't fight the calendar or depend on it. They build recognition habits that run year-round. They treat milestones, project completions, and tenure moments as natural triggers for rewards, not just company-wide events.  

Instant delivery matters too: digital rewards that arrive immediately see faster, stronger engagement than rewards that take two weeks to ship.

What This Means for Your Rewards Program

If you're considering a recognition and rewards program, the data points to three practical principles:

Give people real choice. A rewards catalog that includes what employees want, not just what's easiest to administer, is the single biggest driver of engagement. Limiting choice doesn't simplify a program. It quietly undermines it.

Pair recognition with the reward. Don't let the "why" disappear. A message tied to a reward tells a story: here's what you did, here's why it mattered, and here's something that reflects that. That's a very different experience than a points balance update in an inbox.

Think beyond the transaction. The best rewards programs aren't really about the reward itself. They're about how the reward makes someone feel about the company they work for.  

Alex describes this well: "Two employees can receive the exact same reward and have completely different experiences, because what they're really responding to is the meaning behind why they received it. The data can tell you what was redeemed, when, and how much it cost. What it can't fully capture is how that moment made someone feel. That's when recognition sticks."

Frequently Asked Questions

What types of rewards can employees redeem through Kudos?
Through Kudos, employees can redeem points for a wide range of rewards including brand-name gift cards, merchandise, travel, prepaid cards, charitable donations and company swag. The rewards catalog is designed to offer genuine choice, so employees across different roles, locations, and lifestyles can find something personally meaningful to them.

How does Kudos connect recognition to rewards?
Kudos Rewards are optional, however if your organization decides to run recognition and rewards, they are part of the same experience. When someone receives recognition, the message and the Kudos Points, are delivered together. Kudos Points can then be redeemed for Kudos Rewards through the rewards catalog.

Can HR teams track and manage employee rewards spending inside Kudos?
Yes. Kudos gives HR teams and leadership full visibility into recognition and rewards activity across the organization. Admins can set budgets by team or department, monitor redemption trends, and see recognition data through Kudos Reporting.

Does Kudos support rewards for a global or distributed workforce?
Yes. Kudos’ Rewards+ offering spans 190+ countries and includes locally relevant reward options for employees around the world. Whether your team is in North America, Europe, APAC, or beyond, employees can redeem rewards that make sense for their region, in their currency, from brands they recognize.

Can managers give rewards in Kudos, or is it only HR-driven?
Both. Kudos supports peer-to-peer recognition, manager-to-employee recognition, and company-wide recognition — all with the ability to attach reward points. Managers can recognize and reward their teams directly within the platform, within whatever budget parameters HR has set, without any manual logistics, expense reports, or sourcing on their end.

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